Federal Sports Betting Bill Cares Little About The Integrity Of States Rights

A thirty-seven page draft of a federal sports betting bill was floated around the Internet after being disseminated in Washington D.C. on December 4. The most important thing to know about it is that it is not being debated and is far from becoming law. However, the fact that it received so much attention in the sports betting world means that it is at least worthy of discussing its ramifications should it ever be debated in its current form.

The bill attempts to take the form of being a document that maintains state rights, but really shifts a lot of power to the federal government. The mechanism by which it accomplishes such goal is by empowering the U.S. Attorney General to essentially govern the way in which states provide sports wagering options, if at all.

Under the current drafted document, the U.S. Attorney General will have up to 180 days to review a state’s petition to implement some form of sports betting within its borders. After approval, a state will be provided a three-year license to offer sports betting within its borders, but can be checked on by the U.S. Attorney General and have its credentials pulled at any time. Furthermore, a state must renew its “license” after the three-year trial period.

In reality, the U.S. Attorney General would not have very much leeway in rejecting a state’s application; the draft of legislation indicates that the U.S. Attorney General will approve an applicaation unless it is determined that the proposed sports wagering program does not meet certain standards as set forth therein. That criteria does not seem to be very difficult to follow, although the up-to-180-days waiting period seems rather excessive.

The larger concern for states and sports betting operators should be that the bill seeks to tie them to the use of “official data,” which all eight states that currently offer legal, regulated sports wagering have thus far avoided including in their new betting laws.

The relevant provision of the drafted federal sports betting bill reads:

“With respect to any sports wager accepted on or before December 31, 2022, provide that a sports wagering operator shall determine the result of a sports wager only with data that is licensed and provided by (I) the applicable sports organization; or (II) an entity expressly authorized by the applicable sports organization to provide such information.”

The requirement of sports betting operators to purchase data will cut into their revenues, which will likely be shifted to the consumer. If one of the true goals of the bill is to improve on the integrity of operations and further shift betting activity from offshore entities and illegal bookies to regulated sportsbooks, then the federal government should be cognizant of the possible negative effects of requiring the purchase of such data.

There are many other items of import in the thirty-seven pages of the bill, but until it is seen as something with true potential of being debated and passed, it is likely not necessary to spend too much time on the remainder of the text. Further, it is very possible that the text be altered between now and whenever it is truly discussed by Congress.