Next month the U.S. Supreme Court will hold a hearing on the constitutionality of a controversial 1992 federal law that virtually bans sports betting outside of the state of Nevada. It could be one of the most significant cases in recent memory.
“The ruling could be one of the most important ever issued by the High Court,” prominent gaming attorney I. Nelson Rose said in a “Gambling and the Law” blog post this week. Rose said it could be the most pivotal case “of this century” thanks to the larger issue surrounding states’ rights.
The case involves the state of New Jersey, as well as more than a dozen others tagging along, seeking to have the 1992 Professional and Amateur Sports Protection Act (PASPA) struck down. On the other side are the major sports leagues, who have opposed New Jersey’s attempt to circumvent federal law and put sports books in Atlantic City casinos.
The U.S. sports betting black market is estimated at about $150 billion annually, according to data from the American Gaming Association. That is the handle, or amount wagered, and not revenue for unregulated operators. In Nevada, where a record $4.5 billion was bet on sports last year, the state-sanctioned books retained about $220 million of the handle in the form of gaming win.
Forty U.S. states have casinos these days, with more than $70 billion won off of gamblers annually between commercial and tribal operators. All of those casino states are expected to explore authorizing sports betting should the feds get out of the way. Also at play is the multi-billion-dollar DFS market, which many say is a contemporary form of sports betting.
Despite the massive market gambling and the proliferation of casinos across the country, the sports betting case isn’t really about gambling, according to Rose.
“It is important to understand that the Supreme Court does not care about gambling at all, let alone sports betting,” Rose said. “But it cares very much about our system of government and the relationship between the power of the federal government and the states. The Justices took this case to decide where to draw the lines.”
What’s at stake is the burgeoning marijuana industry, Rose said. Last year, marijuana sales in the U.S. grew 30 percent year-over-year to $6.7 billion. It was just $1.5 billion in 2013. According to a May 2017 report from Forbes, the pot sales are projected to grow to $30 billion by 2021, assuming more states join in on the gold rush and the Trump Administration doesn’t take action against it.
Nevada, which kicked off recreational marijuana sales in July, saw its dispensaries sell $27.1 million of the plant in the first month. The dispensaries paid more in taxes that month than what Nevada’s sports books had in revenue. State gaming regulators have so far said that weed can’t be smoked in Nevada casinos, but that would likely change if federal law does.
“On the surface, this is a case about interpreting a federal statute, PASPA, and whether that statute is constitutional. So, this may look like—and, of course, really is—a case about sports betting,” Rose said. “But what is really at stake is medical marijuana. Today, 44 states have passed laws allowing patients to use medical cannabis. Yet, under the federal Controlled Substances Act, the FDA has determined marijuana has no possible medical use.”
A ruling on the PASPA case is expected between April and June of next year.