Frank Pallone Pulls Federal Sports Betting Bill from U.S. House

Frank Pallone GAME Act - US Federal Sports Betting Regulations

Frank Pallone introduced the GAME Act to the Judiciary Committee last December, but the bill failed to gain traction.

U.S. Representative Frank Pallone (D-New Jersey) has withdrawn a federal sports betting bill from consideration ahead of a congressional hearing on sports betting. Rep. Pallone in December 2017 introduced Gaming Accountability and Modernization Enhancement Act, which would provide a regulatory framework for sports gambling in the United States.

The Gaming Accountability and Modernization Enhancement (GAME) Act would have set federal regulations for licensing, tax reporting, and a host of consumer protection issues. The GAME Act would have introduced protections against underage gambling, as well.

Pallone introduced the bill the same month the U.S. Supreme Court heard arguments from New Jersey and the US sports associations in Christie v. NCAA (later Murphy v. NCAA) about the constitutionality of the Professional and Amateur Sports Protection Act (PAPSA). Five months later, the Supreme Court rendered it decision, which struck down PASPA as unconstitutional.

Though proposals like the GAME Act take on a greater importance after the Supreme Court decision, Pallone’s bill never gained traction in the U.S. House of Representatives. It languished in the House Subcommittee on Digital Commerce and Consumer Protection for the better part of a year and never received a committee vote. Such a bill would need to make it out of committee before it ever received a floor vote.

House Subcommittee on Crime and Terrorism

The House Subcommittee on Crime, Terrorism, Homeland Security and Investigation plans a hearing of sports betting for September 27. The House hearing may not give sportsbook proponents the forum they want for pushing forward pro-sports betting legislation, but it could be an important time for proponents to play defense.

Over the years, opponents of various types of gambling have tried to undermine gaming legislation by claiming unlicensed gambling could fund terrorism. A subcommittee on terrorism and homeland security might be expected to raise similar arguments.

Departing U.S. Rep. Jim Sensenbrenner (R-Wisconsin), who is the chairman of the Crime & Terrorism Subcommittee (of the Judiciary Committee), released a statement describing his reasons for the Sept. 28 meeting: “My subcommittee will look at the implications of this SCOTUS ruling and talk about what it means for the integrity of sports as well as what sorts of improper or illicit activities could arise. Ultimately, we want to determine whether or not a basic federal framework is necessary to guide states’ new gambling policies.”

Will Lawmakers Try to Tie Gambling to Terrorism?

The term “what sorts of improper or illicit activities could arise” is filled with meaning.┬áIn the recent past, U.S. lawmakers have tried to confuse the public about the difference between licensed and unlicensed gambling. A licensed and regulated gambling operation requires transparency and accountability, so sportsbooks which operate within federal and state regulations cannot fund terrorism.

Banning sportsbooks and bookmaker sites drives the practice underground, where bookmakers do not face scrutiny or accountability. While most successful offshore online sportsbooks and sports bet exchanges are licensed by international regulatory agencies, some unlicensed online bookmakers might fund organized crime or other illegal groups.

Jason Chaffetz and RAWA

Anti-gambling lawmakers have in the recent past tried to muddy the waters, claiming licensed gaming would lead to terrorism. The starkest case in recent memory was former U.S. Representative Jason Chaffetz’ attempt to push Restore America’s Wire Act (RAWA) throughout 2014 and 2015. Chaffetz, then the head of the powerful House Oversight Committee, argued that legal and licensed online gambling might fund terrorism or other criminal enterprises. Then Chaffetz brought witnesses like John Kindt, who cited cases of unlicensed online gambling to back their contention.

The series of hearings came to an end in December 2015 when Chaffetz’s logic fell apart under scrutiny. By the end of the hearing, Jason Chaffetz handed over his gavel to another House member and washed his hands of the meeting. That seemed to be the end of Restore America’s Wire Act.

Orrin Hatch and Chuck Schumer

Lawmakers who would ban sports betting in all 50 states remain on Capitol Hill. The man who created PASPA, Senator Orrin Hatch (R-Utah), is still a U.S. Senator twenty-five years after the now-defunct federal ban on sports betting went into effect. From a state where 100% of gambling is banned, Orrin Hatch would want to ban sports betting along with all other forms of gaming.

In the U.S. Senate, Minority Leader Charles Schumer (D-New York) appears to have the initiative at the moment. Last month, Sen. Schumer introduced his own set of regulations for sports betting. While Schumer’s home state has not legalized sports betting at the moment, the New York State Legislature has considered doing so in the recent past.

“Not One Dime of Tribute”

Sen. Chuck Schumer’s proposed federal legislation was praised by the U.S. sports leagues, but widely condemned by most stakeholders in the American sports betting industry. Casino groups and sportsbook companies do not like federal regulations back by the NBA, NFL, and MLB, because the leagues want to be paid a 1% to 2% “integrity fee”.

After Sen. Schumer announced his proposed regulations, the the NBA, Major League Baseball, and PGA Tour issued a joint statement: “As legalized sports betting spreads across the states, there is a need for consistent, nationwide integrity standards to safeguard the sports millions of fans love. We strongly support the legislative framework outlined by Senator Schumer and we encourage Congress to adopt it.”

Though the leagues have argued for the past quarter-century they have done everything in their power to protect the integrity of their sports, they now claim= they need to be paid a fee for the additional cost of protecting sports integrity. The prospective US sports betting industry and their public advocates scoffed at the notion of integrity fees.

After winning a 6-year legal battle against those same sports leagues to be able to offer legal sports betting at all, the sportsbook operators are not in a mood to pay the leagues who tried to shut down their businesses. That thought caused former New Jersey State Senator Raymond Lesniak to state, Not one dime of tribute to the sports leagues.