Hatch’s bill would take sportsbook licensing decisions away from states and hand them to the federal government.
A new draft piece of legislation from the office of Sen. Orren Hatch (R-Utah) would require all sportsbooks to be approved by the U.S. Attorney General. Orrin Hatch, who is retiring from the US Senate at the end of the month, is a longtime opponent of gambling in the United States and one of the authors of the PASPA law which the US Supreme Court struck down in May.
Chris Cylke, the VP of Government Relations for the American Gaming Association (AGA), released a statement of concern about the newly released bill.
In the state, Chris Cylke said, “Since the Supreme Court’s ruling in May, the American Gaming Association has consistently maintained that federal legislation regarding sports betting is not necessary.”
The AGA, whose board members are a who’s who of US casino, lottery, racing, and gaming equipment companies, prefers state-level to federal oversight of the gaming industry. It’s spokesman’s statement continued, “That underlying position remains unchanged. At the same time, we remain committed to maintaining an open and constructive dialogue with policymakers considering sports betting legislation at any level of government.”
National Sports Wagering Clearinghouse
Orrin Hatch’s proposed legislation would created the National Sports Wagering Clearinghouse, which would be responsible for detecting suspicious betting activity. The Clearinghouse would require amending of the 1961 Wire Act to require states to share information on sports betting.
The 37-page bill also would target companies which accepted real money American bets on or after October 13, 2006. That is the day the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed.
PokerStars Targeted in Hatch Bill
If the bill is passed, then it would undermine PokerStars’ inroads in the US gaming market. PokerStars is the most prominent “bad actor” which took American bets after the UIGEA went into effect. The world’s largest poker site famously was sanctioned by the U.S. Justice Department on Black Friday (April 15, 2011), when the DOJ seized domains of several poker sites and indicted 13 of their executives.
PokerStars has been approved for online gaming by the Division of Gaming Enforcement in New Jersey and the Gaming Control Board in Pennsylvania. PokerStars also recently signed a deal with Eldorado Resorts, an owner of 20 land-based casinos with properties in 12 states nationwide.
The deal would allow PokerStars to launch gaming skins under the Eldorado casino licenses in states which allow online gambling. If the Hatch bill were passed in Congress and signed into law by President Donald Trump, those various PokerStars deals and licensing arrangements would fall by the wayside.
Proposed Federal Sports Betting Law
Since the US Supreme Court ruled on May 14, 2018 that the Professional and Amateur Sports Protection Act of 1992 was unconstitutional, a number of states have moved to legalize single-game sports bets. New Jersey, Mississippi, and West Virginia all passed pro-sports betting bills, while Delaware changed from sports lotteries to single-game sports bets.
Meanwhile, Pennsylvania, New York, Massachusetts, Louisiana, Indiana, Michigan, Virginia, Maryland, and the District of Columbia have discussed legalizing sports betting. While all of those states might not decide on legalization, the chances of expansion are great.
Orrin Hatch’s Sports Betting Bill
Readers might think the Supreme Court’s 6-3 ruling precludes such actions. The SCOTUS decision stated that the decision to legalize sports betting in 4 states while banning it in 46 states was a violation of the dual sovereignty and equal protection clauses of the US Constitution.
In effect, the US Congress can ban sports betting in all 50 states, regulate sports betting in all 50 states, or allow the individual state government to regulate the industry on their own. Congress cannot pick and choose favorites. If the US Congress passes Orrin Hatch’s bill, it would be constitutional and would become the law of the land.
Will Orrin Hatch’s Bill Gain Traction?
The question then becomes: will the US Congress pass Hatch’s draft legislation? Given the large number of US states which stand to gain tax revenues from legalized sports betting, a 50-state ban is off the table. Even in 1992, when the public mood against gambling was much greater, the sports leagues could not convince the Congress to ban sports betting in Nevada, Delaware, Montana, and Oregon. Such a ban would be far less possible nowadays.
That is where Sen. Orrin Hatch’s legislation is such a danger. His bill would allow states to legalize sports betting and collect revenues. It only would give the federal government the right to ban certain operators — to pick and choose favorites at an individual company level (instead of a state level).
In a time when the U.S. Interior Department is favoring commercial casino operators over tribal casinos, the development could hurt tribal gaming is the new US attorney general followed the policies of Ryan Zinke. Or it might allow casino companies which successfully lobby the DOJ to gain special status, while companies which offend President Trump and his officials might find themselves without sports betting.
Will Sports Betting Be Approved in Lame-Duck Session?
Whether enough votes in the US Congress exist to allow such a bill to pass is questionable. When Restore America’s Wire Act (RAWA) was championed by Lindsay Graham and Jason Chaffetz from 2014 to 2016, many conservatives in their own party opposed it, because it would expand federal authority and harm states rights. Sen. Rand Paul, ex-Rep. Ron Paul, and tax activist Grover Norquist famously came out against RAWA.
Those same politicians likely would challenge federal oversight of sports betting. State governments would want to maintain the authority to license sportsbooks, instead of giving bureaucrats and officials in Washington DC do it.
The real danger could be if the Hatch bill went the way of the UIGEA in 2006. The UIGEA was unpopular and could not gain the votes it needed to pass Congress, but the Republican-controlled Senate and House attached it to the Safe Port Act — a bill few patriotic congressman would vote against. Thus, UIGEA was snuck into US federal law through backroom deals.
Will Lame-Duck Congress Pass Sportsbook Bill?
Lame-duck congresses are notorious for passing unpopular bills. Many retiring or defeated lawmakers in a lame-duck session have nothing to lose, because they soon will be lobbyists, corporate executives, or simple retirees. They’ll pass legislation they never would pass normally.
Meanwhile, the Congress has to pass a year-end budget. With an omnibus spending bill coming between December 12 and the end of the month, the departing Republican majority could attach the Hatch bill to the omnibus spending bill. Lawmakers either would not notice — or would not dare vote against — a bill on which a government shutdown hinged.
While it seems a longshot to pass a federal sports betting bill by the end of the year, the 84-year old Sen. Orrin Hatch released draft legislation with 3 weeks to go before retirement. A bill passing through a divided US Congress next year seems less likely, so the intention appears to be to pass the bill in 2018. The AGA, pro-sports betting states, and sports bettors across the United States better watch out.
