Should Congress Regulate Online Sports Betting?

 

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The NFL is throwing its weight behind a federal framework, while the gaming industry blamed “burdensome” taxes and laws for the allure of illegal sports books.

WASHINGTON — State and gaming industry officials pushed back Thursday on the notion that additional federal oversight of online sports betting is needed to curb illegal gambling.

Meanwhile proponents of setting up a federal legal framework for sports betting, including the NFL, encouraged members of the House Judiciary Committee’s crime subcommittee to enact standards safeguarding consumers, punishing violators and protecting intellectual property.

In May, the Supreme Court ruled in Murphy v. NCAA that states are free to establish their own sports betting schemes and Delaware, New Jersey, Mississippi, and West Virginia are doing just that. Nevada was already permitted under the Professional and Amateur Sports Protection Act, while Pennsylvania, Rhode Island and New York have passed sports betting laws but not begun taking bets.

Sara Slane, senior vice president of public affairs for the American Gaming Association, told lawmakers there is already enough regulation in place.

“With such robust and rigorous regulatory oversight at both the state and federal levels, there is no need to overcomplicate or interfere with a system that is already working,” she said.

The gaming industry already works with the Treasury Department to prosecute financial crimes under the Bank Secrecy Act, Slane said, while the Illegal Gambling Business Act gives the federal government the tools to go after match fixing and illegal betting outfits. But she noted that illegal sports books are enticing to gamblers because they don’t require identification or money up front, they don’t report to the IRS and often offer better odds.

Federal and state governments should help the gaming industry in its race against illegal operators by avoiding approving “burdensome” taxes and laws, Slane said.

Jon Bruning, counselor at the Coalition to Stop Online Gambling, agreed states taxing a “low-margin venture” like sports betting would only drive more gamblers to illegal avenues needlessly. But he said the real problem is “the federal government has effectively abandoned the playing field.”

“How does an attorney general, like I used to be, prosecute an illegal online gambling company?” Bruning asked. “Do I send an investigator to the Cayman Islands?”

U.S. Rep. Bob Goodlatte, a Virginia Republican, agreed “state regulations are difficult if not impossible to enforce” where online sports betting is concerned. A federal ban not being “possible,” he said existing federal laws need to be enforced and modernized.

Professional sports leagues like the NFL are concerned about illegal betting because they don’t want fans thinking “improper influences affect the game,” said Jocelyn Moore, executive vice president of communications and public affairs for the football league.

“Sports betting issues cannot be confined within state lines,” Moore said.

Nevada Gaming Control Board Chair Becky Harris said the state has refined its regulatory process through the decades to monitor “both sides of the counter” and federal regulation would only add additional costs.

The board has access to 90 sworn peace officers through its law enforcement agency.

“The best way to eradicate illegal activity is through coordinated law enforcement efforts,” Harris said.

Bruning, however, said Nevada represents the top tier of gambling and brick-and-mortar casinos aren’t at issue; online sports betting is.

Committee leadership expressed an inclination to tighten federal regulations in the future.

“For Congress to do nothing is the worst possible alternative,” said U.S. Rep. Jim Sensenbrenner, a Wisconsin Republican, to close the hearing. “So we have some work to do.”

Dave Nyczepir is a News Editor at Government Executive's Route Fifty and is based in Washington, D.C.

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