PASPA Explained

If you're just breaking in to the world of sports betting or even if you've been a serious sports bettor for a while, there is a seemingly endless amount of information to try and keep track of if you want to have any success with your hobby. As if analyzing the teams, point spreads and betting trends by staying abreast of injuries, crucial matchups, the arrival of emerging stars and the decline of big name teams and players was not enough, one crucial point that is too often overlooked is how to place bets and wagers on sporting events legally so that you may collect your winnings in a safe, timely manner without any worry of legal interference. Players of all skill levels, from casual bettors putting up a couple bucks to high rollers betting several thousand would do well to familiarize themselves with a few key Federal Laws that impact the sports betting culture. The Professional and Amateur Sports Protection Act of 1992, also known as the Bradley Act, and most commonly referred to as PASPA, was one of those key laws for more than a quarter century.

However, PASPA – for all its efficacy at containing the spread of sports betting states to Nevada, Delaware, Oregon and Montana – was not destined to last, and the largely unpopular law was overturned by the US Supreme Court on May 14, 2018. The SCOTUS members returned a 6-3 majority decision, with Chief Justice John Roberts being joined by Samuel Alito, Anthony Kennedy, Neil Gorsuch, Clarence Thomas and Elana Kagan voting to strike down PASPA for being unconstitutional in its violation of the states’ rights principles of the 10th Amendment. Justice Stephen Breyer issued a separate but concurring opinion, agreeing with some parts of the majority ruling while opposing it other areas, while justices Sonia Sotomayor and Ruth Bader Ginsburg came down in favor of a dissenting opinion in the case.

In this comprehensive breakdown of PASPA we will take a look at the law’s history and ramification for the sports betting industry in the US. Well will also examine how the momentous repeal of the law is already making a brighter future for states interested in offering sports wagering opportunities to their residents and visitors.

Professional and Amateur Sports Protection Act: Background Information

The Professional and Amateur Sports Protection Act was into law in 1992, after then-National Basketball Association Commissioner David Stern was all over the media and in the halls of Congress to speak out against the practice of betting on professional sports. For Stern and his colleagues and counterparts in other major pro sports leagues, the climate of sports betting was evidently cause enough for extra federal legislation against that form of gambling activity.

Many members of the US Congress apparently agreed, and – led by New Jersey Sen. Bill Bradley, himself a former NBA star athlete – collectively put together a bill that would halt the spread of sports betting to those states that had legislation legalizing the activity for at least 10 years. That means that Nevada – the undisputed worldwide leader for all forms of gambling, not least of which is sports betting – along with Delaware, Montana and Oregon were the only states permitted by PASPA to offer sports wagering platforms at their licensed gambling outlets. Of those four states, only Nevada offered a full sports betting menu at its various casino properties on the Las Vegas Strip, and to a lesser extent in Reno and other middle sized cities, while the other three states offered little more than sports lottery scratch off tickets.

The language of PASPA states that it is unlawful for a person or government entity to sponsor, operate, advertise or promote any businesses that generates income based on wagers placed on any professional or amateur sporting events. Unlike its close counterpart, the Federal Wire Act of 1961 – which, unlike PASPA, remains in effect to this day - PASPA does not attempt to go after the business of betting and wagering through the transfer of funds, but instead outright declares that the entire act of hosting bets and wagers is unlawful.

What Does The Professional And Amateur Sports Protection Act Say?

The first and most important distinction it is necessary to make is that the PASPA in no way mentions the act of placing bets or wagers. This means that all bettors, from the most casual all the way up to those who would wager several hundreds of thousands of dollars are safe from any kind of prosecution under this act. This federal act, while it was still the law of the land, only had power to attack government agencies or businesses that hosted any kind of sports betting, whether in person and online.

This loophole, if indeed it is a loophole, had an unintended consequence that the lawmakers and interested groups that crafted the Bradley Act (as PASPA is also known) could not have anticipated: PASPA indirectly led to the rise to prominent of legal sports betting sites. A cursory search of online sportsbooks will reveal that most or all of them are based overseas in foreign countries, and therefore the prohibitions of PASPA (or any other federal ban on sports betting activities) would not apply to the operators of these sites. Even as the rest of domestic online gambling market was being systematically wiped out by a slew of federal laws, sites like Bovada, BetOnline, SportsBetting, 5Dimes and BetDSI, all of which operate well outside of reach of federal or state jurisdiction, went from strength to strength and eventually came to dominate the internet gambling marketplace in sports betting states.

New Jersey Leads The Fight Against PASPA

It is worth pointing out that PASPA, which took effect on Jan. 1, 1993, came under fire almost immediately from a great many states around the nation. When the act was first written and being bandied about Congress in 1991, it was stated that the bill had no intention of breaking up legal and functioning sports betting businesses. Therefore several states, like the aforementioned quartet of Nevada, Delaware, Oregon and Montana, which were already promoting sports betting in their jurisdictions, were exempted from the bans imposed by PASPA and were according grandfathered in after its passage. Therefore, PASPA at no point during its quarter century long existence held jurisdiction over sports lotteries in Oregon, Delaware or Montana, and organized sports pools in Nevada were exempt as well.

As an ongoing effort for states to increase tax revenues, many other states around the country from West Virginia to Mississippi to California (with New Jersey taking the lead) pointed to this ban from sports betting or wagering as an unconstitutional breach of their state's rights. All 50 states actually have the right regulate gambling activities within their borders as guaranteed by the 10th Amendment, which eventually became the crux of the US Supreme Court’s majority ruling against PASPA.

In March of 2009, then New Jersey State Sen. Raymond Lesniak filed a lawsuit in the United States District Court for the District of New Jersey claiming that the PASPA was unconstitutional in that it favored four exempt states to collect taxes and revenues from legal sports betting sites whereas all the other states were forced to ignore this potentially profitable means of income. Almost identical language has been used as recently as 2010 in states like Rhode Island, Iowa, Missouri, Texas and California in an effort to drum up Federal support to repeal the act in the Federal Courts. Although no real progress was made as a result of this push, the continuing struggle showed that many sports betting states see a profit in legalizing bets and wagers on sporting events, and were interesting in keeping up attempts to have PASPA overturned.

That eventually came after the Garden State, ever the agitator for the right to host legal sports betting at its Atlantic City casino properties and beyond, passed a bill into law in 2014 that authorized the state’s licensed gambling outlets to open sportsbooks – when and if PASPA were to be struck down. This, naturally, drew the fire of the NCAA and the four major pro sports leagues, all of which took New Jersey to court over the law. The case eventually went all the way to the US Supreme Court, and then-governor Chris Christie, an outspoken advocate for sports betting in New Jersey, started making the argument that the time had come for PASPA to make its exit from the stage.

The Supreme Court Rules Against PASPA: The Aftermath

After four years in court, New Jersey eventually won its Supreme Court case in May 2018, and the majority of the SCOTUS justices ruled against PASPA’s constitutionality, striking the widely unpopular (and by now largely toothless) law from the federal legal rolls. The rationale behind the decision was that PASPA represented an unconstitutional breach of New Jersey’s 10th Amendment rights – and, by extension those of the other 45 states not exempted from the law’s prohibitions. So, while this was evidently not a particularly difficult case to argue, it apparently just took some time for the highest court in the land to make up its collective mind.

Nevertheless, the ruling in favor of New Jersey had huge ramifications for the rest of the country as well, and, in the meantime, as many as nearly two dozen states had been busily passing or crafting laws of their own to legalize, regulate and, most importantly for their bottom lines, to tax sports betting. Several states went as far as to pass legislation that would take immediate effect pending a PASPA repeal by Congress or an overturn by the Supreme Court, so once the latter eventuality was realized the talk immediately shifted to when these newly minted sports betting states would start rolling out their sportsbook offerings.

Now that PASPA has been eliminated, it remains to be seen how many other states across the country will get in on the action of making sports betting outlets available for their residents and visitors, but the fact is that this is a very lucrative arrangement for the entire nation. Flagging state economies will benefit greatly from the SCOTUS’ decision to strike down PASPA, as the overseas sports betting market has been estimated to amount to anywhere between $150 billion and $250 billion annually. With PASPA no longer a factor many states, particularly those with highly developed gambling industries already and especially those with an eye toward branching out into the online sportsbook segment, can realistically hope to start adding tens if not hundreds of millions of dollars, collectively speaking, the public coffers in a relatively short time frame.

Most Important Thing To Know About PASPA

Now, it was worth mentioning first and it is well worth repeating that, even if you do not live in one of the four states that was previously exempt from PASPA, there are no federal laws restricting you from actually placing bets on sporting events. The same is true, since the overturn of PASPA in 2018, if your state has not as yet passed a law to legalize and regulate sports betting. The only action that could be prosecuted under PASPA was hosting or promoting any businesses related to any bets or wagers.

By ensuring that you do your wagering at online sportsbooks based in a country where sports betting is found to be lawful, PASPA could in no way affect your ability to wager on your favorite teams. Similarly, if your state of residence has not decided to legalize or regulate sports betting, or if lawmakers there have not finalized whatever law they will eventually adopt, you can still legally bet on sports at any of our most highly recommended offshore sportsbook sites without fear of running afoul of the law.

More: Is Online Sports Betting Legal?

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