Last May, the United States Supreme Court ruled that the federal Professional and Amateur Sports Protection Act of 1992 (“PASPA”) was unconstitutional. PASPA was enacted to prohibit state-sanctioned sports betting and effectively outlawed sports betting outside of Nevada (which was given an exemption). As a result, sports fans often turned to black market bookmakers to place wagers on their favorite sports teams.
The Supreme Court reasoned that PASPA’s prohibition on state-sanctioned sports betting violated the 10th Amendment to the United States Constitution. The Supreme Court’s decision did not legalize sports betting nationwide. Instead, the Supreme Court simply held that each state was free to make that decision for itself. Some states, like New Jersey, have already legalized sports betting in the months following the Supreme Court’s decision. Ohio is moving in that direction.
Two identical sports betting bills (the “Bills”) were introduced in the Ohio House and Senate this Summer. In each, the General Assembly’s intentions are clear:
“It is the intent of the General Assembly to develop and enact legislation legalizing sports wagering.”
The Bills – so-called “placeholders” – are light on details. The General Assembly needs time to adequately develop a sound regulatory framework and could decide to wait and see how other states address the issue. Key questions remain, such as:
- Where will sports betting wagers be permitted to be placed (casinos, sports bars/restaurants, online)?
- How/will winnings be taxed?
- How/will revenues be taxed?
- How/will the sports leagues – such as the MLB or NBA – get paid?
- What types of consumer protection laws will apply to businesses accepting sports wagers and what agencies in Ohio will be tasked with enforcing those laws?
- Will Congress enact a national regulatory framework?
Black market sports betting is a $150 Billion industry in the U.S. annually (perhaps significantly more). Considering the revenue potential, special interest groups, casinos, and other proprietors are asking State legislatures to act quickly. However, because of the complex questions that still need answered, Ohio is unlikely to have a legal framework for sports betting in place this year. 2019 is more feasible.
With this anticipated change, so comes business opportunities. If the General Assembly chooses to authorize sports betting online, payment processing companies and other third party payor apps could realize significant business opportunities in a sector that was legally inaccessible just a few months ago. Similarly, there will be opportunities for growth for companies who specialize in gaming compliance. Software companies will need to develop code that identifies out-of-state IP addresses. Security experts will be needed and data analytics specialists will be at a premium. As with any new market, niche segments will develop. Companies would be wise to consider whether expanding into the sports betting market makes sense for them.
As the Ohio General Assembly comes out with updated legislation and additional regulations in the future, Coolidge Wall will be able to answer questions you might have as you or your business considers this untapped market. When more information becomes available, Zachary B. White will keep you updated.
Should you wish to discuss any of the items in this blog post or their implications, contact your trusted advisors at Coolidge Wall who can provide guidance tailored to your specific situation.
NOTE: This information should not be considered a comprehensive discussion of the legalization of sports betting or the recent legislative endeavors of the Ohio General Assembly. Nor should it be construed as legal advice.
 See Murphy v. National Collegiate Athletic Association, 584 US ___ (2018).  See Ohio General Assembly H.B. No. 714, introduced 7/17/18, and S.B. No. 316, introduced 7/12/18.
 Rick Maese, “What the Supreme Court’s sports gambling decision means,” published 5/14/18, available at: https://www.washingtonpost.com/news/sports/wp/2018/05/14/what-the-supreme-courts-sports-gambling-decision-means/?utm_term=.64ac3e2d9d0f.