Updated 2:06 a.m. ET Tuesday
The Supreme Court threw open the door to legalized sports betting on Monday. By a 6-3 vote, the court struck down a 1992 federal law that effectively prevented most states from legalizing sports betting.
"Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own," the court wrote.
The law called the Professional and Amateur Sports Protection Act, passed in 1992, prohibited sports betting, except in four states where it had already been legalized — mainly Nevada, and to a lesser extent Delaware, Montana and Oregon. It gave the other states one year to legalize such betting, if they wanted to do so.
Separately on Monday, the Supreme Court also handed down decisions in two other important cases, dealing with personal rights. In Byrd v. US, the court ruled unanimously that police who stop a motorist for a traffic infraction may not search a rental car without a search warrant, even if the driver's name is not on the rental agreement. And in McCoy v. LA, the court, by a 6-3 vote, ordered a new trial for a capital defendant whose lawyer conceded his guilt to the jury, disregarding the explicit instructions of his client.
Which states will legalize?
The court's sports betting decision, written by Justice Samuel Alito, said the federal law had unconstitutionally commandeered the states' lawmaking authority. The law at issue here, he said, "unequivocally dictates what a state legislature may do and not do," thus putting state legislatures "under the direct control of Congress.
Congress, he said, can regulate sports gambling directly, but it can't pass the buck to the states, telling them how to regulate their own citizens.
While the Court's decision was couched in constitutional terms, the results were a lot more mercenary.
"Gambling is a huge, huge fan engagement tool," said Andrew Brandt, director of sports law at Villanova University. He quoted Nielsen research which estimates that the average NFL fan who is a non-bettor watches about 15-16 games a year. The average NFL fan who is a bettor watches 45-50 games a year. "That kind of information is gold!" Brandt said.
Brandt went on to list a number of states that are "on deck" to enact legislation that would legalize sports betting — among them New Jersey, Pennsylvania, Delaware, Connecticut, Iowa, Mississippi, New York, and West Virginia. Another dozen states have publicly announced plans to do so at different speeds.
One state that is an "absolute no" for sports betting is Utah, which has an anti-gambling provision written into its state's Constitution. But most experts expect a majority of the states to legalize sports betting in the next year or two, thus providing the states with a new and needed tax revenue stream.
College athletes the most vulnerable
With every player in the sports world seeing dollar signs, there is one problem player — the amateur athlete.
Amateur athletes are the most vulnerable to corruption because they are not paid, noted Michelle Minton of the Competitive Enterprise Institute.
That's why the NCAA could throw "a wrench in the works," said John Wolohan, professor of Sports Law at Syracuse University. Professional players make too much to risk throwing a game, he said, but a kid on full athletic scholarship with no money in the bank is much more susceptible when someone approaches him and says, "Hey, you're playing Colgate tonight. You guys are favored by 20 points. Here's $5,000. Make sure it's under 20."
Potential impact of the court's ruling
The ban on legalizing sports betting was also known as the Bradley Act, after author of the bill, former basketball great Bill Bradley, who served three terms in the U.S. Senate.
In an NPR interview, Bradley said his motivation was simple, and personal. "Betting on sports was betting on human beings, and I thought that was wrong," he explained.
Bradley said that in invalidating the 1992 law, the Supreme Court "ignored the impact of their ruling on sport," turning "every baseball player, basketball player, football player into a roulette chip." And he said that with this ruling, there is "nothing to prevent betting on high school or even grade school games."
Bradley said there was virtually no congressional opposition to his bill back in 1992, though he added that Donald Trump, with failing investments in Atlantic City casinos at the time, lobbied against it, believing that sports betting was the answer to his financial problems there.
After the bill passed, New Jersey did not seek to legalize gambling in its one-year window of opportunity. It was not until 2011 that the state, starved for tax revenue, began trying to get out of the ban. Only when it finally got its case to the Supreme Court did it finally prevail.
After oral arguments in December, then-Gov. Chris Christie, R-N.J., said on the Supreme Court steps, "If we're successful here, we can have bets being taken in New Jersey within two weeks of a decision by the court. We're like boy scouts; we're prepared."
The American Gaming Association estimates that illegal sports betting has grown to $150-billion-a-year market. Expectations are that legal sports betting could significantly outstrip that number.
America has seen a cultural shift on the question of sports gambling in recent times. NPR's Uri Berliner reported in 2015 that ESPN has been increasing its coverage of gambling by, for instance, directly referencing the point spread set by oddsmakers.
And while the major U.S. pro- and college-sports leagues have "always sought to distance themselves completely from gambling," as Berliner put it, NBA Commission Adam Silver came out in favor of legalizing (and regulating) sports betting in 2014.
Then there's the popularity of daily fantasy sports — an industry that has weathered legal challenges of its own. Fantasy sports leagues amount to "thinly veiled gambling," as ESPN's Rob King told Berliner, and have helped push sports betting into the mainstream.
It's no wonder that news of Monday's decision sparked a surge in gaming stocks on Wall Street.
Jason Robins, CEO of DraftKings, in an interview with NPR, estimated an increase of $15 to 20 billion in revenue in the fantasy sports industry alone if a majority of states end up legalizing sports betting. The ruling Monday opens up a lot more "cool experiences and products we can offer to our customers," he said.
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