As We Approach the Seventh Anniversary of the PASPA Decision, the Legal Sports Betting Landscape Confronts New Trials
In the lead-up to the seventh anniversary of the Professional and Amateur Sports Protection Act (PASPA) repeal, the legal sports betting industry is grappling with numerous obstacles. Recent months have witnessed a surge in challenges from various fronts, raising concerns about the sustainability of traditional casinos.
The influx of illegal gaming operations, offshore websites, sweepstakes casinos, and innovative "prediction markets" has intensified competition for brick-and-mortar establishments. This context has ignited discussions regarding the potential adverse effects on physical casino revenues stemming from the expansion of legal online gaming.
On April 15, at the 28th annual East Coast Gaming Congress in Atlantic City, a panel of stakeholders—including regulators, legal experts, and lawmakers—came together to address these pressing challenges. The event was moderated by Lynne Kaufman, a partner and group co-chair at Cooper Levenson, who emphasized the dual threats facing traditional casinos.
Joining Kaufman on the panel were figures such as Shawn Fluharty, a West Virginia legislator and president of the National Council of Legislators from Gaming States (NCLGS), along with Mary Jo Flaherty, interim director of New Jersey’s Division of Gaming Enforcement, and industry leaders from various sectors.
Addressing the Internal Struggles
Kaufman highlighted the billions that brick-and-mortar casinos contribute to local and state economies through taxes, jobs, and large-scale projects. Yet, these establishments are now in a race to protect their revenues amid rising competition from online platforms. Fluharty argued that many of the obstacles facing casinos result from factors internal to the industry, particularly concerning taxation and competition.
With a wave of internet gaming bills currently up for debate, Fluharty urged lawmakers to focus on revenue generation without imposing additional tax burdens. His remarks underscore a critical viewpoint: while industries often fear that online gaming cannibalizes their profits, its expansion does not equate to a decline in demand. As more states consider legalization, this sector is likely to grow.
The Rise of Online Gaming
Fluharty also pointed out that fears about the negative impact of online gaming on physical venues have not stalled legislative processes. Although there is still a significant amount of work to be done, progress appears inevitable. He suggested that the economic implications of federal funding—or the lack thereof, as seen during Trump’s administration—might accelerate states’ efforts to enforce online gaming to bridge revenue gaps.
Additionally, concerns regarding internal competition from online lottery services have surfaced. Yael Harel Hertz, CEO of TheLotter Group, shared insights on how the business model of lottery couriers—services that enable individuals to purchase tickets remotely—could overlap with traditional revenue streams if not regulated properly. She argued that, under the right conditions, these services could supplement state revenues while preserving the interests of brick-and-mortar retailers.
However, the most alarming developments, according to the panel, stem from the rise of unregulated gaming operations, such as sweepstakes casinos and prediction markets.
Structuring Fair Competition
Fluharty mentioned that NCLGS is actively crafting model legislation aimed at regulating online gaming while also prohibiting sweepstakes casinos, which he described as entities that operate in a legal gray area. Their operations not only undermine the integrity of state-licensed gaming but also provide unfair competition to those who have adhered to the rigorous licensing process. Fluharty contended, “Licensing is a privilege, not a right,” and called for stricter regulations against these practices.
In a separate discussion, industry analyst David Katz addressed the implications of emerging forms of gaming, particularly concerning the investment community. He noted that navigating the legality of these platforms can be complex, with some potentially needing regulation while others may be best excluded altogether.
Delving deeper into the realm of prediction markets, Fluharty criticized their framing as “commodities.” He warned that these platforms, often characterized as venues for wagering on political events and sports outcomes, can act similarly to traditional sportsbooks.
As the legal landscape evolves, stakeholders must grapple with these multifaceted challenges to ensure a balanced and equitable gaming environment. The future of legal sports betting hinges not only on the legislation that is passed but also on the ability of traditional casinos to adapt and thrive amidst rising competition from various fronts.