Last updated on: July 17th, 2023
What Is PASPA | How PASPA’s Repeal Changed Sports Betting
Until very recently, those looking at the legality of placing sports wagers would always run headlong into the harsh reality of PASPA. What is PASPA? PASPA, the Professional and Amateur Sports Protection Act, is a federal anti-gambling law (or rather, was a federal anti-gambling law) that was signed into law in 1992 and went into effect on January 1, 1993. While PASPA was finally overturned by the US Supreme Court in 2018 (in a 6-3 vote), the law had – and continues to have – far-reaching effects on sports betting and sports betting culture in the United States. To understand why the consequences of PASPA will take time to repair now that the law has been expunged, you need to know a bit of PASPA background. This page, then, exists as a sort of explanation of what the US betting market was so that sports gamblers can better get a grasp on what the US betting market can and will be.
PASPA, in a nutshell, was a blanket ban on sports wagering that applied to all states in America except for four: Nevada, Oregon, Montana, and Delaware. This was due to a “grandfather” clause in the law, allowing states with existing sports betting products at the time of the passage of the law to continue offering these products once PASPA went into effect. Unfortunately, only Nevada had true single-game (what we call “Vegas-style”) sports betting at the time, which meant that the other exempt states were limited to the glorified sports-themed lotteries and bingo-style pub games they were offering. Under PASPA, Nevada was the only state with legal sports betting as we know it today. (In fact, the other states’ products were so limited, low-volume, and unpopular that all three ceased those meager operations shortly after PASPA became the law of the land.) As such, Nevada became – for the next 25 years – the only place in the US where legal land-based sports betting could be enjoyed.
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The Philosophy Behind PASPA
PASPA was, in a sense, a continuation of a longstanding political and legal effort in the United State to contain and strictly curtail the expansion of sports betting. This goes back to the 1961 passage of the Interstate Wire Act, which was designed to stop the use of communications equipment to transmit sports betting information across state lines. This law, commonly considered the one what is PASPA’s effective forebear, was conceived of by then-Attorney General Robert F. Kennedy as a means of cutting off one of the major revenue streams used by organized crime syndicates. Of course, this perhaps wasn’t true, and many historians and industry insiders believe that the Wire Act – like PASPA to come next – was more a governmental monopolization effort than a broadside attack on crime.
However, while the Wire Act served to preserve state monopolies on lotteries (which seems to have been ultimate goal of the law, regardless of its “focus” on sports gambling), PASPA was actually an effort to set up an East Coast monopoly on sports betting in New Jersey, home of Atlantic City (the second largest US gambling center after Las Vegas). Indeed, the law’s most vocal proponent was NJ senator and former NBA player Bill Bradley, which is why PASPA is sometimes referred to as the Bradley Act. Bradley essentially worked language into PASPA that would permit any state that had at least ten uninterrupted years of legal gambling operations (at the time of the bill’s passage) to establish a full-fledged Vegas-style sports wagering industry within one year of PASPA going into effect. Under these terms, only one state actually qualified for this window: New Jersey!
Hilariously, of course, the NJ government was not able to pass any sports betting bills during the grace period, and on January 1, 1994, the state was officially barred from offering any sports wagering products going forward. Thus, a law intended to give NJ a sports betting monopoly actually gave Nevada the monopoly and led to the long-running bankruptcy and financial struggles of entire casino industries nationwide, with NJ’s Atlantic City the hardest hit.
PASPA In The Age Of Legal Online Sports Betting
Though it doesn’t seem like 1992 was that long ago, almost no one, least of all the incompetent lawmakers who created PASPA, could have envisioned the meteoric rise of the Internet just a few years later (with the exception of Al Gore, natch). In the early ‘90s, most Americans didn’t even have a computer at home, but for the last decade or so, there’s not been an American without a smartphone in their hands all day long. The intervening years between PASPA’s passage and now fully revealed the law’s creeping obsolescence – an obsolescence that made PASPA not only ineffectual but actively detrimental to the American Economy. This is because most US sports betting action simply moved overseas to offshore sportsbooks that operate outside of US legal jurisdiction altogether.
As neither PASPA nor the Wire Act made it unlawful for individuals to place bets, US residents were free to use these offshore books. And use them they did! By most credible analyses, Nevada was only attracting about 1-3% of the total US sports betting handle, with the vast majority of players simply using offshore books to place their wagers. The drain this represents on the US economy over the last quarter century is reckoned to be in the trillions of dollars. (Yes, that’s trillions, with a “T”). Indeed, what is PASPA if not the biggest financial boondoggle in US history? To fix this problem, of course, politicians do what they do best: Instead of repealing PASPA, they established the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006, penalizing financial institutions like banks and credit companies for “knowingly” processing monies related to Internet gambling. Of course, aside from disrupting the burgeoning online poker craze for about 15 minutes, the UIGEA did nothing to stop the flow of US dollars to offshore sites.
Given the ascendancy of the Internet, PASPA’s original intent of limiting the expansion of gambling on sports has long been rendered a moot point. Offshore sportsbooks like Bovada, BetOnline, SportsBetting, MyBookie, and others had obviated the law just a few years after it went into effect, and this perhaps played a key part in the Supreme Court’s decision to overturn PASPA (though it was patently unconstitutional to begin with, violating the 10th Amendment in addition to the longstanding Equal Sovereignty Doctrine).
The Supreme Court Sports Betting Ruling On PASPA
The Supreme Court sports betting ruling on PASPA has enormous implications and positive consequences for all of America, nationwide. As stated, PASPA was finally overturned by the nation’s highest court. The case, Murphy vs. NCAA (originally Christie vs. NCAA, as Chris Christie was the plaintiff as acting governor when New Jersey appealed the lower court ruling, only to be replaced on the docket by new governor Phil Murphy). The SCOTUS heard oral arguments in early 2018, and on May 14, 2018, they ruled PASPA to be unconstitutional. Ironically, given that legal sports betting is primarily a Democrat platform in the states seeking legalization post-PASPA (and among those states that filed amicus briefs on the part of legalized sports wagering during the Supreme Court hearing), the three dissenting judges that voted to retain PASPA – Stephen Breyer, Ruth Bader Ginsburg, and Sonia Sotomayor – are all Democrat appointees.
With PASPA formally relegated to the trash heap of history, all US states are now free to offer sports betting products and services of their own, on land and online alike. In the latter half of 2018, in fact, eight states legalized sports betting within their borders, and seven of these actually had consumer-facing wagering products open to the public before the year’s end. These were, in order of legalization: Delaware, New Jersey, Mississippi, West Virginia, Pennsylvania, Rhode Island, and New Mexico. Additionally, three other states had full or partial sports betting laws in place by December 2018, including Arkansas, New York, and Connecticut. The coming few years should see almost all US states offer some variety of sports wagering product, and the future is very bright for all those who enjoy the most popular gambling pastime in America.
Could Another PASPA Happen?
Now that you know the answer to “What is PASPA?” you likely have another pressing question: Could another PASPA happen? This is a difficult question to answer, but the most adept industry and government analysts out there reckon that the answer is both “yes” and “no”. In the sense that the federal government could introduce sports betting legislation that applies to all states uniformly, several congresspeople are already assembling and introducing bills of this kind. In fact, one of the original authors of PASPA, Republican Senator Orrin Hatch of Utah (along with Senator Chuck Schumer, D-NY), submitted SB 3793, the Sports Wagering Market Integrity Act of 2018.
So will the government again abuse its authority by picking and choosing which states can and cannot offer sports wagering? We predict the the answer to be a resounding “no”. It seems that Uncle Sam has learned his lesson about limiting citizens’ harmless financial activities to overseas outlets. Now, the gambit will be practically the opposite of PASPA, with the government doing everything in its power to maximize participation in and revenue from sports betting stateside. And while it’s not out of the question that they’ll screw everything up again, the disaster of what PASPA was will hopefully never be repeated.
The Post-PASPA United States
Ever since the repeal of PASPA in 2018, the United States has seen a whole new source of revenue for its states that have legalized the activity. More than half of the nation, as of 2022, has legalized the sports betting industry in one form or another. Those states that have embraced it whole-heartedly like New Jersey and Pennsylvania have seen millions upon millions of dollars being made by this one industry, having it skyrocket as one of their top earners. As sportsbooks that take USA players increase in accessibility, they are raking in the revenue hand over fist.
Other states that have not yet made the pastime legal have studied what these states have gained from legalizing the market and have become very interested in passing their own legislation to help their economies to thrive. With PASPA now a thing of the past and the overwhelming desire of Americans to wager on sporting events, the nation as a whole could see sports betting made legal almost everywhere within the next decade to come. As far as a return of anything resembling PASPA, that would be a bet that sportsbooks would tell gamblers not to take because the industry has been made indispensable to the American economy in terms of revenue alone.
Which Sports Leagues Were In Favor Of PASPA?
At the time, all major sports leagues were in favor of PASPA. Sports leagues claimed it was because they wanted to preserve the integrity of the game, but in reality, it can be attributed to the lack of compensation sporting leagues would be getting from legal sports betting. Since PASPA’s repeal, all but the NFL seem to have openly embraced legal sports betting. Leagues like the NBA and the MLB have even become partners with sports betting providers and have ushered deals further ingratiating sports betting into their league. Right now, sports betting has become a normal addition to major sports.
Did The Repeal Of PASPA Make Sports Betting Legal In Every State?
No, the repeal of PASPA simply made it legal for any state to handle its only sports gambling laws the ways it sees fit. This means that all states have the freedom to legalize and regulate sports betting the way they’d like. It also means that states can choose not to legalize sports betting as well.
Did PASPA Stop Legal Sports Betting From Happening?
No, not necessarily. With PASPA in place during the time that the internet was beginning to take over our daily lives, PASPA simply made online offshore sportsbooks a popular and safe option to access legal sports betting. It stopped states from being able to compete with their own sportsbooks and forced American sports bettors to give their money to overseas-based websites.
Will The Federal Government Pass Regulations Against Sports Betting Again?
Most likely not. The government seems to have come full circle on the issue of sports betting and is now open to each state having its own platform and income through the medium. While we are never certain of what the government is going to do, we hope we have turned a corner and are working towards full-fledged legalization across all 50 states, and not the other way around.