U.S. high court paves way for states to
legalize sports betting
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[May 15, 2018]
By Lawrence Hurley
WASHINGTON (Reuters) - The U.S. Supreme
Court on Monday paved the way for states to legalize sports gambling,
striking down a 1992 federal law that barred it in most places and
setting off a rush by businesses and states to cash in on an expected
multibillion-dollar jackpot.
The justices endorsed New Jersey's bid to allow such wagering in a
ruling that ushers in a new era for the leading U.S. sports leagues,
which had sued to block the state's sports gambling law and called such
betting a threat to the integrity of competition, fearing game-fixing
and other types of cheating.
In a ruling that sent shares in gaming companies and casinos soaring,
the court voided the federal Professional and Amateur Sports Protection
Act and upheld the legality of a 2014 state law permitting sports
betting at New Jersey casinos and horse racetracks.
Some states see sports betting, like lotteries, as a potentially
lucrative source of tax revenue. The American Gaming Association
estimates there is currently a $150 billion-a-year illegal
sports-betting market.
The ruling takes the United States a step closer to legal sports betting
in numerous states, perhaps nationwide, rather than just in select
places such as Nevada, home to the gambling capital Las Vegas. The 1992
law had effectively prohibited sports gambling in all states except
Nevada and, to a limited extent, Delaware, Montana and Oregon.
"New Jersey has long been the lead advocate in fighting this inherently
unequal law, and today's ruling will finally allow for authorized
facilities in New Jersey to take the same bets that are legal in other
states in our country," New Jersey Governor Phil Murphy, a Democrat,
said in a statement.
The ruling adds to a decades-long trend of decreased restrictions on
various types of gambling in the United States.
The news ignited a rally in gaming stocks, sending several to record
highs. Those specializing in gambling technology gained 10 percent or
more. Shares of Scientific Games Corp, which develops gaming systems and
sports-betting technology, jumped more than 11 percent to a record high
close.
Shares of casino and racing facility operators also rose. Churchill
Downs, which operates the Kentucky Derby, rose 4.9 percent to a record
high, while Penn National Gaming climbed 4.7 percent, also to a record.
Caesars Entertainment Corp rose 5.5 percent.
The U.S. subsidiary of British sports betting operator William Hill PLC,
which has already been working with state officials in New Jersey on
opening an outlet at Monmouth Park racetrack, is one of the companies
hoping to capitalize. The shares in the company, which derives nearly 20
percent of annual revenue from the United States, jumped nearly 11
percent in London trading.
The Supreme Court agreed with New Jersey's argument that the federal law
infringed upon state sovereignty as laid out in the U.S. Constitution by
compelling states not to license or regulate sports betting.
'POLICY CHOICE'
The justices struck down the entire federal law on a 6-3 vote, with the
court's five conservatives joined by liberal Elena Kagan. Lower courts
had ruled against New Jersey's law.
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A CNN television crew is set up before a decision was released
allowing the legalization of sports betting in Washington, U.S., May
14, 2018. REUTERS/Joshua Roberts
"The legalization of sports gambling requires an important policy
choice, but the choice is not ours to make. Congress can regulate sports
gambling directly, but if it elects not to do so, each state is free to
act on its own," Justice Samuel Alito wrote on behalf of the court.
Legal experts predicted that sports leagues and players' unions, as
well as dozens of states, will seek a cut of the revenue from
expanded sports gambling.
In addition to New Jersey, five other states - Connecticut,
Mississippi, New York, Pennsylvania and West Virginia - already have
sports betting laws in place that would allow them to move quickly,
according to a Fitch Ratings report.
New Jersey's law, championed by Republican former Governor Chris
Christie, was challenged in court by the National Football League,
Major League Baseball, the National Basketball Association, the
National Hockey League and the National Collegiate Athletic
Association, the major governing body for intercollegiate sports.
The decision may prompt the U.S. Congress to consider legislation to
regulate sports betting nationally, a move the National Football
League said it would welcome.
"Congress has long recognized the potential harms posed by sports
betting to the integrity of sporting contests and the public
confidence in these events. Given that history, we intend to call on
Congress again, this time to enact a core regulatory framework for
legalized sports betting," the NFL said in a statement.
Republican Senator Orrin Hatch said he would introduce legislation
to "establish fundamental standards for sports betting" and allow
states to decide whether or not to legalize it.
Professional sports leagues have begun to shift their views
regarding sports betting. Las Vegas now has an NHL team and will
soon have an NFL team, and the NBA's commissioner has called for
legalizing sports betting so it can be properly regulated.
Geoff Freeman, president of the American Gaming Association, said
his group will work with states, sports leagues and law enforcement
"to create a new regulatory environment that capitalizes on this
opportunity to engage fans and boost local economies."
Daily fantasy sports company DraftKings Inc said it is weighing
entering the sports betting business following the decision.
New Jersey's law allows people age 21 and above to bet on sports at
New Jersey casinos and racetracks, but would ban wagers on college
teams based in or playing in the state.
(Reporting by Lawrence Hurley; Additional reporting by Andrew Chung,
Hilary Russ, Frank Pingue, Dan Burns and Sinead Carew; Editing by
Will Dunham)
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