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Supreme Court ruling allows states to legalize, regulate sports betting

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The Murphy v. NCAA ruling means legalized sports books outside Nevada.

Supreme Court Hears Arguments On Tax Burdens On E-Commerce Businesses Photo by Alex Wong/Getty Images

The United States Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA) Monday, striking the law that prevented states from drafting their own regulations for local sports betting. The ruling will allow legal sportsbooks to begin operations throughout the country; it had previously only been allowed in grandfathered-in states Nevada, Oregon, Delaware, and Montana.

Murphy v. NCAA was a legal battle between the state of New Jersey and America’s major sports leagues. New Jersey argued legalization of sports gambling would allow the state to capture a new and significant stream of revenue from a practice already rampant in underground operations. The NCAA and its colleagues countered that the state’s legislation was a violation of PASPA — an argument that held up in federal court and twice on appeal before being heard by the Supreme Court on Dec. 4, 2017. In the end, a 6-3 majority sided with state authority to legalize sports betting on a case-by-case basis.

In its ruling, the Court decided that PASPA’s provision prohibiting state authorization of sports gambling schemes violates the anti-commandeering rule. Furthermore, PASPA’s provision prohibiting state “licens[ing]” of sports gambling schemes also violates the anti-commandeering rule. In Justice Samuel Alito’s opinion, the Court ruled that, “Congress can be allowed to regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own.”

In short, without federal oversight, the rules governing sportsbooks fall to state legislations.

The ruling will bring immediate relief to New Jersey, who has been fighting for legalized sports gambling since changing its state constitution back in November 2011. That reform brought legal challenges from the NFL, NBA, MLB, NHL, and the NCAA in 2012 and 2014, whose lawyers were able to use PASPA as precedent to prevent the referendums New Jersey residents approved twice over from legalizing local sports betting. The state fought back, pushing its case through legal defeat after legal defeat before the Supreme Court agreed to hear this argument.

Monday’s verdict is a victory for the Garden State, where estimated revenue from newly-legal sportsbooks is projected to bring up to $9 billion in revenue to a depleted Atlantic City. New Jersey is just one of 14 states to have active sports betting reforms chambered for debate in their local legislative bodies. Several more could follow as the revenue streams from an estimated $150 billion once-illegal business become too tempting to avoid. Connecticut, Delaware, New York, Pennsylvania, and Mississippi have each already enacted gambling legislation with the expectation PASPA would be overturned.

Who had fought against this ruling?

The NCAA has vehemently opposed betting on its outcomes, even going as far to threaten to move any postseason events from the state of Delaware if it had allowed legal gambling on college sports. America’s four major sports leagues have also led the legal charge against New Jersey’s wagering renaissance, though that stance has softened among some of the country’s most popular sports. The NBA, MLB, and PGA Tour have lent their support to proposed legislation in Indiana on the condition it include a one percent “integrity fee.” That money would go to the leagues being bet on and ostensibly spent to ensure proper oversight against issues like point shaving or match fixing.

The players’ unions of America’s big four sports aren’t entirely opposed to the idea, but haven’t exactly expressed approval, either. That group released a joint statement urging caution about sports betting earlier in April.

It’s unclear what the next steps are for these opponents, though legislation in West Virginia has roped in payments to Marshall and West Virginia University as part of its gambling law, though without any deference to an “integrity fee” paid to the leagues.