US Lotteries Interested in Offering Sports Betting Services

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Wednesday, May 30th, 2018 | Written by Stephen Smith

In the wake of the recent Murphy v. NCAA Supreme Court decision lifting the ban on sports betting in the United States, many organizations are looking to facilitate wagering on athletic contests. This is true not just of private firms but also of state-backed lottery organizations.

About the Recent Court Decision

The Supreme Court has struck down PASPA, the 1992 federal legislation that prevented the states (except for Nevada and three others) from authorizing sports betting activities. Justice Alito, in his majority opinion, explained that Congress has no right to dictate what laws the states can and cannot pass.

It would have been a different case if national legislators had opted to ban betting on sports altogether – they have an unquestioned right to do so. However, the directives contained in PASPA determining what kinds of laws the states could pass or repeal were found to be unconstitutional. To be more specific, PASPA, according to Alito, violated the doctrine of anti-commandeering, which holds that the federal government cannot usurp the powers reserved to the states.

Note that the Murphy decision does not legalize sports betting across the country immediately. Rather, it removes a stumbling block that had been in the way of individual states that wished to permit this activity. In states that have prohibitions against gambling on sports, these restrictions remain in force.

Why Should Lotteries Get Involved

In some of the states that are likely to feature sports betting in the near future, like New Jersey, commercial casino and racing interests will probably be the ones hosting the sportsbooks. However, there’s another path that some jurisdictions will be looking to take.

Particularly in states without strong land-based casino or race track presences, lotteries provide a ready-made way to jump start any licensed sports betting regime. Forty-four states have lotteries, making this type of gambling more prevalent across the nation than any other kind.

Broad Preexisting Networks

The North American Association of State and Provincial Lotteries (NASPL) has brought up another reason to entrust sports wagering to lotteries. They’ve already partnered with thousands of bars, clubs, and retail establishments, so there’s a network of betting locations already in place. Moreover, a handful of state lotteries already sell tickets online because they were cleared to do so under a 2011 reinterpretation of the Wire Act by the Department of Justice. These entities are thus a natural fit for managing online bookmaking concerns.

Some States Further Ahead Than Others

Approximately half of the states have either already authorized sports betting or are looking to do so in the near future. Some of them intend to permit this type of gambling via other mechanisms than through their lotteries. In others, the situation is still fluid, and it’s not yet clear who will be managing any sports betting that eventually emerges. Nevertheless, there are a handful of states in which the lottery is expected to be in charge of the newly permitted betting products.

Delaware

The Delaware Lottery already oversees NFL parlay betting because it had offered this type of wagering at the time PASPA was passed in 1992 and was thus allowed to continue offering it. Parlays involve selecting the winners of multiple games, all of which must be predicted correctly for the bettor to win. The First State passed legislation to expand its offerings in anticipation of the Murphy v. NCAA ruling, and it expects to go live with traditional, single-game sports betting within a month or two.

Rhode Island

Rhode Island leaders had already met to discuss sports betting even before the Murphy decision, and some believe that no new legislation is needed. Plans are in the works for the Rhode Island Lottery to supervise the industry. However, it will not accept sports wagers itself; rather, it’s looking to contract that out to a third party.

Oregon

Oregon has had sports betting in the past in the form of its “Sports Action” lottery tickets, and this was enough to earn it a partial exemption from PASPA although the game has now been in abeyance since 2007. Following the recent Supreme Court decision, the Oregon Lottery says that it’s “very interested” in the possibility of bringing Sports Action back in some form. The Lottery claims that it can do so without needing any special legislative authority, but there are others who disagree, so it might take a while to clarify the legal situation.

Michigan

The Wolverine State has been a hotbed of legislative pushes to expand gambling in recent years. However, there are many more bills that have stalled or failed than have actually passed. Among the proposals being floated is one that would authorize sports betting under the auspices of the Michigan Lottery. Michigan has plenty of potential contenders for this market, including tribal casinos, commercial casinos, and the lottery. Who will emerge with ultimate control of the bookmaking industry is anyone’s guess at this point.

Montanta

Montana, as one of the states with limited sports wagering grandfathered in under PASPA, might appear at first glance to be a natural fit for sports betting expansion. However, its small population combined with the low amount of revenue generated by its existing sports pools and fantasy contests mean that progress in this area isn’t viewed by almost anyone as a significant source of revenue. There’s therefore no real impetus for the state to take action on this front.