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Martin Lycka: Supreme Court’s (sports betting) punt return and beyond

SBC News Martin Lycka: Supreme Court’s (sports betting) punt return and beyondIn the second of a series of columns on international gambling legislation, GVC’s Director of Regulatory Affairs Martin Lycka takes a look at the current activity around sports betting in the US and tracks how the industry has arrived there and where it should go next.

It is 14 May 14 2018, which may be the US football offseason, yet the sights of the whole gambling industry are on a nine-bodied punt returner called the Supreme Court of the United States of America. Will the most honourable punt returner catch the ball thumped many moons ago by the 1992 Professional and Amateur Sports Protection Act’s punter?

The ball has been hanging in the air for what feels like a lifetime (well, 26 years to be precise) and…
then the ball is caught, and the punt returner is off. The first few gunners are left in the dust of the Capitol Hill pitch; but the long uphill return is stopped just yards short of the Capitol building (firmly in the state by state regulation territory). The first play has been successful but many more are yet to come.

14 May 2018 is the day when the modern area of US sports betting regulation was born. Since then ten US states have regulated and launched their sports betting markets – the Trailblazing Ten are Nevada (“grandfathered” into the new regulatory world), New Jersey, Delaware, West Virginia, Mississippi, Rhode Island, Pennsylvania, New Mexico, Arkansas and New York.

At the time of writing, eight other states, namely Montana, Washington, D.C., Indiana, Iowa, Tennessee, Illinois, New Hampshire and North Carolina, have formed an Exploratory Eight-pack of states to have approved state-wide sports betting regulations without however launching them just yet. Tennessee has become the first US state to approve mobile only wagering laws, i.e. very much European style legislation which does not require tethering of remote gambling products to a land-based casino, a racetrack or another type of sports venue.

US state-by-state sports betting regulation is thus seemingly on a Tom Brady like led bulldozing charge that knocks down opposition in one state legislature after another. Nonetheless, TB12 is not getting any younger, Gronk has retired and most importantly of all, the defense they’re marching up against has rallied and is seeking to stop or at the very least slow down the Sports Regulation Special Team. Third and long conversions might be required…

The new First Down line lies in New Hampshire. In November 2018, the Department of Justice (DoJ) changes its heart and mind on the scope of application of the 1961 Wire Act, which inter alia prohibits all types of gambling related interstate communication. The new interpretation is that the Act applies to all types of interstate gambling, including casino as well as pooled liquidity reliant products such as poker or lotteries, not just sports betting, which was the DOJ’s original interpretation in 2011.

The New Hampshire Lottery, supported by the online gambling industry and its suppliers, challenges the interpretation before a New Hampshire judge, Paul Barbadoro. The goal is to give those wide receivers within the respective state legislature offenses enough time to get into slots and get the sports regulation touchdowns over the line; the industry also feels that it needs to be protected from what very arguably is an erroneous interpretation of the Wire Act and avoid halting the tide of sports regulation that has (rightly so in my view) engulfed the nation.

Barbadoro converts the third-and-super-long by rejecting DoJ’s interpretation of the Wire Act; DoJ cedes the ground, at least for now, and grants enforcement forebearance at least until the end of 2019. However, an appeal seems to be looming and the “game” might be taken all the way back up to the Supreme Court…

The judicial battles will go on and continue making industry headlines. At the same time, the US sports betting and wider online gambling market, in the form of a conglomerate of individually regulated US state markets, has a shot at becoming the biggest gambling market in the world.

Let me however point out, using the immortal words of Lin-Manuel Miranda’s musical Hamilton, that not throwing that shot away is absolutely vital; the nascent US market may still be “young” and as a result somewhat “scrappy” and most definitely “hungry”. It might have already got a lot of “scholarships” in the form of investments into commercial partnerships, which in some cases rather “amaze and astonish”, but I would suggest still requires a lot of “polish”.

The regulatory “diamond in the rough”, indeed that very “shiny piece of coal”, is in need of gentle but very firm and steadfast touch of an experienced jeweller. They will make sure that the lessons the (online) gambling industry has learned elsewhere, in most cases the hard way, will have duly landed across the pond and potential issues can be avoided further down the field.

It is needless to say that every market is unique and no patronising is called for; I would however respectfully suggest that there is a lot to learn from the responsible gambling and sports integrity programmes the global (online) gambling industry has put in place. The global industry’s most recent more cautious approach to advertising could also serve as inspiration…

I firmly believe that learning and applying these lessons will ensure that mistakes of the past will not be repeated and that in the future the US market will have the luxury of going down the path of steady “third and 2” conversions as opposed to regulatory firefighting requiring a Hail-Mary pass.

Martin Lycka is Director of Regulatory Affairs at GVC Group. Before that he spent nearly ten years at Paddy Power Betfair working on international markets. Views expressed are personal and not necessarily those of GVC Group.

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