Because the federal government tends to stay out of the states’ way when it comes to gambling, when Rep Paul Tonko introduced a bill to clamp down on sports betting advertising, the industry paid little heed and largely dismissed it.
How could the inept federal government ever come together around this issue? Why will Congress put time and energy into sports betting when it has more pressing issues?
My first thought was not to dismiss it out of hand. Instead, my mind went to the Heath Ledger Joker meme from the Dark Knight … And here we go.
It’s true that states largely control their own gambling destiny, but the smattering of current and revoked federal gambling laws have serious consequences, particularly in the online gambling space.
- The Wire Act has been a lightning rod in the online gambling discussion.
- The now-repealed Professional and Amateur Sports Protection Act (PASPA) prevented states from legalizing sports betting for over 25 years.
- The Unlawful Internet Gaming Enforcement Act (UIGEA) has made payment processing a nightmare for legal sites.
- The Indian Gaming Regulatory Act (IGRA) has prevented tribes from entering the online gambling arena as sovereign entities.
- The .25% excise tax on all sports betting wagers acts as an additional 5% tax on operators, with the proceeds disappearing into the federal government’s general fund.
It’s Like Déjà vu All Over Again
Federal action isn’t an archaic idea. The federal government has a recent history (going back just over 15 years) of involving itself in gambling.
- In 2006, Congress inserted UIGEA into the Safe Port Act.
- In 2011, the Department of Justice handed out indictments to the key players at the major online poker sites.
- The same year, the DOJ issued a Wire Act opinion that opened the door to intrastate online gambling.
- Throughout the 2010s, the Restoration of America’s Wire Act (RAWA) hung over the industry like the Sword of Damocles.
- In 2018, the DOJ issued a new Wire Act opinion.
- 2018 also gave us a sports betting hearing and saw Sen. Chuck Schumer and Sen. Orrin Hatch push a sports betting bill in December.
Not all of the above succeeded, but enough did. And they didn’t exactly come out of left field, but these instances caught the bulk of the industry and its customers unprepared. Now, with the temperature gauge turned up and the U.S. online gambling industry facing increasing scrutiny, it’s a little concerning that very few are taking the idea of federal action seriously.
It might not happen this year or next. But it could. More importantly, if the federal government does set its eyes on the industry, it is unlikely to be a positive development. And when it does, expect everyone to act surprised, and say they never saw it coming.