Federal Sports Betting Laws
Unlike state laws that are specific to Pennsylvania, the entire nation falls under the umbrella of federal sports betting laws. Considering that sports betting is a multi-billion dollar industry, you would think that there would be numerous laws to govern how it operates. This is not the case, as there have only been three federal laws in the history of the U.S. with an impact on sports gambling. It makes sense that there would be limited laws when you consider the Tenth Amendment of the United States Constitution and the “Anti-Commandeering Doctrine”, which essentially protects states from federal overreach. As you learn more about federal sports betting laws, you will find that one law was actually struck down for that exact reason.
The three federal sports betting laws of the past and present that you should become familiar with are the Professional and Amateur Sports Protection Act, the Wire Act, and the Unlawful Internet Gambling Enforcement Act. Below, you will find an explanation of each, along with how it relates to legal Pennsylvania sportsbooks.
The Professional and Amateur Sports Protection Act of 1992 (PASPA) was for a period the most controversial sports betting law in the U.S. Former New Jersey Senator and NBA player Bill Bradley was the main sponsor of the bill, which is why it was also referred to as the Bradley Act. The federal law banned sports betting across the nation, with few exceptions. States that had already legalized sports betting were exempt from the law, and those states were Nevada, Delaware, Montana, and Oregon. These states could not legalize any new forms of sports betting, hence why NV was the only state with single-game wagering and DE was limited to NFL parlays. Oregon and Montana could only offer sports lotteries.
In 2012, New Jersey attempted to legalize sports betting by passing the Sports Wagering Act. The NCAA, NBA, NFL, NHL, and MLB filed a lawsuit against the state, citing a violation of PASPA. The case, widely known as Christie vs NCAA et al, was dragged out over a period of six years. New Jersey acknowledged that their several attempts to legalize sports gambling were prohibited by federal law, but argued that the law was unconstitutional. The sports leagues contended that sports wagering was harmful to the integrity of their events, though the NFL and NHL both have Las Vegas franchises.
After several denied appeals in the lower courts, New Jersey requested a writ of certiorari from the Supreme Court in October 2016. Their appeal was based on challenging the constitutionally of PASPA, which was the underlying issue preventing New Jersey and other states from legalizing sports gambling. On June 27, 2017, the Court agreed to hear the New Jersey sports case, which was combined with NJ Thoroughbred Horsemen v. NCAA – this was a petition filed by racetrack owners in the state that also had interest in regulated sports betting. The New Jersey Thoroughbred Horsemen’s Association (NJTHA) initially filed separately to highlight the distinct economic disadvantages to the horse racing industry that were caused by the prohibition of sports betting. The NJTHA ultimately proposed the same question as the state, which was “is the federal ban on sports betting constitutional?”.
On May 14th, 2018, the U.S. Supreme Court came to a decision on Murphy vs NCAA (the name was changed to reflect Governor Phil Murphy taking office). The nine justices of the Court ruled 7-2 that PASPA violated the anti-commandeering section of the 10th Amendment and voted 6-3 that the federal law was unconstitutional. As a result of the landmark case, New Jersey, Pennsylvania, and other states across the nation can legalize sports wagering. The state has already passed a sports betting law, with sports gambling to be available at casinos and racetracks in PA.
The Wire Act is a federal law that has raised questions from policymakers and civilians alike. Passed on September 13, 1961, by former President John F. Kennedy, the law was a direct response to the underground criminal gambling operations that were common during the era. This particular anti-racketeering law stated that those in the business gambling would be persecuted for using wire communications to relay or accept information, bets, or compensation related to sports wagering. During the 1960’s the primary mode of communication was the telegraph, which is why the term “wire communication” was used.
Fast forward to the advent of the internet, where citizens can now use the web for just about everything. Lawmakers have decided that though the internet was not yet invented during the original enactment of the Wire Act, it still falls under the definition of a wire communication. This is why for decades there were no US-operated sports betting sites.
However, now that the overarching ban on Pennsylvania sportsbooks has been lifted, states can start legalizing sports gambling. This relates to the Wire Act because the law includes a provision that says it is only applicable in states where sports betting is not legal. Put simply, the Wire Act will not be applicable or prevent online sports betting in states with regulated sports wagering. Pennsylvania has already passed a law legalizing both mobile and online sports betting.
The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) is a federal law that at first glance leads many to think that online gaming is illegal. On the contrary, the UIGEA relates primarily to banking at U.S. financial institutions. Signed into law by then-President George W. Bush on October 13, 2006, the UIGEA does not specifically mention sports betting. Instead, the law prohibits gambling operators from accepting payments from bettors participating in unregulated gaming activities. The Federal Reserve Board and Treasury created guidelines that U.S. banks must follow in order to flag and stop any such transactions from going through. Financial institutions must monitor credit card, ACH, wire transfer, and check collection systems to prevent payments from being processed.
The law does not mention any language regarding the legality or illegality of online sports betting. This is a right reserved to each state. The only impact that the UIGEA has on sports bettors is that credit card deposits may sometimes get declined. This is because card systems are monitored heavily and are easier for banks to detect. That being said, many offshore online sportsbooks still have high credit card success rates because they work with a wide range of payment processors.
Also, if you are using a state-licensed sports betting site the UIGEA is not applicable because you can legally bet on sports within your state. Being that PA has legal online gambling, you will not come across any banking issues. You can also still use offshore online sportsbooks and make deposits with methods like bitcoin, ethereum, MoneyGram, and money orders if your credit card gives you issues.
