All Bets Are On! . . . Line: the Varied Regulatory Framework of an Interconnected Online Sports Betting System

• Jurisdiction: United States,Federal
• Citation: Vol. 50 No. 3
• Publication year: 2022
• topic: Internet, Media and Communications,Consumer Law

All Bets Are On! . . . Line: The Varied Regulatory Framework of an Interconnected Online Sports Betting System

Meg Graham

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TABLE OF CONTENTS

I. INTRODUCTION.....................................................................................721

A. The Rise of Online Sports Betting..........................................724

II. BACKGROUND.....................................................................................729

A. The United States' Shifting and Inconsistent Policies Towards Online Sports Betting............................................................729

i. Professional and Amateur Sports Protection Act.............729
ii. Murphy v. National Collegiate Athletic Association.........731
iii. Differences in State Policies............................................733
iv. New Jersey's Accessible and Tolerant Policies................733
v. Mississippi's Intermediate Approach...............................735
vi. Texas' Uncompromising Restrictions..............................736

B. The United Kingdom's Consumer Protective Policies............737

i. The Betting and Gaming Act of 1960...............................738
ii. The Gambling Act of 2005...............................................738
iii. The United Kingdom's Gambling Commission................739

III. ANALYSIS...........................................................................................743

A. The United States Should Adopt a Commission Similar to the United Kingdom for Consistency and Consumer Safety.........743

IV. CONCLUSION......................................................................................747

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I. INTRODUCTION

Considering the vast variation of opinions toward betting throughout history, it is unsurprising that extreme inconsistencies exist in the regulation of gambling throughout the United States.¹ Well before transatlantic travel to the Americas, British subjects enjoyed their fair share of games of chance.² Interestingly, private English lotteries were used as a form of support for American settlements.³ The chronicles of the English wager did not make American betting practices difficult to speculate. The practice of betting was brought from England,⁴ but ideals varied among the colonists.⁵ Perceptions of placing wagers varied from socially acceptable to "not so much on moral grounds"⁶ as "an appearance of evil as is forbidden in the word of God."⁷

Today, the world is quite different. Instead of primarily moving people across land and sea to share ideas, sentiments, and opinions, these values are spread easily with a reliable internet connection. Through the accessibility of the internet, the interconnectedness of the world has increased sharing of ideas and opportunities.⁸

Individuals in the United States could access online bookmakers prior to legalization in their respective states.⁹ However, congressional legislation

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attempted to squander the ability of individual states to regulate online sports betting due to the "harms . . . inflict[ed]" by sports betting.¹⁰ Considering most legislation did not impact participation in online sports betting, it seems that regulatory bans would serve little to no purpose.

The United Kingdom's history with gambling is not a short one.¹¹ Through the United Kingdom's proactivity on gambling legislation, online bettors in the country have been afforded protections that are not only beneficial to the individual bettors, but to the industry.¹² The impact online sports betting affords the country is notable, as tax revenue is derived from earnings and operations of licensed bookmakers.¹³ The United Kingdom was one of the first countries to have a regulatory framework to protect those placing online bets.¹⁴ Access to online betting agencies was not restricted to countries in which online betting was legalized or regulated.¹⁵ To this day, the remote betting sector is continuing to experience growth in the United Kingdom, with bets placed on European football and horses comprising a large portion of the sector.¹⁶ It is clear the United Kingdom capitalized on the benefits of the industry.

The Internet offers "cheap and easy access to a variety of gambling services."¹⁷ The first online gambling services began operation in 1995.¹⁸

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Although it is quite possible to vote on close to anything,¹⁹ the primary focus of this Note is internet sports betting.²⁰ With more participants in online sports betting, there are increased risks. Without regulation to mitigate that risk, bettors are put in a precarious situation. Those who choose to participate in activities such as day-trading are provided protections when placing their money in an online market.²¹ While the risks of each activity are different, there are similarities. As such, online bettors should be provided some type of protection and security to know their bets are not sent to bookmakers that in reality are simply scammers. Although a 2018 Supreme Court ruling²² designated power to the states to determine independent regulatory schemes for sports betting, this decision did not provide protections for bettors in states that have yet to produce legislation on the matter.

This Note is divided into three Parts. Part I details the history of sports gambling legislation and case law in the United States at both the federal and state level. Three states are identified in Part I for their distinct policies toward internet betting: New Jersey, Mississippi, and Texas. In addition, Part I identifies and explains the history and structure of the United Kingdom's online betting regulations. Part II discusses Congressional involvement in online sports betting. Part III further considers the United States adopt a

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regulatory system for online sports betting similar to that of the United Kingdom.

A. The Rise of Online Sports Betting

Use of the internet for online gambling began in 1995.²³ Due to the limited access to online sportsbooks in the United States, those who wanted to place bets online were able to do so through websites based in Caribbean Islands and Central American countries.²⁴ During the 1990s, the practice of placing offshore bets was illegal under United States federal regulation,²⁵ but was rarely enforced.²⁶ Many of the online sportsbooks lacked any affiliation with established gambling companies because the state of the law was ambiguous and those companies did not want to risk loss of their licenses to operate their gambling establishments.²⁷

In the early days of online gambling, regulations lacked clarity on both the national and international level.²⁸ Due to the vagueness and pure lack of a legal standard, those who wanted to operate gambling sites did so in jurisdictions that either did not regulate against online betting or had no existing regulations in place.²⁹ Although the United States explicitly prohibited online gambling, access to online sites that were legal in their respective jurisdictions was unrestricted.³⁰ Countries like Antigua and

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Panama did not place restrictions on either residents or non-residents from placing online bets.³¹ As a result of the Internet's accessibility, those in the United States could place bets on sites based in these countries and others. Federal legislation created liability for offshore agencies accepting wagers from Americans,³² so many companies restricted bets originating from the United States. Even with these prohibitions, Americans accounted for large portions of the online gambling market.³³

In stark contrast to the 2007 status of online sports betting in the United States, the United Kingdom permitted internet wagers as long as the organization obtained and maintained a valid license.³⁴ Responsibility shifted to the bookmakers, as opposed to shaming or preventing bettors from participation.

In recent years, sports bookmakers have experienced incredible growth, resulting in an increased number of partnerships to effectively reach new markets.³⁵ Regardless of legal challenges and opposition to online

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gambling, the practice has continued and the industry has experienced massive growth since 1995.³⁶ As internet access expanded to places outside the home, such as on cellular devices, access to online sports betting grew.³⁷ With the advancement and accessibility of technology, bettors may gamble directly on bookmaker's websites as well as on cell phone applications.³⁸ Watching sports has always been a source of excitement, but the ability to place wagers on these games on a mobile device has increased the enjoyment for a growing number of people. It is anticipated that the United States sports betting market will be ninety percent online within the next decade.³⁹

In considering the many positive aspects surrounding online gaming, the negative impacts must also be weighed. Problem, or pathological, gaming is a legitimate concern.⁴⁰ The ease of access to the internet permits those with a gambling addiction the ability to overplay. It is the responsibility of governments to protect individual parties against problem gaming. Fortunately, there are multiple solutions. For example, restrictions could be placed on accounts of those who have exhibited addictive traits in the process of placing online bets. Behavior like this could be seen in consistent losses and continuation of placing bets coupled with increased amounts spent on wagers with little to no return. Nevertheless, the increased availability of online betting has not increased the rate of problem gamblers in the United States.⁴¹

Aside from risks associated with addiction, online bettors face issues with verifying the websites or agencies with which they choose to place their

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wagers.⁴² This poses a greater concern for those placing bets online. Without proper verification or certification of a website or application's legitimacy, individuals could share their confidential banking or credit card information with those...