Prohibitive Failure: the Demise of the Ban on Sports Betting
| Citation | Vol. 35 No. 2 |
| Publication year | 2019 |
Prohibitive Failure: The Demise of the Ban on Sports Betting
John T. Holden
Oklahoma State University - Main Campus, john.holden@okstate.edu
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On May 14, 2018, the Supreme Court of the United States struck down the federal prohibition on sports gambling. The sweeping opinion, authored by Justice Alito, ended more than a twenty-five-year-old policy that kept states from offering sports gambling, which confined sports betting almost entirely to illegal underground markets. Indeed, the sports betting prohibition is largely responsible for the growth of the illegal sports gambling market, which is now one of America's twenty largest industries. The challenge to the federal Professional and Amateur Sports Protection Act was initially launched in 2012 when former U.S. Attorney and New Jersey Governor, Chris Christie, signed a bill licensing sports betting at New Jersey casinos and racetracks. Almost six years later, Governor Philip Murphy would see New Jersey prevail at the Supreme Court.
The Supreme Court decision, holding that the Professional and Amateur Sports Protection Act was unconstitutional because of its commandeering of state legislative bodies, was an impactful decision bound to have implications across a variety of topics, ranging from state legalization of marijuana to so-called sanctuary cities. This article explores the origins of the Professional and Amateur Sports Protection Act by detailing the political conditions that gave rise to the statute and then examines the practicalities of the sports betting prohibition. In the second section, this article discusses the demise of the prohibition and its defeat at the Supreme Court. In section three, this article elucidates the remaining obstacles to an expansion of sports betting at the state and federal level. In section four, this article recommends several provisions that would serve the interests of all in
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new legal markets and concludes with a brief discussion of the broader implications of the fall of the prohibition.
On May 14, 2018, the Supreme Court struck a fatal blow to the federal government's sports betting prohibition.1 The decision, authored by Justice Alito, ended the existence of the Professional and Amateur Sports Protection Act (PASPA), which had, up to that point in time, frozen sports betting laws in place for a little more than twenty-five years.2 Some commentators had suggested that the Supreme Court would avoid the constitutional questions raised by the case and attempt to dispose of the matter on statutory grounds to avoid the complex quagmire of addressing the anti-commandeering doctrine and attempting to define the precise scope and bounds of federal power.3 Alas, what happened was not the surgical approach some had anticipated; rather, the Supreme Court performed surgery with all the precision of a chainsaw, ruling that PASPA was unconstitutional and could not be saved by simply severing the
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constitutionally offensive language.4 Although the majority's decision was sweeping, Justice Thomas argued in a concurring opinion that not only does PASPA exceed congressional authority, it also raises doubts as to a broader question of federalism, namely Congress's ability to regulate sports gambling that does not cross state lines.5 Like many other prohibitions that came before it, the prohibition on sports betting was an abject failure.6
The prohibition on alcohol, which Congress passed just before the end of 1917 and ratified on January 16, 1919, was likely America's most committed and prominent prohibition.7 The push for prohibition began decades earlier, led by Hillsboro, Ohio housewife Eliza Thompson, who began a nationwide crusade against alcohol.8 The calls for prohibition began to mount, and by the early twentieth century the Anti-Saloon League had gained sufficient power to become a force to be reckoned with.9 By 1916, the Anti-Saloon League had used its influence to "effectively seize[ ] control of both the House and Senate," becoming the driving force behind what would motivate Congress to pass what would become the Eighteenth Amendment to the United States Constitution, banning the sale of intoxicating beverages in the United States.10 The economic drivers of prohibition were based on the idea that there would be a substitution effect if alcohol was banned.11 The idea put forth by legislators and advocates was that prohibition would shift spending from alcohol to items such as life insurance, food, shelter, and
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savings.12 The alcohol prohibition was a substantial failure.13 Not only did the practice not result in additional spending on food and shelter, but also beer consumption increased during prohibition, and the consumption levels of pure alcohol remained relatively stable throughout the era.14 The Amendment's prohibition failed miserably in achieving its purpose because it simply forced bootleggers to improvise, often creating concoctions with far more alcohol than typical alcoholic beverages, rendering them much more dangerous.15 The prohibition against alcohol ended on December 5, 1933, with the ratification of the Twenty First Amendment.16 Prohibition lasted little more than a decade cost an estimated $11 billion in lost tax revenues as a result of prohibited liquor being sold outside the realm of taxation.17 The lost tax revenue was compounded by the $300 million spent on enforcement of Prohibition.18 The failure of the prohibition of alcohol would manifest yet again in the federal government's "War on Drugs."
The War on Drugs' most controversial target has been marijuana,19 especially since the rise of the medical marijuana industry, which began with California passing Proposition 215 in 1996.20 Marijuana in the United States has been illegal at the federal level since the passage of the Marijuana Tax Act in 1937.21 Although illegal since before World War II, large expenditures on policing the drug did not escalate until the late 1960s.22 As enforcement expenditures rose, so
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did the potency of the drug; like during the alcohol prohibition era, providers sought to increase the potency so that there was less drug needed to achieve the same result, effectively maintaining a similar level of risk.23 The marijuana prohibition, however, is slowly being dismantled on a state-by-state basis.24 Indeed, there has been an ongoing litigious debate between the federal government and state lawmakers over who should bear the cost of federal marijuana enforcement in states that have repealed their prohibitions.25 The debate over state power to legalize marijuana for both medicinal and recreational purposes continues, but the federal government does not yet appear ready to totally abandon the enforcement of its own criminal laws against cannabis growers and sellers, despite a stated policy shift in enforcement priorities.26 Unlike the prohibition against alcohol, the federal marijuana prohibition appears to be eroding by slow decay, as opposed to the democratic death of its predecessor.27 Sports betting, however, is the most recent prohibition to meet its end, and, unlike marijuana and alcohol, the courts ended this prohibition.28
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The modern prohibition against sports betting dates to the early 1950s29 and the emergence of the Special Committee on Organized Crime in Interstate Commerce's (Kefauver Committee) final report, which noted that organized crime figures used wire transmissions to convey bookmaking information across the country.30 The primary fixation of early modern sports gambling laws was less on sports gambling itself as a vice, but on sports gambling as a means of revenue generation for organized crime.31 Attorney General Robert F. Kennedy had estimated that organized crime's illegal gambling business surpassed a value of $7 billion in 1961.32 Kennedy made clear that it was not the intent of the federal government to target all
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sports bettors; to the contrary, the bill was only intended to target professional bettors. The Attorney General sought to avoid a situation where a bettor could escape the scope of the statute by claiming "I just like to bet. I just make social wagers."33 The Wire Act, which would become law on September 13, 1961, would serve as the lone federal statute to explicitly address bets and wagers on sporting events until the passage of PASPA in 1992.34
Among the pushes for the enactment of PASPA, scholars cite continued pressure to reinforce existing laws protecting against organized crime and the potential for an increase in match-fixing in a world where sports betting was not prohibited.35 By 1989, it was estimated that more than $29.5 billion was being wagered illegally, and federal lawmakers and sports leagues began to express concerns that states would seek to recapture some of the illegal market share by legalizing sports gambling themselves.36 Senator Bill Bradley wrote a law review article in which he detailed that "one million of the eight million compulsive gamblers in this country are teenagers," and their activity of choice is sports betting.37 The argument that state-sanctioned sports betting would exacerbate gambling addictions was prominent in the early 1990s.38 These fears, along with fears of
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rising societal costs, were the locomotives driving the crusade of Congress against state-sanctioned sports betting.39
PASPA was a disaster for more than twenty-five years.40 The statute did not prohibit sports wagering; instead, it prohibited the state sanctioning of sports wagering in states that did not already offer sports betting prior to its passage.41 This policy decision effectively conveyed a monopoly to Nevada and ensured that illegal bookmakers did not have to fear losing their clients to the legal market.42 PASPA served as an incubator for illegal sports gambling with the internet acting as...
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