Published On: Wed, May 16th, 2018

Pennsylvania poised to become one of first states to allow sports wagering in aftermath of Supreme Court decision

Ken Durden | Shutterstock.com

A day that Pennsylvania officials anticipated last year has arrived, as the U.S. Supreme Court on Monday struck down prohibitions on sports wagering outside Nevada. Now, thanks to a state law passed in October 2017, Pennsylvania is one of a handful of states in a position to take advantage of that ruling and allow sports betting at casinos.

The Supreme Court case hinged on a lawsuit between the state of New Jersey and the NCAA, the governing body of major college athletic programs, and three professional sports leagues. The court ruled in a 6-3 vote that the law banning certain states from allowing sports wagering was unconstitutional.

“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make,” the majority of the court wrote in their decision. “Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own.”

Writing in dissent, Supreme Court Justice Ruth Bader Ginsburg argued that the court should have drawn its ruling more narrowly, excising unconstitutional portions of the law rather than throwing it out altogether.

“The Court wields an ax to cut down [the law] instead of using a scalpel to trim the statute,” she wrote. “It does so apparently in the mistaken assumption that private sports-gambling schemes would become lawful in the wake of its decision.”

Pennsylvania’s Act 42 of 2017 was a significant gaming reform and expansion that legalized daily fantasy sports and online gambling, among other measures. Tucked away in the bill was a provision that established that sports wagering on individual games would be legalized if the federal prohibition was ever lifted.

The establishment of sports gambling in the state is not automatic, however. The Pennsylvania Gaming Control Board now has to establish how such gambling would be regulated and set a timetable for its implementation.

“The Board is reviewing the court opinion in its entirety to properly understand the full opinion,” state gaming control officials said in a statement. “The Pennsylvania legislature saw Sports Wagering as a key element of overall gaming expansion, and took the initiative prior to this decision to authorize Sports Wagering which does provide some guidelines on implementation. The next step for Pennsylvania would be for our staff to draft appropriate regulations and seek approval of those regulations by the Board.”

The board’s statement said that it had no information to share yet regarding the timetable for establishing those regulations or for when sports wagering might go into effect.

Act 42 could provide a significant windfall to state coffers if all 12 Pennsylvania casinos decide they want to offer sports wagering. Each casino would have to pay a $10 million licensing fee and a renewal fee of $250,000. The proceeds would be taxed at a 34 percent rate, plus a 1 percent tax allocated to the county where the casino is located and another 1 percent for the local municipality.

Elizabeth Stelle, director of policy analysis for the nonprofit Commonwealth Foundation, a nonprofit organization that advocates for free-market solutions to improving Pennsylvania’s economy, warned against seeing the potential new revenue as a solution to the state’s budgetary problems.

“Gambling alone is not a stable source of revenue,” Stelle said. “[The state] needs to be thinking long-term, not year-to-year.”

Stelle pointed out that the Independent Fiscal Office is projecting a $2 billion budget deficit in Pennsylvania by 2023. To combat that, she said, the state needs to look at controlling spending rather than chasing after new revenue, and one avenue to do that is the proposed Taxpayer Protection Act, which would tie government spending to population growth.

Pennsylvania is a state with a wide variety of successful professional and college sports teams. Pittsburgh has teams in the National Football League, Major League Baseball and the National Hockey League; the Pittsburgh Steelers have won more Super Bowls than any other team, with six; and the Pittsburgh Penguins were two-time defending Stanley Cup champions before they were eliminated from the playoffs this month.

Philadelphia has teams in all four major sports leagues, the NFL, MLB, NHL and National Basketball Association. The Philadelphia Eagles are the defending NFL champions, and the Philadelphia 76ers (basketball) and Philadelphia Flyers (hockey) both made the playoffs in their respective sports this season.

Among college programs, Villanova, based in Philadelphia, saw its men’s basketball team win the National Championship this spring, and the Penn State University and University of Pittsburgh football teams have long track records of success and national prominence.

The American Gaming Association was, unsurprisingly, pleased by the Supreme Court’s decision.

“Today’s decision is a victory for the millions of Americans who seek to bet on sports in a safe and regulated manner,” Geoff Freeman, the association’s president and CEO, said in a statement. “According to a Washington Post survey, a solid 55 percent of Americans believe it’s time to end the federal ban on sports betting. Today’s ruling makes it possible for states and sovereign tribal nations to give Americans what they want: an open, transparent, and responsible market for sports betting.”

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