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SPORTS GAMBLING IN THE UNITED STATES: WHY PASPA SHOULD BE REPEALED AND SPORTS GAMBLING SHOULD BE LEGALIZED

MITCHELL S. BISSON

INTRODUCTION Between $80 billion and $380 billion is illegally wagered on sports in the United States each year.1 In comparison, only about $3 billion is wagered legally.2 The difference between how much is wagered illegally and how much is wagered legally is outstandingly large. The discrepancy is because the Professional and Amateur Sports Protection Act3 makes sports gambling illegal in all but 4 states.4 The states in which sports gambling is prohibited are missing out on a major way to raise revenue.5 PASPA should be repealed by Congress, effectively allowing sports gambling to be legalized throughout the United States.6 Part I will trace the history of sports gambling and sports gambling legislation in the United States. The policy reasons and substance of PASPA will also be discussed in detail. Part I will also show how Congress does not have the power to regulate sports gambling - making PASPA void.7 Part II will discuss the rationales behind legalizing sports gambling throughout

NATL GAMBLING IMPACT STUDY COMMN, FINAL REPORT 2-14 (1999) available at http://govinfo.library.unt.edu/ngisc/reports/2.pdf. 2 Michael Levinson, A Sure Bet: Why New Jersey Would Benefit From Legalized Sports Wagering, 13 SPORTS LAW. J. 143, 144 (2006) (citing ROBERT M. JARVIS ET AL., GAMING CASES AND MATERIALS, 297 (2003)). 3 28 U.S.C. 3701-3704 (2000). 4 Id. 3704. 5 See discussion infra Part II.A. 6 See generally Levinson, supra note 2; see also generally Michael P. Fecteau, All for Integrity or All for Naught: The Battle Over State-Sponsored Sports Betting, 7 GAMING L. REV. 43 (2003). 7 See discussion infra Part I.C.

the United States. Legalized sports gambling would allow the states to benefit from increased direct and indirect revenue.8 The relationship between sports gambling and organized crime will also be discussed. The prohibition of sports gambling is allowing organized crime to thrive.9 Part II will also show how the legalization of sports gambling in the United States would help protect consumers from the world of unregulated internet gambling.10 Part III sets forth the most common arguments against the legalization of sports gambling and explains how each of these arguments is unfounded. Opponents of legalized sports gambling claim that if PASPA were repealed, the integrity of sports would be threatened.11 By establishing a few regulations, the integrity of sports will not be effected by legalized sports gambling.12 Part III also distinguishes sports gambling from other so-called vices such as drugs and prostitution. Part IV discusses some rules and regulations that should be included in sports gambling legislation. Establishing and enforcing regulations will help prevent scandals and corruption involved with sports gambling.13 I. BACKGROUND A. History of Sports Gambling in the United States Gambling is one of the oldest forms of entertainment.14 Researchers have found that ancient Egyptians, Chinese, Japanese, Greeks, Romans, and Germanic tribes all
8 9

See discussion infra Part II.A. See discussion infra Part II.B. 10 See discussion infra Part II.C. 11 See discussion infra Part III.A. 12 See discussion infra Part III.A. 13 See discussion infra Part IV. 14 See John Grady & Annie Clement, Gambling and Collegiate Sport, 15 J. LEGAL ASPECTS SPORT 95, 95-96 (2005). 2

engaged in games of skill and chance for amusement.15 Gambling was brought to the United States by the Europeans during colonization.16 In fact, forms of gambling financed many aspects of colonization, including establishing the colonies first institutions of higher education.17 The relationship between gambling and sports has been a long one.18 People have been placing wagers on sporting events as a form of entertainment for many years.19 The first widely known sports gambling scandal was uncovered in 1920 when the Chicago White Sox were accused of intentionally losing the 1919 World Series.20 The accused players were eventually acquitted of criminal charges, but were still banned by Major League Baseball for life.21 Gambling on sports continued to be an accepted form of entertainment until the 1950s when Congress decided to take a bigger role in investigating the relationship between sports gambling and organized crime.22 In an effort to curb organized crimes hold on the gambling industries, Congress passed the Wire Act in 196123 and the RICO statutes in 1971.24 RICO was passed in an effort to combat the infiltration of organized
15

Id. at 96, (quoting Mike Roberts, The National Gambling Debate: Two Defining Issues, 8 WHITTIER L. REV. 579, 582 (1997)). 16 Id. 17 Id. 18 See generally Anthony N. Cabot & Robert D. Faiss, Sports Gambling in the Cyberspace Era, 5 CHAP. L. REV. 1 (2002). 19 See id. at 2-4. 20 Id. at 3, (citing Eight White Sox Players are Indicted on Charge of Fixing 1919 World Series, N.Y. TIMES, Sept. 29, 1920, at A1, available at http://query.nytimes.com/mem/archive-free/pdf?res=9800E7D91F31E433A2575AC2A96F9C946195D6C F). 21 Id. (citing ELIOT ASINOF, EIGHT MEN OUT: THE BLACK SOX AND THE 1919 WORLD SERIES 273 (1963). 22 H. Wayne Clark Jr., Whos In? The Bona Fide Future of Office Pools, 8 GAMING L. REV. 202, 203 (2004) (citing Aaron J. Slavin, The Las Vegas Loophole and the Current Push in Congress Towards a Blanket Prohibition on Collegiate Sports Gambling, 10 U. MIAMI BUS. L. REV. 715, 717 (2002)). 23 18 U.S.C. 1084 (2000). 24 Id. 1961-1968. 3

crime and racketeering into legitimate organizations25 Sports gambling was one of theses organizations.26 Legalized gambling spread across the United States in the 1980s.27 Many people worried that the relationship between sports and gambling was having a negative effect on the integrity of the sports.28 In an effort to stop the spread of state-sponsored sports gambling, Congress passed the Professional and Amateur Sports Protection Act.29 B. The Professional and Amateur Sports Protection Act The Professional and Amateur Sports Protection Act (PASPA) was passed in 1992.30 PASPA prohibits a governmental entity or individual from sponsoring, operating, advertising, or promoting sports gambling.31 Although PASPA makes state-sanctioned sports gambling illegal, it includes a grandfather clause which exempts states that already had a sports gambling scheme at the time it was passed.32 Nevada, Oregon, Delaware, and Montana are the only states that satisfy the requirements to be exempt from PASPA.33 Currently, the only way to legally gamble on sports in the United States is to be present in a Nevada sports book.34 At the time PASPA was enacted, Nevada had a law on

25

Aaron J. Slavin, The Las Vegas Loophole and the Current Push in Congress Towards a Blanket Prohibition on Collegiate Sports Gambling, 10 U. MIAMI BUS. L. REV. 715, 718 (2002) (quoting S. Rep. No. 91-617, at 80 (1969)). 26 Id. (citing S. Rep. No. 91-617, at 80 (1969)). 27 Ronald J. Rychlak, A Bad Bet: Federal Criminalization of Nevadas Collegiate Sports Books, 4 NEV. L.J. 320, 320 (2004). 28 See generally Bill Bradley, The Professional and Amateur Sports Protection Act-Policy Concerns Behind Senate Bill 474, 2 SETON HALL J. SPORT L. 5 (1992). 29 28 U.S.C. 3701-3704 (2000). 30 Id. 31 Id. 3702. 32 Id. 3704. 33 See Fecteau, supra note 6, at 45-46. 34 Id. at 44. 4

the books that provided for licensed sports books.35 As of December 31, 2008, there were 177 licensed sports books in Nevada.36 Montana, although not mentioned in the Senate Committee Report on PASPA, is exempt from PASPA because it also allowed for sports books by statute.37 However, Montana has not currently licensed any sports books. Oregon and Delaware are exempt because they had state-sanctioned sports lotteries at the time PASPA was enacted,38 but these have since been discontinued.39 One of the major policies behind PASPA was to stop the spread of state-sponsored sports gambling.40 Supporters of PASPA felt that if something wasnt done about legalized sports gambling, the legitimacy of the games would be questioned and lead fans to think the fix was in.41 Coaching decisions and calls by the referees would be questioned more than ever.42 Another policy reason behind PASPA was to keep sports from being seen as a way to promote gambling among the youth in America.43 Hearings were held on PASPA in 1991.44 As a result of these hearings, Congress found that sports gambling is a national problem.45 During these hearings, PASPA was

35 36

NEV. REV. STAT. 463.160 (2001). NEV. GAMING CONTROL BD., GAMING REVENUE REPORT, http://gaming.nv.gov/documents/pdf/1g_08dec.pdf (2008). 37 NFL v. Delaware, 435 F. Supp. 1372, 1379 (D. Del. 1977) (citing Mont. Code Ann. 23-7-103(4)(a) (2001)). 38 See OR. REV. STAT. 461.213; see also DEL. CODE ANN. tit. 29, 4805(b)(4). 39 Fecteau, supra note 6, at 46; see also Oregon Lottery, http://www.oregonlottery.org/sports/pdfs/thank_you_qna.pdf (last visited Apr. 9, 2009). 40 Fecteau, supra note 6 at 45 (citing S. Rep. No. 102-248, at 1 (1992), reprinted in 1992 U.S.C.C.A.N. 3553, 3553). 41 Id. at 44 (quoting S. Rep. No. 102-248, at 5 (1992), reprinted in 1992 U.S.C.C.A.N. 3553, 3555). 42 Bradley, supra note 28, at 8. 43 Ante Z. Udovicic, Special Report: Sports and Gambling a Good Mix? I Wouldnt Bet on it, 8 MARQ. SPORTS L. J. 401, 419 (1998). 44 See S. Rep. No. 102-248 (1992), reprinted in 1992 U.S.C.C.A.N. 3553. 45 See id. 5

heavily opposed by the Department of Justice. The Department of Justice claimed that PASPA was an intrusion on states rights because it kept the states from raising revenue.46 It claimed Congress had historically left decisions on how to raise revenue to the states.47 C. Congress Lacks the Power to Regulate Sports Gambling Does Congress even have the authority to prohibit states from establishing sports gambling? Supporters of PASPA say yes, and point to Congresss power to regulate interstate activity under the Commerce Clause.48 Former New Jersey Senator Bill Bradley claims that Congress has regulated gambling activities in the past and has exercised its Commerce Clause powers to regulate activities that are arguably more intrastate than sports gambling.49 One of the biggest cases the supporters of PASPA rely on is Champion v. Ames.50 In Champion, the Supreme Court upheld a statute prohibiting the carrying of lottery tickets from state to state.51 The Court held that this regulation was within the power granted to Congress under the Commerce Clause.52 The Court went on to state that Congress has the ability to regulate against an evil carried on through interstate commerce.53 Supporters of PASPA claim that the prohibition of sports gambling is similar to the prohibition in Champion in that it protects the country from a moral and social wrong.54

46 47

See id. See id. 48 U.S. CONST. art. I, 8, cl. 3 (The Congress shall have Power . . . To regulate Commerce . . . among the several States . . . .); see generally Bradley, supra note 28. 49 Bradley, supra note 28, at 6. 50 188 U.S. 321 (1903). 51 Id. at 345. 52 Id. at 354. 53 Bradley, supra note 28, at 13 (citing Champion, 188 U.S. at 355-358). 54 Id. at 13-14. 6

Supporters of PASPA also claim that Perez v. United States55 leaves no doubt that Congress can regulate sports gambling.56 Perez held that the Commerce Clause extends to those activities intrastate which so affect interstate commerce.57 Supporters state that there is plenty of evidence that shows that sports gambling has a direct impact on interstate affairs, including the finding that sports betting negatively impacts gambling among teenagers.58 However, the argument that sports gambling affects interstate commerce is weak. The supporters of PASPA argued that without the legislation, the moral erosion sports wagering produces will not be limited geographically and other states will not be able to resist the lure to legalize sports wagering.59 This is a bad argument because Nevada had legalized sports gambling for many years before PASPA, and there was little activity among the states to legalize sports wagering.60 Sports gambling was neither spreading rapidly nor posing a threat to widespread moral erosion.61 Supporters also state that the holding in Perez has been applied with equal force to illegal gambling prohibited by [federal legislation].62 The problem with this argument is that the statutes they are talking about are criminal statutes, and PASPA is not criminal in nature.63 These statutes also regulate individual activity, whereas PASPA regulates

55 56

402 U.S. 146 (1971). Bradley, supra note 28, at 14. 57 402 U.S. at 151 (quoting United States v. Wrightwood Dairy Co., 315 U.S. 110, 129 (1942)). 58 Bradley, supra note 28, at 15 (citing Hearing on H.R. 74 Before the Subcomm. on Economic and Commercial Law, 102d Cong. 22-27 (1991) (statement of Valerie C. Lorenz)). 59 Levinson, supra note 2, at 171 (citing S. Rep. No. 102-248, at 4 (1992), as reprinted in 1992 U.S.C.C.A.N. 3553, 3556). 60 Id. 61 Id. at 172. 62 Bradley, supra note 28, at 14 (quoting United States v. Smaldone, 485 F.2d 1333, 1342 (10 th Cir. 1973)). 63 Levinson, supra note 2, at 173; PASPA gives the power to the sports organizations to commence civil actions in cases where there is a violation. Id. 7

state-sponsored gaming activity.64 Supporters of PASPA also point to legislative findings that the interstate ramifications of sports betting are a compelling reason for federal legislation.65 However, the Supreme Court has ruled that legislative findings are not enough to uphold a law on Commerce Clause grounds.66 PASPA prohibits state-sponsored gaming activity.67 But, such activity should come within the purview of the states revenue-raising power and should not be susceptible to control by Congress.68 In Justice Kennedys concurrence in United States v. Lopez,69 he stated that when questioning the constitutionality of Commerce Clause legislation, the Court must inquire whether the exercise of national power seeks to intrude upon an area of traditional state concern.70 The regulation of sports gambling falls within the states police and revenue-raising powers, which are traditionally reserved to the states.71 In fact, the legislative history behind PASPA even says that this is traditionally reserved to the states.72 Also, in Thomas v. Bible73 the court held that licensed gaming is a matter reserved to the states within the meaning of the Tenth Amendment.74 Since sports gambling is an exercise of states police and revenue-raising

64 65

Id. (citing 28 U.S.C.A. 3703 (2005)). Id. at 174 (quoting S. Rep. No. 102-248, at 6 (1992), as reprinted in 1992 USCCAN 3553, 3557). 66 Id. (citing United States v. Morrison, 529 U.S. 598, 614 ([S]imply because Congress may conclude that a particular activity substantially affects interstate commerce does not necessarily make it so.)). 67 See 28 U.S.C. 3702 (2000). 68 Levinson, supra note 2, at 174. 69 United States v. Lopez, 514 U.S. 549 (1995). 70 Levinson, supra note 2, at 172-173 (quoting Lopez, 514 U.S. at 580 (Kennedy, J., concurring)). 71 Id. at 173. 72 Id. (citing S. Rep. No. 102-248, at 11 (1992), as reprinted in 1992 U.S.C.C.A.N. 3553, 3562). 73 694 F. Supp. 750 (D. Nev. 1988). 74 Id. at 760. 8

powers, the federal government should not be able to prohibit it.75 II. RATIONALES FOR LEGALIZED SPORTS GAMBLING A. Legalized Sports Gambling will Significantly Raise State Revenue One of the biggest reasons sports gambling should be legalized is because it would afford the states a way to raise revenue. In 1999, the National Gaming Impact Study Commission found that between $80 billion and $380 billion is wagered illegally in the United States each year.76 Since this money is wagered illegally, the states have no way to tax it. In Nevada, where gambling is legal, the state can tax the money that is made by the sports books.77 In 2008, the 177 licensed sports books in Nevada had a revenue of $136,441,000.78 If sports gambling were legalized in other states, the states could tax a percentage of all gross casino revenue.79 This money could be used to fund important state-wide programs. In an article about sports gambling, Forbes magazine staff editor Ari Weinberg wrote: The math for further legalization of sports wagering is compelling. The administrative infrastructure to handle sports gambling is already in place--at least in the 42 states and territories that run lotteries. If Oregon, with just 3.4 million people, contributes $2.5 million per year to higher education, a state like New York or Massachusetts could hypothetically raise an additional $24 million each for their university systems.80 There is so much money involved with sports gambling that is going to nothing; being

75 76

See generally Levinson, supra note 2. NATL GAMBLING IMPACT STUDY COMMN, FINAL REPORT 2-14 (1999) available at http://govinfo.library.unt.edu/ngisc/reports/2.pdf. 77 NEV. REV. STAT. 463.250 (2001). 78 NEV. GAMING CONTROL BD., GAMING REVENUE REPORT (2008), http://gaming.nv.gov/documents/pdf/1g_08dec.pdf. 79 See, e.g., NEV. REV. STAT. 463.250 (2001). 80 Ari Weinberg, The Case for Legal Sports Gambling, FORBES, Jan. 27, 2003, http://www.forbes.com/2003/01/27/cx_aw_0127gambling.html. 9

able to tax this money would benefit many people and organizations.81 Individuals who win money on sports wagers could also be taxed.82 With most sports gambling being done illegally, individuals who win a sum of money dont report their winnings.83 This is money that could be taxed simply by having people fill out forms when collecting their money from a licensed sports book. Legalized sports gambling would also benefit the states by way of indirect revenue.84 The casinos that have licensed sports books would get more people to enter their facility, which in turn would increase non-sports related activity in these casinos.85 The states would also benefit from taxes on other industries that help facilitate these actions. Traveling, lodging, and tourism industries would get an increase in taxable revenue from people wanting to gamble on sports.86 The economy of the states would benefit by an increase in the number of jobs available.87 Casinos would need to hire a number of people to work in their sports books.88 Due to increased casino activity, the number of employees needed for maid services, valet parking, food/beverage servers, and general casino personnel would also increase.89 Opponents of legalized sports gambling claim that revenue earned by the states through sports gambling is not enough to justify the waste and destruction attendant to the practice.90 This argument ignores the fact that

81 82

See id. See, e.g., NEV. REV. STAT. 463.250 (2001). 83 See Udovicic, supra note 43, at 417. 84 See Levinson, supra note 2 at 152. 85 Id. at 153. 86 See id. at 152-153. 87 See Slavin, supra note 25, at 741. 88 Id. 89 Id. (citing Proposed Legislation Banning College Sports Wagering: Hearing on H.R. 3575 Before the U.S. H. Comm. on the Judiciary, 106th Cong. (2000) (statement of Frank J. Fahrenkopf, Jr., President and CEO, American Gaming Association)). 90 Bradley, supra note 28, at 6. 10

the waste and destruction caused by sports gambling is coming from illegal sports gambling, not legal sports gambling.91 B. Legalized Sports Gambling will Stifle Organized Crime Operations By prohibiting state-sanctioned sports gambling, the federal government is allowing illegal gambling organizations to get the benefit from the demand for sports gambling.92 Organized crimes biggest source of revenue is sports gambling.93 These illegal organizations are making money that in all likelihood is going to fund other illegal activities.94 In other words, PASPA is placing sports gambling exclusively back into the hands of Organized Crime.95 A prime example of this involved the Borgata Casino in Atlantic City, New Jersey. In late 2007, authorities discovered an illegal sports gambling ring was being run in the Poker Room at the Borgata Casino.96 The men who were arrested and charged for running this illegal sports gambling ring had ties to organized crime.97 In a two year span, the operation made $22 million dollars on illegal sports gambling.98 The people who lost their bets were forced to take out loans with an interest rate of over 50%.99 Another example of organized crime being in control of illegal sports gambling
91

See Student Athlete Protection Act: Hearings on H.R. 3575 Before the House Comm. On the Judiciary, 106th Cong. (2000) (prepared testimony of Bobby L. Siller, Member, Nevada Gaming Control Board), ([A] bill banning college sports wagering in Nevada does not address the issue. The real issue and threat to college sports is illegal gambling - not Nevadas legal sports gambling.). 92 See John Warren Kindt & Thomas Asmar, College and Amateur Sports Gambling: Gambling Away Our Youth?, 8 VILL. SPORTS & ENT. L.J. 221, 240 (2003). 93 Id. (quoting Philip Bloomer, Experts Detail Problems From Sports Betting, The News-Gazette, (Champaign, Ill.), Apr. 4, 2000, at B1 (sports betting is organized crimes biggest single revenue source.)). 94 See id. 95 Fecteau, supra note 6, at 44. 96 David W. Chen, 23 are Charged with Illegal Sports Betting at Borgata Casino in Atlantic City, N.Y. TIMES, Nov. 15, 2007, available at http://www.nytimes.com/2007/11/15/nyregion/15bust.html. 97 Id. 98 Id. 11

occurred in the mid-to-late 1990s. Joseph Massimino, who was a high-level associate of the Bruno-Scarfo organized crime family, was arrested for facilitating illegal sports gambling.100 Massiminos operation made between $50,000 and $100,000 per week before it was eventually discovered and shut down.101 Illegal gambling operations do more than just take the money of people who lose. These operations are also increasing the need for loan-sharks.102 With some loan-sharks charging an interest rate of over 50%, people can get into trouble fast.103 Having to go to a loan-shark to pay off an illegal gambling debt can have dire consequences, including rape and death.104 If sports gambling were legalized, the licensed sports books could allow people with gambling debts to set up affordable payment plans. This would allow a safer alternative to going to a loan-shark. Sports gambling and alcohol are often viewed as being fairly similar vices.105 In 1919, Congress prohibited the manufactur[ing], sale, or transportation of intoxicating liquors within [. . .] the United States . . . .106 This prohibition on alcohol served to facilitate the rise of organized crime and illegal alcohol operations.107 Fourteen years later, Congress realized that an outright ban on this vice was doing more harm than

99

Id. Ranking Member & Associate of Phila.-South Jersey Organized Crime Family Plead Guilty to Racketeering ChargesEach Faces 10 Years in State Prison, CRIMINAL JUSTICE NEWS, Mar. 4, 2004, http://www.state.nj.us/lps/dcj/releases/2004/massimino_plea_0304.htm. 101 Id. 102 See Udovicic, supra note 43, at 418. 103 Chen, supra note 83. 104 See, e.g., K.C. Howard, Jury Finds Man Guilty in Slaying at Imperial Palace, LAS VEGAS REVIEW-JOURNAL, June 6, 2007, http://www.lvrj.com/news/7860027.html. 105 See Fecteau, supra note 6, at 49. 106 U.S. CONST. amend. XVIII, repealed by U.S. CONST. amend. XXI. 107 Levinson, supra note 2, at 175 (citing Mark Thornton, Alcohol Prohibition Was a Failure, DRUG LIBRARY, Nov. 20, 2005, http://www.druglibrary.org/Schaffer/alcohol/pa-157.html.
100

12

good.108 In 1933, the Twenty-first Amendment was ratified, effectively ending the prohibition of alcohol.109 The prohibition on sports gambling is doing the same thing the prohibition of alcohol did - allowing organized crime to thrive.110 Organized crime is benefiting from the prohibition on state-sanctioned sports gambling, and it is not going to stop any time soon unless people have legitimate opportunities to gamble on sports legally.111 In retrospect, making something illegal only prescribes what conduct is punishable; it does not mean that the new legislation is going to be productive or solve the problem.112 Legalizing sports gambling would help undercut illegal wagering operations and give individuals an arena to safely wager on sporting events.113 C. Legalized Sports Gambling will Help Prevent Fraud and Corruption Another reason sports gambling should be legalized is because people are going to do it regardless of whether it is legal or not. The problem in America today isnt sports gambling, its illegal sports gambling.114 PASPA is forcing sports gambling further underground,115 where it is susceptible to being run by organized crime. Some people enjoy adding a little more excitement to the games, and are determined to back their

108 109

See id. U.S. CONST. amend. XXI. 110 See Levinson, supra note 2, at 175. 111 See Kindt & Asmar, supra note 92, at 240. 112 Clark Jr., supra note 22, at 207 (citing Cabot & Faiss, supra note 18, at 41). 113 Levinson, supra note 2, at 175. 114 See Student Athlete Protection Act: Hearings on H.R. 3575 Before the House Comm. On the Judiciary, 106th Cong. (2000) (prepared testimony of Bobby L. Siller, Member, Nevada Gaming Control Board), ([A] bill banning college sports wagering in Nevada does not address the issue. The real issue and threat to college sports is illegal gambling - not Nevadas legal sports gambling.). 115 See Fecteau, supra note 6, at 49; see also Student Athlete Protection Act: Hearings on H.R. 3575 Before the H. Comm. on the Judiciary, 106th Cong. (2000) (prepared testimony of Fahrenkopf). 13

sports enthusiasm with a wager.116 University of Louisville head basketball coach Rick Pitino once said, I was always amazed at the people who stayed until the end of a game. Somebody finally told me why: the point spread.117 Being able to wager on a game gives ticket-holders added incentive to stay until the end of the game, which in turn maintains the intensity and enjoyment that would be lacking if all of the spectators left early. These people just want to place a bet, and unless they are in Nevada, they are not allowed to do so. Unless a person spends what could be hundreds of dollars getting to Nevada, the only opportunity that person has to place a wagers is to do it illegally through an underground bookie or on the internet. To some, the ease of placing a wager on the internet through an off-shore sports book is more appealing than traveling to Nevada.118 Internet gambling has become a very large industry.119 The problem with internet gambling is that it is very susceptible to fraud and corruption.120 The owner of an online casino could very easily close down its website after taking deposits from people wanting to gamble.121 Since a majority of these online casinos are based off-shore, it is very difficult for the United States to obtain jurisdiction over them and prosecute them.122 In order for the United States to obtain jurisdiction over an online casino, the casino must be incorporated here, any of its owners or operators [are] U.S. citizens, or any of the owners or operators [are] physically

116 117

Fecteau, supra note 6, at 44. Tim Layden, Bettor Education-Gambling in College, SPORTS ILL., Apr. 3, 1995 at 68, available at http://vault.sportsillustrated.cnn.com/vault/article/magazine/MAG1006405/index.htm. 118 See generally Cabot & Faiss, supra note 18. 119 See Levinson, supra note 2, at 155-156 (citing Keith Furlong, Gaming Continues as an Internet Success Story, Despite Obstructions from U.S. Government: The Industry Uses Self-Regulation To Fill the Void Left by Governmental Inaction, 9 GAMING L. REV. 211 (2005)). 120 See Udovicic, supra note 43, at 413. 121 Cabot & Faiss, supra note 18, at 12. 122 See generally id. 14

present and arrested in the United States.123 Problems like this could be avoided by allowing states to have licensed sports books. In Nevada, unlike on the internet, licensed sports books are required to have reserves to pay winning bets.124 This ensures that people who win their bets will get paid. It is very difficult to regulate internet gambling. Legalizing sports books in United States casinos would help protect gamblers from illegitimate online casinos. It would provide people an opportunity to place wagers in a forum that they know is regulated and sanctioned by the state. If sports gambling in licensed sports books in the United States is legalized, the government would be wise to crack down on internet gambling. Otherwise, people may still be tempted to gamble online from the comfort of their own homes. We already have the framework for governmental regulation of internet gambling in the Wire Act of 1961 (Wire Act)125 and the Unlawful Internet Gambling Enforcement Act (UIGEA).126 The Wire Act makes it illegal to use wire communications to conduct a betting business.127 Read broadly, the Wire Act is applicable to internet connections.128 United States v. Baborian129 interpreted the Wire Act as applying only to those in the business of gambling and not mere betting.130 This means the Wire Act has no effect on recreational gamblers. Congress should amend the Wire Act to encompass all people

123

Id. at 28 (citing United States v. Juda, 46 F.3d. 961, 976 (9th cir. 1995)); see also generally United States v. Cohen, 260 F.3d 68 (2d Cir. 2001), cert. denied, 536 U.S. 922 (2002). 124 Nev. Gaming Reg. 22.040 (2000). 125 18 U.S.C. 1084 (2000). 126 31 U.S.C. 5361-5367 (2000). 127 See Shekel Masoud, The Offshore Quandary: The Impact of Domestic Regulation on Licensed Off-Shore Gambling Companies, 25 WHITTIER L. REV. 989, 993-994 (2004). 128 Id. 129 528 F. Supp. 324 (D.R.I. 1981). 130 Id. at 328. 15

placing bets, not just those in the business of gambling. To further government regulation of internet gambling, the UIGEA was passed in 2006 in order to stop unlawful internet gambling.131 The UIGEA is aimed at financial providers and prohibits certain transactions between the financial providers and online casinos.132 The UIGEA is an attempt to eliminate the means generally used to gamble, including credit cards and wire transfers.133 The statute had been considered incomplete since its enactment, but the final regulations for the UIGEA have recently been put into effect134 and will likely result in the UIGEA being enforced.135 Between the Wire Act and the UIGEA, the government is able to crack down on illegal internet gambling. This could in turn encourage people to gamble at state-sanctioned sports books instead of doing it illegally on the internet. III. ARGUMENTS AGAINST LEGALIZED SPORTS GAMBLING ARE UNFOUNDED A. Legalized Sports Gambling will Not Affect the Integrity of Sports One of the biggest counter-arguments against the legalization of state-sanctioned sports books is that it threatens the integrity of sports.136 During the Senate hearings on PASPA, NFL commissioner Paul Tagliabue argued that [s]ports gambling threatens the character of team sports.137 However, supporters of the legalization of sports gambling question how much integrity these sports currently have.138 Supporters of sports

131

See generally Nelson Rose, New UIGEA Regs put Benefits and Burdens on States, 13 GAMING L. REV. & ECON. 1 (2009). 132 31 U.S.C. 5361-5367 (2000). 133 See generally Rose, supra note 131. 134 See generally id. 135 See generally id. 136 See Fecteau, supra note 6, at 46-47; see also generally Bradley, supra note 28. 137 Levinson, supra note 2, at 176 (quoting S. Rep. No. 102-248, at 4 (1992) reprinted in 1992 U.S.C.C.A.N. 3553, 3555). 138 See id. 16

gambling say that there is very little integrity left, and point to the steroid scandals,139 violence,140 sex,141 alcohol,142 and eligibility issues143 in many of the most popular sports. There are many problems in the world of sports - sports gambling is only one of them. The professional sports leagues need to worry less about people gambling on their games, and worry more about their own players ruining the integrity of the sports.144 Sports gambling is going to occur whether it is legalized or not. Legalizing it will make it much easier to regulate. The notion that once sports gambling is made legal, the integrity of the game will somehow suffer, is a very weak argument. For one, sports gambling is already legal in Nevada.145 Expanding the legalization of sports books to other states will not lower the integrity of sports, it will help keep sports gambling out of the hands of the people who are truly a threat to the integrity - organized crime.146 B. Legalized Sports Gambling will Prevent, Not Create, Betting Scandals Supporters of PASPA point to the number of betting scandals involving athletes as a reason to prohibit legalized sports gambling.147 Sports wouldnt be any more susceptible to betting scandals if sports gambling were legalized than they currently are. Nearly all of the betting scandals have been associated with illegal betting, and not legal

139

See, e.g., Bill Pennington, Baseball Bars Longtime Star for Steroid Use, N.Y. TIMES, Aug. 2, 2005, at A1, available at http://www.nytimes.com/2005/08/02/sports/baseball/02palmeiro.html. 140 See, e.g., Liz Robbins, One Player Barred for Season as N.B.A. Responds to Brawl, N.Y. TIMES, Nov. 22, 2004, at A1, available at http://www.nytimes.com/2004/11/22/sports/basketball/22brawl.html. 141 See, e.g., Pat Borzi, On Water and on Turf, Vikings are Finding No Place to Hide, N.Y. TIMES, Oct. 18, 2005, at D4, available at http://www.nytimes.com/2005/10/18/sports/football/18vikings.html. 142 See, e.g., Joshua Robinson, Yankees Pitcher Apologizes for Error, N.Y. TIMES, Oct. 20, 2008, at D8, available at http://www.nytimes.com/2008/10/20/sports/baseball/20yankees.html. 143 See, e.g., Lynn Zinser & Thayer Evans, UConn Reportedly Violated Rules, N.Y. TIMES, Mar. 26, 2009, at B17, available at http://www.nytimes.com/2009/03/26/sports/ncaabasketball/26UConn.html. 144 Levinson, supra note 2, at 177. 145 NEV. REV. STAT. 463.160 (2001). 146 See Fecteau, supra note 6, at 44. 147 See Udovicic, supra note 43, at 410-414. 17

betting.148 Professional athletes make hundreds of thousands, if not millions, of dollars a year. Legalizing sports gambling would not make professional athletes more likely to throw a game than they already are.149 Student-athletes would be more susceptible to scandals than professionals athletes.150 Student-athletes are not paid for their participation in amateur sports.151 However, this hurdle can be overcome by establishing regulations that place a limit on the amount of money that can be wagered on intercollegiate sports. If there isnt a large sum of money to be won, student-athletes are less likely to be paid off. There are also a number of federal laws and NCAA regulations that prohibit people from doing anything that effects the outcome of a game.152 Although these laws and regulations alone may not stop everyone from getting involved in a betting scandal, combining them with limits on the amount of money to be won will reduce the likelihood that a student-athlete will get involved. Furthermore, legalized sports books would increase the chances of uncovering any betting scandals, not cause more of them. The licensed sports books in Nevada use state of the art technology to discover betting irregularities.153 The technology is very powerful and can be used to determine when there could be a betting scandal at hand.154 Other states would be required to follow in Nevadas footsteps and establish a strict regulatory scheme. For example, all of the licensed sports books in Nevada are required

148

Lori K. Miller & Cathryn L. Claussen, Online Sports Gambling -- Regulation or Prohibition?, 11 J. LEGAL ASPECTS SPORT 99, 106 (2001). 149 See Udovicic, supra note 43, at 403. 150 Id. 151 Id. 152 E.g., 18 U.S.C. 224 (2000). 153 Fecteau, supra note 6, at 48. 154 See id. 18

to use a computerized bookmaking system approved by state regulators.155 This system creates detailed records of every transaction.156 The Nevada sports books look at every little detail when monitoring betting activity, and are required to report anything that looks suspicious or illegal.157 This is a very effective way of uncovering betting scandals.158 If these regulations were used in other states with legalized gambling, the likelihood of finding any and all betting scandals would greatly increase. C. Sports Gambling is No Longer Seen as a Vice Another counter-argument against the legalization of sports gambling is that if sports gambling is allowed, drugs and prostitution would also have to be allowed.159 However, the fact of the matter is that people see drug use and prostitution as being a serious problem which gambling on sports doesnt compare to.160 Gambling is no longer seen as being as morally wrong as drug use or prostitution.161 In fact, gambling has become an accepted part of our culture.162 Gambling is no longer a corrupting vice and has become a socially acceptable activity.163 [I]n 1996, 92% of Americans were in agreement that casino gambling is acceptable entertainment.164 Unlike drugs and prostitution, sports gambling is no longer considered a vice, and should be legalized.165

155 156

Nev. Gaming Reg. 22.100 (2000). Cabot & Faiss, supra note 18, at 18. 157 Id. (citing Nev. Gaming Reg. 22.120 (2000)). 158 See id. 159 See generally Udovicic, supra note 43. 160 Id. at 404. 161 Id. 162 Id. 163 Stephen M. McKelvey, U.S. Professional Sport Organization Policies Shift to Embrace Legalized Gambling Entities: A Roll of the Dice?, 14 J. LEGAL ASPECTS SPORT 23, 26 (2004). 164 Id. (citing Nicholas S. Goldin, Casting a New Light on Tribal Casino Gaming: Why Congress Should Curtail the Scope of High Stakes Indian Gaming, 84 CORNELL L. REV. 798, 800 (1999)). 165 For a discussion on the legalization of such things as drugs and prostitution, see Richard A. Epstein, The Moral and Practical Dilemmas of an Underground Economy, 103 YALE L.J. 2157 (1994). 19

IV. PROPOSED RULES AND REGULATIONS Legislation legalizing sports gambling should include many regulations and restrictions. First, each state should include a section in their gaming legislature that enumerates certain powers and duties to a state-run Sports Gambling Commission.166 This Commission would be in charge of creating regulations consistent with the intent of the legislature.167 The Commission should be given policing power over the sports books, which would help the regulating and oversight of sports gambling.168 The Commission would be in charge of establishing the tax rates and licensing fees for each sports book.169 For guidance, the Commission should look to the already-established sports books in Nevada. Each licensed sports book in Nevada has to a pay an annual licensing fee.170 The Commission should require each casino that wants a sports book to pay an annual fee. This would add to the amount of revenue each state makes from sports gambling.171 Sports gambling legislation should also restrict the creation of sports books to allow them only in casinos.172 This would prevent small sports gambling shops from popping up on street corners everywhere. By requiring the sports books to be operated by casinos, there is less of a chance for corruption among the people in management positions. Otherwise, small sports gambling establishments could be taken over by

166 167

See Levinson, supra note 2, at 164. See id. 168 See id. 169 See generally id. 170 THE LIQUOR & GAMING LICENSING BD. OF CLARK COUNTY, APPLICATION FOR GAMING LICENSE, http://www.accessclarkcounty.com/depts/business_license/lg/Documents/GAM-GEN-CON%20Apps.pdf. 171 See generally Levinson, supra note 2. 172 See id. at 159. 20

organized crime.173 A person who wants to place a sports wager should also be required to have a form of identification when placing the bet. The sports books should then be required to record the transaction.174 The Commission should keep a very detailed database that records who placed a bet, how much they wagered, when they wagered, and whether or not they won.175 This database could be used to expose betting scandals and tax evaders.176 This database could also detect when a person with ties to a sports organization attempt to place bets. The Commission should create a regulation that prohibits any person involved in athletics from betting on sports.177 If an athlete, coach, general manager, etc. tries to place a bet, the system could warn the sports book and reject the wager. A person could always just have someone else illegally place the bet for them, but the person placing the bet will be the one getting taxed. This would help prevent people from placing bets for other people. A person should also be required to place the bet in-person at a licensed sports book.178 Phone-in bets should not be allowed. This will make it easier to verify the identification of the person placing the bet. The Commission should also establish various other general limitations on sports gambling. So as not to promote gambling among youth,179 there should be an age restriction. In Nevada, you must be 21 years old to legally gamble on sports.180 Likewise,
173 174 175 176 177 178 179 180

See generally Kindt & Asmar, supra note 92. See generally Cabot & Faiss, supra note 18. See generally id. See generally id. See Levinson, supra note 2, at 162. See generally id. See Udovicic, supra note 43, at 416. NEV. REV. STAT. 129.130. 21

the Commission should prohibit anyone under the age of 21 from placing a sports wager.181 The amount of money that a person can wager on a game should also be regulated.182 The Commission should set maximum betting limits on each game. If a person isnt allowed to wager huge amounts of money, there is less likelihood that that person would try to fix a game.183 Maximum betting limits would also help prevent independent bookies from taking wagers from excluded persons184 and placing their bets for them. Another regulation that should be established by the Commission is the uniformity of the betting options among the sports books.185 All the of the sports books should be required to have the same or significantly similar point-spreads, over/unders, money-lines, etc.186 If there is uniformity among the sports books, people wont have to travel large distances to get a favorable bet. If a person knew that they could get a better point-spread in a different sports book, but could not travel the distance to get there, there is a possibility that they would try and get someone else to place their bet for them. Uniformity among the sports books would prevent this from happening. One of the most helpful things the Commission could do is create programs for people who think they have a gambling problem.187 These programs could be funded by

181 182

See Levinson, supra note 2, 162. Id. at 166. 183 See generally id. 184 An excluded person is a person who has been banned from a casino for violating laws, rules, or regulations. See generally William N. Thompson, Robert W. Stocker II, & Peter J. Kulick, Remedying the Lose-Lose Game of Compulsive Gambling: Voluntary Exclusions, Mandatory Exclusions, or an Alternative Method?, 40 J. MARSHALL L. REV. 1221 (2007). 185 See generally Levinson, supra note 2. 186 See generally id. 187 See generally id. 22

the money generated from sports gambling. This would give a person who feels they are addicted to sports gambling a way to get help. These programs should be extensive and completely confidential. CONCLUSION Americans spend billions of dollars each year illegally gambling on sports.188 Until PASPA is repealed, sports gambling will continue to be run through organized crime and unregulated internet casinos.189 Legalized sports gambling will deprive organized crime of their single biggest revenue source, allowing the states to receive this revenue.190 Although there are a few minor concerns involving the legalization of sports gambling, the economic benefits each state will receive far outweigh these concerns.191 PASPA should be repealed, and sports gambling should be legalized throughout the United States.192

188

See NATL GAMBLING IMPACT STUDY COMMN, FINAL REPORT 2-14 (1999) available at http://govinfo.library.unt.edu/ngisc/reports/2.pdf. 189 See discussion supra Part II.B-C. 190 See discussion supra Part II.A-B. 191 See discussion supra Parts II-III. 192 See discussion supra Part II. 23