The history of the law at the heart of the seven-year-plus legal battle between New Jersey and the professional sports leagues — the Professional and Amateur Sports Protection Act of 1992 (PASPA) — is replete with irony.
To begin with, it was a former professional athlete with a distinguished 13-year NBA career, Bill Bradley, that originally introduced the bill on Feb. 22, 1991. He presented the proposed legislation while in his role as a Democratic U.S. Senator for none other than the Garden State, a capacity in which he served three terms spanning 1979 to 1997.
Additionally, a key figure that testified before Congress in support of eliminating further expansion of sports betting during the June 26, 1991 public hearing on the subject, then-NBA commissioner David Stern, has now spoken out in favor of the law being amended at a minimum.
Moreover, Murphy vs. NCAA (formerly Christie vs. NCAA), the case that will culminate in a Supreme Court decision by no later than this summer regarding the future of PASPA and U.S.-based sports betting, may have been different in scope or altogether unnecessary had New Jersey acted on a loophole granted by the very law it’s now spent the better part of a decade trying to overturn.
Language added into PASPA by Representative William Hughes gave his district – which included Atlantic City – 12 months from the date of the law going into effect to authorize sports betting within its casinos. Specifically, the provision authorized any municipality that had operated casinos under a state regulatory framework within the prior decade the option of adding sports betting within the year timeframe.
Having had a regulated casino environment in place for the prior 15-plus years at the time, Atlantic City was the only other municipality in the country outside of the state of Nevada that would have qualified.
The Seeds From Which PASPA Sprouted
As is often the case, a brush-up on the past is necessary to best understand how we’ve arrived at present-day circumstances. This is especially true regarding a subject with as robust a history as PASPA.
By 1991, certain groups – including a segment of the legislative population at various levels – began to grow increasingly concerned with what they viewed as a rather sudden and accelerated expansion of gambling interests in the United States.
A report by the Senate Judiciary Subcommittee on Patents, Copyrights and Trademarks prepared at the time minced no words — it positioned sports gambling as a “national problem” and emphasized that the “harm it inflicts” had the potential to proliferate nationwide.
This report, coupled with the aforementioned June 1991 public hearing, essentially served as the final impetus for Congress to codify restrictions on any further expansion of sports-based wagering. The final product, just over 15 months later, would be PASPA.
Gambling Interests Progressively Grow
For decades prior to PASPA’s eventual passage, Nevada had served as the epicenter of money-based gaming establishments in the U.S. The Silver State boasted an abundance of renowned casinos with a variety of gaming options. It also had been the exclusive source of single-game sports betting in the country since 1949.
For its part, New Jersey had subsequently legalized casino gambling specifically for Atlantic City in 1976 in a referendum that passed by a 56%-44% margin. Thus, it became the only other state at the time outside of Nevada to have casinos operations within its borders.
This effectively had compartmentalized legalized gambling (beyond state lotteries, jai-alai and both pari-mutuel greyhound and horse racing) to very specific and limited geographical areas. However, a wide array of gaming initiatives beyond the two states then began gaining steam by the end of the decade.
Native American Indian tribes in both California and Florida began experimenting with bingo halls in 1979 as a means of revenue. This practice was soon expanded by tribes in New York and Wisconsin as the 1980s dawned. Issues over the legality of these and other subsequent operations that included card rooms eventually led to the passing of the Indian Gaming Regulatory Act of 1988.
The non-Native American commercial casino industry was beginning to experience growth as well. By 1991, South Dakota, Iowa, Colorado, Illinois, Mississippi, Louisiana and Missouri had all legalized casinos within the prior three-year period. Indiana was also already on the same path and would reach that mark by 1992.
Limited Sports Wagering Outside of the Desert
To a lesser extent, sports wagering was also taking place in multiple states, albeit in various forms outside of its more well-known iteration in Nevada. Each had its own unique spin on the activity. However, none came close to approximating the level of popularity of the single-game wagering and parlay betting offered by the numerous sports books in Las Vegas.
Oregon had begun offering a parlay card system for the NFL called Sports Action beginning in 1989. NBA games were made available as well beginning in 1990, with the home-state Portland Trail Blazers being exempt. The basketball component was discontinued after one year due to lack of public interest. (Dissatisfaction on the part of both the NFL and NCAA led to the eventual passing of a bill to outlaw Sports Action, making the 2007 NFL season its swan song.)
The Delaware Lottery had offered three-team or greater parlay cards for just the 1976 NFL season before discontinuing the practice. However, the law that permitted it remained on the books and unchanged, albeit dormant.
Post-PASPA passage: A struggling economy in 2009 that saw both the state lottery and the casinos take a significant financial hit led to a proposal by Governor Jack Markell for establishments to add single-game sports betting. It passed the Senate by a 17-2 margin in May of that year.
Unsurprisingly, the leagues became involved in this case as well. The Third Circuit Court of Appeals ultimately short-circuiting The First State’s plans by declaring that NFL parlay cards were the only forms of sports betting that PASPA grandfathered in with respect to Delaware.
Montana had taken a different tack altogether. At the time of PASPA’s passage, non-house-banked betting squares contests in establishments licensed to sell alcoholic beverages. These were allowable under an exemption through a sports pool law. As per regulations, the boards could have up to 100 squares and payouts were required to include the outcome of a full sporting event.
Post-PASPA passage: Montana has also offered pari-mutuel fantasy sports betting through its state lottery, beginning in 2008. Only NASCAR and NFL fantasy contests are available.
Bumpy Legislative History
Once in finalized form, PASPA’s path through the legislative process was ultimately fairly brisk and decisive. However, that’s not to say it didn’t have its share of bumps in the road along the way.
For example, Bradley, who’d carved out exemptions for the aforementioned four states in the original version of the bill, backtracked on that at one point in later 1991, even seeking to ban sports betting in Nevada’s casinos.
The Department of Justice also originally opposed the wording of the bill based on federalism concerns, as did Senator Charles Grassley of Iowa. He was one of the few dissenting votes on June 2, 1992, when PASPA passed the Senate by an 88-5 margin, railing against what he felt was favoritism shown to the four states it made exceptions for.
However, with an abundance of support from the professional sports leagues – then-NFL commissioner Paul Tagliabue had joined Stern and MLB commissioner Fay Vincent in testifying before the Judiciary Committee the year prior — the House of Representatives also overwhelmingly passed PASPA by a voice vote on Oct. 6, 1992.
PASPA was ultimately signed into law by President George H.W. Bush just over three weeks later, on Oct. 28. It officially became effective as a prosecutable law on Jan. 1, 1993.
Exemptions for Four States, Certain Sports
Through its wording (but without mentioning the states explicitly), PASPA exempted the existing sports-based gaming and lotteries in Oregon, Delaware and Montana. It also preserved the status quo in Nevada with respect to its casinos and the comprehensive array of gaming options offered within them, including single-game sports betting.
Furthermore, it contains specific carve-outs for other forms of betting that were already widespread at the time and for gaming activities occurring on designated Native American lands:
A Favorable SCOTUS Decision?
Effects of Full Repeal of PASPA
Due to its far-reaching restrictions, a Supreme Court decision that declares PASPA wholly unconstitutional would theoretically unshackle the remainder of the country with respect to at least considering the implementation of sports betting.
To that end, 16 states have already introduced or reintroduced legislation in 2018 to legalize and regulate sports betting in the event of such a decision. The flurry of activity is the culmination of a flurry of activity that had been progressively building since 2016. That year, five states – California, Delaware, New Jersey, New York and Pennsylvania – pioneered sports betting legalization bills as New Jersey was in the midst of their final appeal prior to successfully attempting to take their case to the Supreme Court.
The matter of sports betting implementation carries an extra layer of intrigue in the 29 states in which a total of 244 Indian tribes operate their own gaming interests. With sports betting not commonly addressed in the tribal-state compacts that govern the scope of gaming offered on Indian reservations — and with some of those states potentially violating the current terms of those compacts by expanding gaming options within their borders — there will presumably be some hoops to jump through for both the tribes and state governments before a full sports betting regulatory framework and operation can be put in place.
Effects of Partial Repeal
A partial victory that leaves PASPA in place but allows New Jersey to proceed would be a step in the right direction and ostensibly set important precedent. Yet it would also require further legal legwork on the part of other states.
How exactly New Jersey moves forward from that point would likely serve as a template. A victory based on partial PASPA repeal would equate to the state’s prior decriminalization of sports betting being allowed to stand. However, it would also prevent it from regulating the activity in any way, based on PASPA’s wording.
Whether other states would be willing to welcome sports betting under such conditions is an open question. The appetite for an unregulated sports betting market could arguably be less in certain areas than others, meaning that those states would likely have to continue pushing the legal envelope.