Pending either outcome, a sure bet for sports wagering's future
The official court document brief reads "Governor Christopher J. Christie vs. the NCAA" indicating a legal appeal on behalf of the State of New Jersey. But, next Monday's Supreme Court oral argument hearing represents at least 20 other supporting United States filing an amicus brief and many more states on guard to learn a crucial outcome, as their state budgets and business plans involve this SCOTUS historic decision. Both casual and dedicated sports bettors will ultimately be dramatically affected. The casino industry stands by already planning their potential billion-dollar strategy. To place it in comparable perspective, the court's deciding vote anticipated in the first half of 2018 is the "Super Bowl of Super Bowls".
But like many Super Bowls, we are often left extremely disappointed in the expected outcome. Many don't remain forever cherished, comparable to last year's historic New England Patriots 34-28 OT comeback over the Atlanta Falcons. Do you recall only four years ago the Seattle Seahawks quickly blew out the Denver Broncos 43-8? No excuses for a strong Broncos team that day featuring a younger Peyton Manning at quarterback.
The point being is champagne may flow should the Supreme Court indeed strike down PASPA (the Professional and Amateur Sports Protection Act of 1992). But there is strong evidence the wagering public will be disappointed and bewildered making their first legal non-parlayed sports bet outside the state of Nevada in 2018. Before examining a typical ground-breaking Sunday card of NFL action in a New Jersey or Pennsylvania sports wagering palace, let's shine the reality flashlight on the legal operator putting out the games. A potential U.S. state licensed bookmaker, facing a long list of new laws, regulations, partner sharing and tax-imposed restrictions upon their sports wagering business.
A Cloudy Profit Pie
It has been impossible to accurately name or forecast the actual U.S. wagering dollars connected to its biggest sports wagering contributors, the NFL and the NCAA Basketball Championship Tournament, "March Madness". Toss in Major League Baseball, NBA basketball, NHL hockey plus several other ancillary sports and reasonable total guestimates have ranged anywhere from $60 to $150 billion per year. With only perhaps 3% of Nevada sports wagering included, the majority 97% is consigned to the illegal contribution of offshore wagering and street bookmakers. It is one of the main appellate cores in the case and a guiding support function from the American Gaming Association (AGA). A huge valuable base to provide legal taxable income to fill a void for either federal and/or state governments. Also, a plus to provide new jobs in an already saturated industry.
Although both Las Vegas and Reno, Nevada sportsbooks account for a very minor amount of overall U.S. sports wagering action, they still are a legitimate and fair representation of current profit margins and customer behavior in the sports wagering industry over an extended period. It's never prudent to write business plans anchored on only an estimated 3% of sales, but the legal base of Nevada sports wagering action has provided accountable results compared to the entire casino landscape of profit and consumer demand.
Thus far, while providing a profit, Nevada sportsbooks do not provide a similar generous percentage of profit versus table games, slot machines and other forms of gaming in a typical casino. Keep in mind, this has been accomplished with a relative small Nevada tax rate and moderate operating costs. Unlike table games, balancing action on sporting events to guarantee the house margin vigorish or "juice" is also challenging day to day. However, over the course of a full year it is possible to guarantee a near specific profit margin within a documented cost structure.
The New Pie
Should the Supreme Court repeal PASPA and rewrite a new set of terms there are many clouds and questions that both operators and bettors should be concerned about. While celebrating a possible victory for either federalism, state's rights and the opportunity to wager on sports throughout the U.S., it could be quite costly for both sides. Here are the major hurdles gaming operators will likely be facing:
Taxes. We've already learned from recent headlines in Pennsylvania how the new game will be played. After several defeats, it was stunning to see PA quickly approve online gaming with expanding gambling for truck stops, bars and airports. Perhaps more stunning was witnessing a massive 54% tax attached by PA legislators. Unlike neighboring state New Jersey, the controversial, uncompetitive tax rate will eliminate some operators and crush bottom line profits. Expect a similar situation should PASPA be reversed.
Licensing Fees. A huge unknown and murky cloud will be who must be included as participatory partners. Although the NCAA is listed on the court document, the NFL stands as the primary blocking force for any action to be taken. All rules and regulations must be written within their guidelines along with the NBA, MLB and NHL. It is possible their mandatory cooperation will directly or indirectly drive up prohibitive licensing fees for operators. It will be quite expensive to "protect the integrity of the game" as the NFL has lobbied for many years.
Many legal and industry experts have suggested it is also possible that the NCAA may be eliminated from any legal wagering appeal and written out of any PASPA reversal. However, the problem in that outcome is providing a monopoly for illegal offshore and street bookmaking operators. It would virtually keep all preferred offshore sportsbooks in business within the U.S. with two major menu items to build upon. NCAA Football and NCAA Basketball, including the multi-million-dollar March Madness NCAA Tournament.
Online Gaming. Although not listed in the oral court appellate hearing, the current and future status of U.S. online gaming is still very much in doubt.
Currently, anyone over legal age can wager online on sporting events on either a computer or cell phone within Nevada limits through their casino applications. IE: bets that are deposited and withdrawn at legal Nevada sportsbook locations. It has not been determined yet if this practice will extend to other states through federal or state laws should PASPA be reversed.
It has been strongly suggested by many industry insiders that U.S. online gaming in its entirety could potentially be eliminated in the future. An exchange for enforcing the 1961 Wire Act as currently being lobbied by casino magnate Sheldon Adelson and documented through his RAWA campaign (Restoration of America's Wire Act). If succeeded, it could result in another major victory for offshore gaming operators, providing bettors the sole convenience of wagering sports online along with other ancillary casino games. While bettors would be able to deposit and withdrawal at various U.S. state casino locations, it is possible they may not be able to legally bet on anything online.
All Bets Down
The fact the Supreme Court of the United States has agreed to hear the PASPA appeal on December 4th has been regarded by many as a monumental surprise and upset. Some indicating the ultimate flag of victory. Although it is impossible to predict an outcome, there will be definitive changes in sports wagering behavior for U.S. bettors in 2018 either way. Next week we'll examine the "what ifs" should PASPA be repealed for bettors (or not) and how they potentially will be affected in the future.
For the curious, Senator Bill Bradley, author of PASPA is alive and retired but will not be involved in any oral arguments or opinions regarding the potential appeal before the Supreme Court on December 4th. He was last heard in September voicing his displeasure against President Donald Trump criticizing the NFL and NBA for kneeling in their protest against the leagues. Bradley in a statement said Trump shows "a fundamental misunderstanding of what makes us great as a country, and as human beings — not to mention a fundamental misunderstanding of what sports is actually about."
Translated: Democracy. And the right to peacefully and legally voice (or bet) your opinion within the law.
Glenn Greene covers the games from a betting angle every week exclusively at OSGA.com. For weekly betting insights, inlcuding previews and picks from Glenn, click here.