Paspa Law – Everything You Ever Wanted To Know About Paspa Law And How It Affects Sports Betting
Sports gambling is a multi-billion dollar industry in the US today but only a few states in the country benefit from this business. The reason is that the Professional and Amateur Sports Protection Act of 1992 prohibits sports betting nationwide. The only exceptions to this rule are the sports lotteries run by Montana, Delaware and Oregon. The state of Nevada is also an exception because the Professional and Amateur Sports Protection Act of 1992 permit some licensed sports pools in the state. This law is also called the Bradley Act but it is usually abbreviated to the Paspa Law.
Understanding the Paspa Law And How It Affects The Sports Betting Industry In 2024
There is no need to quote the Paspa Law in full but it is necessary to look at the relevant sections of the Bradley Act in this article. Section 3702 of the Paspa Law tells us that “it shall be unlawful” for any government entity or person to sponsor, promote, operate or advertise a sweepstakes, lottery, or gambling, betting, or wagering scheme.
At the time this law was passed, the sates of Delaware, Montana, Oregon and Nevada had some forms of sports gambling already. These states were allowed to continue the betting programs they already had.
When this law was enacted, congress provided a one-year window effective from January 1, 1993 for some states to states to enact their own laws permitting sports betting. The state of New Jersey should have taken advantage of this opportunity at the time but it did not.
Opposition to the Paspa Law
A number of states in the US have challenged the Bradley Act without success. The main issue here is simply this. There is big money in the sports betting business but the Bradley Act has prevented many states and local government areas from taking advantage of this opportunity.
From the perspective of the dissenting states, the Paspa Law is a violation of the 10th Amendment of the US constitution. This amendment protects the sovereignty state legislatures. There is a valid argument here because the Supreme Court has declared that laws compelling states to enforce federal laws are unconstitutional.
The federal government’s response is a classic constitutional argument. In cases where there is any conflict between federal and state law, the supremacy clause comes into play. This clause states that federal law shall prevail over state law and this is why the Paspa Law is binding on all American states.
Impact of the Paspa Law
In a democratic system, the law is supposed to serve the interest of the larger society. For this reason, we have to look at the Bradley Act from the perspective of its impact on American society. People who support this law claim it prevents sports betting and therefore reduces the number of gamblers in the society. The question is whether this law has actually reduced the number of gamblers in the society or not. Now, let us look at some statistics.
In spite of the Bradley Act, it is a fact that 86% of the American population have gambled at least once in their lives. Official statistics report that 50-60% of America’s adult population are light bettors. They gamble occasionally but they do not let the habit become a problem. Another 30% or so do not gamble at all while around 10% of the population are “problem gamblers”.
People in this category stake heavily and lose big money. In fact, about 65% of gambling revenue comes from the 10% of people in the problem gambler category. The statistics above simply prove that the Bradley Act prohibits sports betting but it has not stopped Americans from gambling.
The Paspa Law and sports integrity
Some experts claim the Paspa Law is meant to protect the integrity of sports like ice hockey, baseball, American football and major league soccer. These experts state that allowing sports betting will lead to match fixing with all its unpleasant consequences. The problem with this position is that it is just an assertion without evidence. If legalizing sports betting will automatically lead to match fixing, the sports industry in the UK would have been in serious trouble.
Sports gambling in the UK
In the UK, sports gambling is big business and it has been legal for a long time. The online sports betting industry alone is worth £650 million. Millions of people in different parts of the United Kingdom place bets on soccer, cricket, rugby, hockey and basketball among other sports every day of the week. This has not affected the vibrant sports industry in this country. The English premier league remains one of the most reputable soccer leagues on planet earth even though it operates in an environment where betting on sports has been legal for ages.
Limits of the Paspa Law
The Bradley Act in its present configuration has a number of limits and shortcomings. This law prohibits sports betting but this only works in cases of offline sports betting. If you set up an offline sports betting shop anywhere outside the four approved states, you will be arrested immediately. The problem is that many sports betting outfits operate online and it is difficult to police online gambling sites.
The implication here is that millions of Americans can simply sign up, fund their sports betting accounts and gamble online as much as they want. This law has no way to check sports gambling if it is done online. There is another inconsistency on the legality of internet gambling. As it stands, internet gambling is considered illegal but the Wire Act of 2002 does not prohibit internet wagering. This implies that foreign firms can offer American bettors the opportunity to bet online and get away with it because of inconsistencies in the law.
Skills and games of chance
One controversial characteristic of the Paspa Law is that it outlaws sports betting on the grounds that the outcome of the game depends on chance and not skill. In simple English, this means gambling skills do not exist in sports wagering. When you place your bets, you are relying on chance or blind luck. Now, this is not entirely true because any avid soccer fan can easily predict soccer outcomes like the home win, the away win or the draw. In this case, the person betting is using soccer analysis to place the bet and this is definitely a skill.
Fantasy sports and the Paspa Law
It is hard to understand why fantasy sports is considered a game of skill while sports betting is regarded as a game of chance. The only difference between the former and the latter is that fantasy sports has an electronic format. The rules are the same and the betting options are the same. You choose your team, select an option and place your bets.
The truth is that you need more skill to place bets on sports like tennis, basketball, soccer and volleyball than you do for fantasy sports. You can make money from sports betting most of the time if you consider factors like present form, head-to-head records and injured players list before placing your bets. With fantasy sports, you do not have any of these advantages. Clearly, this makes it a game of chance and not a game of skill.
Understanding fantasy sports
Fantasy sports is simply an electronic version of sports betting. To play this game, little or no skill is required. You simply look at the options, select one and place your bet. Some of the best fantasy sports sites out there are draftkings.com, fanduel.com and victiv.com. You can sign up online and play with real money on a per-game basis. You can also play the fantasy league and commit to manage a team for a whole season.
Already, we have fantasy football, fantasy basketball, fantasy baseball, fantasy hockey, fantasy golf and a host of other fantasy games. Millions of people place bets on fantasy sports every day and the owners of these firms are making big money. The punters are also smiling to the bank because it is possible to win big money every day or every week if things go well for you.
Investors in fantasy sports
One indication that fantasy sports has come to stay is the caliber of corporate organizations that have invested in these firms. The Raine Group, GGV Capital, Redpoint Ventures and Atlas Ventures have invested in DraftKings Inc. Fan duel can count corporate giants like KKR, Time Warner Investments, Google Capital and Turner Sports on its investors list. Clearly, if reputable corporate organizations are investing millions of dollars in fantasy sports, it follows that there are great prospects in this business.
A big money game
There is big money in fantasy sports and this is indicated by the numbers below. DraftKings is valued at $1.2 billion and recently received $300 million in new funding from the sports unit of 21st Century Fox. Fan Duel is valued at over $1 billion and recently raised $275 million in new funding from Google Capital, Turner Sports, KKR and Time Warner Investments. Existing investors like Pentech Ventures, Shamrock Capital, Comcast Ventures, NBC Sports Ventures, Piton Capital and Bullpen Capital were also involved in this deal.
It is a classic irony that sports betting is still prohibited in most parts of the US. However, fantasy sports betting is alive and well in this country. The point is that there is little difference between fantasy sports betting and offline sports wagering. Already, many influential people inside and outside the sports industry are pushing for a repeal of the Paspa law. The way some people see it, legalizing fantasy sports and prohibiting sports wagering amounts to discrimination. The good news is that the success of fantasy sports may force the federal government to rethink the Paspa Law.
The New Jersey Case
One indication that the Paspa Law might be repealed soon is the New Jersey case. The state of New Jersey is challenging the Paspa Law in court. In February 2013, a US District Court ruled in favour of the gambling ban. New Jersey promptly appealed this judgment and in September 2014, the 3rd US Circuit Court of Appeals upheld the judgment of the lower court. Significantly, one of the judges at the Appeals Court issued a partial dissent. This has encouraged the state of New Jersey to go all the way to the Supreme Court.
Meanwhile, the states of Georgia, Wisconsin, Kansas, Virginia, Wyoming and West Virginia have filed amicus briefs to support New Jersey. With so many important voices of opposition to the Paspa Law, it is likely that this outdated law will be repealed soon.
Final word
The ban on sports wagering is not doing America any good. The Paspa Law has removed a legitimate money making opportunity from most states and local government councils in the land. As it stands, a handful of bookies, offshore websites and mob-associated gambling outfits are making billions of dollars from sports wagering in the US. These outfits operate illegally so they do not pay taxes. In the final analysis, the Paspa Law should be repealed for two compelling reasons. This move will create thousands of new jobs and bring in much needed revenue to states and local government councils.