Government

Delaware vs Sports Leagues Sports Leagues Win

Fall and spring are the biggest times of the year for sports betting. In the fall there is football and the World Series. In the spring, there is the National Collegiate Athletic Association's (NCAA) "Final Four" basketball tournament. Office pools abound, which aren't truly legal, but what about sports betting that you might see in Las Vegas, is that legal everywhere?

Due to the weak economy, Delaware is in a lot of debt. It has an $800 million budget deficit. To raise money for the state, Delaware's Governor Jack Markell turned to sports betting. The state made plans to begin allowing betting this fall at its three casinos. It spent millions on advertising, marketing and renovations.

However, this plan was immediately opposed by the National Football League (NFL). The NFL, together with the National Basketball Association (NBA), Major League Baseball (MLB), the National Hockey League (NHL) and the National Collegiate Athletic Association (NCAA) sued to prevent the Delaware State Lottery Office from taking bets on their games, claiming the plan violates Delaware's Constitution and federal law.

Is Sports Gambling Legal?

Sports gambling may be the most popular form of betting in the country. However, most of it is done illegally. About $2.6 billion was bet legally in Nevada in 2008, according to the American Gaming Association. A 1999 federal study estimated that as much as $380 billion is bet illegally each year.

The 1992 Professional and Amateur Sports Protection Act (PASPA) made sports gambling and betting illegal in the United States and it prohibits states from being in the bookmaking business. However, Delaware is one of four states exempt from this law through a "grandfather clause" along with Nevada, Montana and Oregon. 

A grandfather clause is an exception that allows an old rule to continue to apply to some existing situations, when a new rule will apply to all future situations. That means that if applicable, current businesses, property owners, universities and states could continue operating under the previous laws even after a new law is enacted that contradicts it.

Sports Betting in Delaware

Delaware is one of the four states exempt from the federal ban on sports betting. It's exempt because it ran an NFL sports lottery in 1976. However, this lottery was unsuccessful and Delaware hasn't had any sports betting since then. 

Markell pushed for the return of sports betting to help close an almost $800 million budget gap in the wake of the U.S.'s economic decline. State officials said the betting expansion is expected to generate at least $17 million this year.

However, not all sports betting is legal in Delaware, only parlays betting is. Generally, a parlay is a bet on multiple games, and the bettor must be correct on every game to win the wager. Such bets are less appealing to most gamblers than wagers on individual games. Single-game betting is preferred because the odds are better and it attracts more gamblers.

As a result, Delaware attempted to go forward with single-game betting. The sports leagues, however, were not pleased and claimed Delaware was violating the law. "Delaware did not conduct single-game wagering during its 1976 sports lottery, which was limited to parlay bets on NFL games," league representatives said in a joint statement. "The PASPA exception does not permit Delaware to now conduct single-game wagers on the NFL or wagering on sports other than the NFL."

The sports leagues also claimed that Delaware will be violating state law, which mandates all forms of gambling be games of chance, not skill. The leagues argued that, by going from parlay to single game betting, chance plays less of a role than skill.

The Court's Decision

In court, lawyers for the state explained that Delaware wants to create a sports lottery to help pay for government services and to create new jobs and increase revenue. The leagues, however, explained that they didn't want to use their games as betting vehicles. They argued that sports betting harms their reputations and exposes young people to gambling. The NCAA added separately that while it "recognizes the economic challenges facing the State of Delaware, legalized betting on college games will provide more harm than good."

The federal court, in a three-judge unanimous decision, agreed with the sports leagues. 

What's Next?

Delaware officials haven't yet decided whether to appeal the ruling to the full court, or to the US Supreme Court. Appealing the federal court's decision will be difficult for Delaware. The three judges ruled unanimously. Also, there is no big and broad impact from the ruling, it only affects Delaware, and therefore it's not likely to be reviewed by the Supreme Court. 

US Sen. Thomas Carper (D. Del.) said the state should appeal the decision to the entire 12-judge court because the state's budget situation is so dire. "On a per-capita basis, our budget hole is deeper than almost any other state's," said Carper, who was the state's governor in the 1990's.

In the meantime, Delaware officials and casino operators are going ahead with sports betting by the beginning of the football season, but limiting it to parlay betting on NFL games. The exact form remains unclear. Stunned by the decision, the state is making the most of what it can offer, said a spokesman for Governor Markell. 

Thus, for now, Delaware will continue with a much more limited form of sports gambling than it initially planned. The governor will need to come up with another solution to the state's budget problems. 

Questions for Your Attorney

  • Are there limits on sports-related gambling in the grandfathered states if you're from another state? Is it legal to place bets in those states over the Internet or phone?
  • Are any legislators pursuing changing federal law to allow states to engage in sports betting?
  • Is it possible to invest in casino businesses owned by Native American tribes, and are those businesses also covered by PASBA?
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