Becker & Poliakoff Gaming Attorney Alan Koslow presented "Legalizing Sports Wagering…A long shot, but don’t bet against it!" at the National Council of Legislators from Gaming States in Las Vegas along with client Donn Mitchell of Isle of Capri.

1. Legalizing Sports Wagering…
A long shot, but don’t bet against it!
Presentation by Alan Koslow, Esq.
Shareholder and Director of Gaming, Hospitality & Sports Law
Becker & Poliakoff, P.A. | Fort Lauderdale, Florida
Research by Michelle L. Klymko, Esq.

2. Current Law on Sports
Wagering in the U.S.
The Professional Amateur Sports Protection Act
(PASPA) was enacted by Congress in 1992
PASPA makes it illegal to bet on professional
and amateur athletics.
Four states, Nevada, Oregon, Montana, and Delaware, were grandfathered in as exceptions
under PASPA because they had some form of sports wagering at the State level at the
time of enactment. (Nevada is unique in that it is the only State in the United
States that has legalized licensed sports books, which comes under PASPA’s
exceptions. (28 USC §3704)

3. Specific Language of PASPA
28 USC Section 3702, the main provision, provides that:
It shall be unlawful for
(1) a governmental entity to sponsor, operate, advertise, promote, license, or authorize by law
or compact, or
(2) a person to sponsor, operate, advertise, or promote, pursuant to the law or compact of a
governmental entity, a lottery, sweepstakes, or other betting, gambling, or wagering scheme
based, directly or indirectly (through the use of geographical references or otherwise), on
one or more competitive games in which amateur or professional athletes participate, or
are intended to participate, or on one or more performances of such athletes in such
games.
PASPA's only remedial scheme, found in Section 3703, allows a sports organization or the
United States Attorney General to seek injunctive relief if Section 3702 is violated:

4. PASPA Opponents
(at time of enactment)
PASPA received opposition from Senator Chuck Grassley of Iowa and the Department of
Justice ("DOJ"), as they felt that PASPA would be a "substantial intrusion" into states'
rights.
 Senator Grassley argued that it would discriminate among the states because the
grandfathered states would have a monopoly on sports gambling.
 The DOJ went on to say that "determinations of how to raise revenue have typically
been left to the states.“
 Senator Grassley contended that “if the professional sports leagues were truly
concerned about the risk of 'fixed' games [and] the integrity of professional sports . . .
they would have sought to prohibit the $1.8 billion head-to-head sports wagering
industry in Nevada."

5. PASPA Supporters
(at time of enactment)
The Professional and Amateur sports leagues have
complained that sports gambling ruins the integrity of their sports. They do not want
fans to think that the “fix was in” when a controversial play occurs.
 However, since PASPA’s enactment, there have been several episodes of point shaving
that would lead one to believe the integrity of sport will always be challenged,
regardless of whether sports gambling is legal.
 One of the biggest proponents of PASPA was Senator Bill Bradley, former
professional basketball player and New Jersey Senator. Senator Bradley was concerned
that state-sanctioned sports gambling would send the wrong message to children that
sports revolve around gambling rather than achievement and sportsmanship.
 Senator Bradley also believed that gambling would injure the integrity of sport by
causing fans to question whether a missed shot or fumble was "fixed." He "believed
that 'the harm that state-sponsored sports betting causes'—that is, threatening the
integrity of sports in the eyes of both fans and young people—far outweighed the
financial advantages received.

6. Do Federal Laws Really Prohibit
Sports Wagering Within States?
18 U.S.C. § 1084 - The Federal Wire Act ("Wire Act") prohibits the use of wire
communications in wagering on a sporting event. In combination, PASPA and
the Wire Act amount to what appears to be a defacto prohibition on Internet sports
wagering.
18 U.S.C. § 1952 – The Travel Act - forbids the use of the U.S. mail, or interstate or
foreign travel, for the purpose of engaging in certain specified criminal acts.
31 U.S.C. §§ 53161-5367 – The Unlawful Internet Gambling Enforcement Act of
2006 - prohibits gambling businesses from knowingly accepting payments in
connection with the participation of another person in a bet or wager that
involves the use of the Internet and that is unlawful under any federal or state law

7. Economic Impact of Sports Wagering In Nevada
 In 2011, $2.88 billion was legally wagered in Nevada’s sports books; (Note:
While approximately $2.88 billion was wagered in 2011, more than 95 percent of
all bets placed were returned to patrons in winnings). As of June 2012, Nevada has
216 legal sports books.
 The National Gambling Impact Study Commission (NGISC) estimated that illegal
wagers are as much as $380 billion wagered illegally annually.
 According to the Nevada Gaming Control Board, approximately $93.9 million was
wagered on the 2012 Super Bowl at legalized sports books across the state, but
most of that figure was returned to bettors in the form of winnings.

8. The Numbers Don’t Lie
States that currently allow legalized
sports gambling have an advantage
over the rest of the states
 Legal sports wagering helps bring more than 30 million visitors to Nevada each year and
provides employment for thousands of people.
 The FBI estimates that more than $2.5 billion is illegally wagered annually on March
Madness.
 The Las Vegas Convention and Visitors Authority estimated that the 2007 Super Bowl
weekend generated $109.5 million in non-gaming economic impact and attracted
approximately 287,000 visitors.
 Club CalNeva, a Las Vegas based company that operates over thirty sports books
forecasts that sports gambling will bring in $1.3 billion in gross revenues and $220
million in tax revenues for New Jersey on an annual basis.
Source: American Gaming Association Fact Sheet

9. Sports Wagering as a Revenue Source
Most states use lotteries to fund public education, economic development, state
parks and gambling problem treatment, so what is wrong with legalized sports
wagering?
Questions States Should Be Asking:
Is PASPA an excuse for the Federal Government to thwart a State’s ability to raise
its own revenues?
Does PASPA violate the Constitution’s 10th Amendment and the Commerce
Clause?
Should PASPA be repealed for economic reasons? Is it outdated? Archaic?
(Analogy to legalization of marijuana at state level)
Why shouldn’t States be free to set up their own taxing schemes from
sports wagering?

10. Why New Jersey? Why Now?
In 2011, NJ State. Sen. Raymond Lesniak (D) envisioned a change that would bring up to
$100 million to state coffers in taxes, generate billions in betting, spark economic
activity, and throw lifelines to casinos and the horse-racing industry.
"Our casinos are suffering, our racetracks are dying, and our
state budget needs revenues,"
"How can Congress say to the people of the state of New
Jersey, 'You do not have this right that the people in
Nevada do?” Lesniak said.
He contends, among other things, that the federal law does not uniformly regulate
commerce and is overly broad and vague.

11. New Jersey Taking
on the Feds?
New Jersey lawmakers have long insisted PASPA is unconstitutional
Nov. 9, 2011 - After a two-year long effort, in the courts and in the state legislature, New Jersey voters
overwhelmingly supported the beginning of legal sports wagering in New Jersey. Voters approved
the constitutional question by a final margin of 65% in favor, 35% opposed. The bets could be
placed at horse tracks throughout New Jersey and casinos in Atlantic City.
Jan. 17, 2012 - New Jersey Governor Chris Christie signed into law a constitutional amendment that will
permit sports wagering at the State’s casinos and race tracks. Governor Christie signed the bill which
can take effect once PASPA has been overturned or repealed. Governor Christie decided that rather
than challenging PASPA in court and trying to overturn the law, New Jersey will implement sports
gaming as of January 2013.
August 2012 - August the NCAA along with the NFL, NBA, NHL, and MLB, filed a lawsuit in federal
court seeking to prohibit New Jersey from implementing sports gambling.
Case Number: 12-cv-4947

12. in New Jersey
December 21, 2012 - According to a Wall Street Journal report, US District Judge
Michael Shipp agreed with the National Football League, Major League Baseball,
National Basketball Association, National Hockey League, and National Collegiate
Athletic Association that they might suffer injury if such gambling were legalized
in the state.
Following, Governor Christie said - “We intend to move forward and to issue sports
gaming licenses where appropriate, and to have this happen in our state.”

13. Judge Shipp’s Order
For the reasons stated in the Opinion filed on this date, and for other
good cause shown,
IT IS on this 21st day of December, 2012, ORDERED that:
1) Plaintiffs have demonstrated standing and this case will proceed
to the merits;”
2) Defendants’ Motion to Dismiss (ECF No. 29) is DENIED;
3) Defendants’ Cross Motion for Summary Judgment (ECF No. 76) is
DENIED in so far as it challenges Plaintiffs’ standing;
4) Plaintiffs’ Motion to Preclude the Expert Testimony of Robert D.
Willig (ECF No. 98) is administratively terminated as moot; and
5) A date for oral argument regarding the constitutional issues will be
issued after January 20, 2013.

14. Other Challenges Involving Sports Wagering
Faced with a mounting budget crisis, Delaware decided to offer a broader range of
sports betting games on non-Delaware athletic events, including individual
games at the professional and college level. The state-run betting operation
was set to begin in September 2009. The four major professional sports leagues
– baseball, basketball, football, and hockey – and the National Collegiate
Athletic Association filed suit to block the Delaware sports betting operation.
The Issue: whether the federal law’s grandfather clause should be read broadly to
permit states to operate a wide range of gambling options, or whether the
clause should be read narrowly to authorize only the same wagering games
offered in the state between 1976 and 1990.
The Third Circuit ruled that the Delaware plan exceeded the narrow scope of the
federal law’s grandfather clause. The state could run the same games it ran in
1976 but may not expand those games or include new games, the appeals court
ruled. The US Supreme Court let stand an appeals court ruling that the
Delaware’s plan to run an expanded sports betting operation is barred by a
federal antigambling law. - Markell v. Office of the Commissioner of Baseball,
et al.

15. Other Challenges to PASPA
In Flager v. United States Attorney for the District of New Jersey, a private citizen of New Jersey
challenged PASPA on the grounds that it violated the Tenth Amendment because "the
power to outlaw sports wagering was not expressly granted to the federal government" by
the Constitution. The court did not address the Tenth Amendment claim and dismissed the
case holding that the plaintiff lacked standing. Case Number: 2:2006cv03699, filed: August 7,
2006, New Jersey District Court .
In Interactive Media Entertainment and Gaming Association, Inc. v. Holder, Interactive Media
Entertainment and Gaming Association, Inc. ("iMEGA"), New Jersey state senator
Raymond Lesniak, and the New Jersey horse-racing industry filed suit against the United
States Attorney General, Eric Holder, claiming that PASPA was unconstitutional and
violated the First, Fifth, Tenth, Eleventh, and Fourteenth Amendments in addition to the
Equal Protection & Commerce Clause. The government sought to dismiss the case for lack
of standing and failure to state a claim.
The Court ruled that the Plaintiff lacked standing and that under the 10th Amendment (the
State’s express and implied reserved powers to regulate matters affecting its citizens including
the raising of revenue) was reserved for the states only and since New Jersey was not a party
to this suit, Plaintiff has no standing. (2011 WL 802106)
.

16. Most Recent Legislative Efforts
April 26, 2012 - Rep. Frank LoBiondo (R-NJ 2nd) and Rep. Frank Pallone, Jr. (D-NJ 6th) have asked
members of the US House of Representatives to support two bills introduced to roll back the
Federal ban on expanded state-licensed sports betting.
In a letter to colleagues, Reps. LoBiondo and Pallone asked members to:
 Support H.R.3809, “the New Jersey Betting and Equal Treatment Act of 2012″,
which seeks ”to exclude the State of New Jersey from the prohibition on professional and
amateur sports gambling”;
 Support and H.R.3797 - “the Sports Gaming Opportunity Act of 2012″ , which
would amend Chapters 178 of Title 28 USC to “permit a 4-year period [for] States to enact
statutes…[for] wagering schemes involving professional and amateur sports. No action
was taken on either bill other than referral to Committee.
Congress was asked to consider the economic benefits of rolling
back the Professional & Amateur Sports Protection Act of 1992

17. If State’s Can Legalize Marijuana to Raise
Revenue, Why Can’t States Legalize
Sports Books for Same Reason?
Colorado's legalization of marijuana campaign touted money for school construction. Ads
promoted the measure with the tag line, "Strict Regulation. Fund Education." State
analysts project somewhere between $5 million and $22 million a year in additional
revenue for Colorado. An economist whose study was funded by a pro-pot group
projects a $60 million boost by 2017, said Christopher Stiffler, an economist for the
nonpartisan Colorado Center on Law & Policy.
Washington State’s campaign promised to devote more than half of marijuana taxes to
substance-abuse prevention, research, education and health care. Washington State
analysts have produced the most generous estimate of how much tax revenue legal pot
could produce, at nearly $2 billion over five years.
Oregon's measure, known as the Cannabis Tax Act, would devote 90% of recreational
marijuana proceeds to the state's general fund. Oregon's fiscal analysts haven't even
guessed at the total revenue, citing the many uncertainties inherent in a new marijuana
market. They have projected prison savings between $1.4 million and $2.4
million a year if marijuana use was legal without a doctor's recommendation.

18. Conclusion
 On balance, the better legal and policy arguments militate in favor of recognizing the
States’ inherent rights reserved to them under the Constitution to enact laws to raise
revenues, and specifically, laws authorizing sports wagering.
 Why is sports wagering sacrosanct to the Federal PASPA laws pre-empting the field
when all other casino gaming laws and licensing are consistently dealt with at the
respective State level. If marijuana sales can now be legalized State by State in their
respective discretion, isn’t legalized sports wagering a fortiori argument.
 Does Federal Policy creating a “back door” monopoly on sports wagering to Nevada
casinos and sports books make any sense?
 The policy clearly impedes on a State’s rights and encourages illegal sports wagering
activity through “bookies” and sports wagering on the internet.
 Given recent trends for states to exercise their rights to legislate their own State
Policies on all other forms of casino gaming, PASPA’s prohibitions on sports
wagering seem arbitrary, capricious and archaic and no longer justified.

19. Questions Welcomed
Thank you