Key Issues To Watch At The Congressional Sports Betting Hearing
Several jurisdictions, such as New Jersey, Delaware, Pennsylvania, Mississippi, and West Virginia have authorized sports betting within their borders as states are able to legalize and regulate after the SCOTUS decision earlier this year. Just New Jersey and Delaware have gone live so far, but more are on the way in the coming months and weeks. Still, even with sports betting now, seemingly, a state issue, the United States Federal government will explore the topic on Thursday morning. At 10 a.m. ET, the U.S. Subcommittee on Crime, Terrorism, and Homeland Security and Investigations will convene to examine the state of the legalized sports betting market.
Post-PAPSA: An Examination of Sports Betting in The US
That’s the title of the hearing, which will be the first since the Supreme Court decision in May. There are a total of five witnesses scheduled for the hearing, including NFL Executive Vice President, Jocelyn Moore, Nevada Gaming Control Board Chari, Becky Harris, and American Gaming Association Senior Vice President of Public Affairs, Sara Slane. Rep. James Sensenbrenner will chair the hearing. The discussion will surround if sports betting should be regulated at the federal level.
Will the Federal Gov’t Impose a Framework for Legal Sports Betting?
That is the big question surrounding this hearing. Last month, we already saw some movement from the Senate, as Chuck Schumer outlined a policy proposal that would regulate sports betting nationally and protect the game from match-fixing.
Federal Government Intervention Is A Bad Idea
Not only does Schumer’s bill propose some ideas that could be done through market efficiency, but a Congressional framework would almost certainly come with a higher tax rate on sports betting and make it harder for both sportsbooks and consumers to profit. The biggest issue with Schumer’s proposed bill is “the official use of league data” when it comes to determining betting outcomes.
Not only would this strengthen the leagues in their quest for “integrity fees,” but they might then conclude their statistics are intellectual property and that would likely come with fees for using their “service.” Once again, this another situation where taxes and fees may pop up in an industry that is already being squeezed by regulators. The AGA has stated, correctly, that “Mandating every sportsbook contract with only one official data company will allow an individual, preferred data providers to set inflated, non-competitive monopoly prices for their services.” We couldn’t have said it better.
The Black Market?
Also on deck for the hearing is the ability for bettors to place wagers at black market sportsbooks, which is just another term for offshore sports betting sites and local bookies. Let’s remember that most states don’t have a law against placing bets as an individual at offshore websites or with local bookies. That act is also not criminalized on the federal level. I am one to think that offshore sports betting will never go away, as there will also be black market operators. Heck, there are still local bookies operating in Las Vegas, the sports betting capital of the country. Also, even if sports betting expanded heavily, at least one-third of states would never legalize and regulate the activity.
A federal bill would almost certainly up costs for sports betting operators and allow the black market to outcompete them for a more extended period. We already advocate online betting sites over regulated sports betting, even if states where the activity is legal. They have several distinct advantages over regulated options, including deposit bonuses, more expansive betting markets, higher limits, and comparable or often better, customer support. Federal government intervention into sports betting markets can only be a bad thing but don’t worry; there will always be the ability to bet at offshore sportsbooks.