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Congress takes a huge step toward legalizing sports betting in America

Daniel Roberts
Senior Writer

Ever since NBA commissioner Adam Silver wrote a passionate New York Times op-ed in 2014 in favor of legalizing sports betting, those with skin in the game have hoped for progress in repealing the federal laws that restrict sports betting. In August, New York Governor Andrew Cuomo signed a bill that legalizes and protects daily fantasy sports contests, which some state attorneys general have called illegal gambling. And the American Gaming Association, the primary lobbying group for casinos and gaming companies, has ramped up its efforts to repeal PASPA, the 1992 federal law that banned sports gambling in most states.

Now there is a major sign that change is coming.

ESPN reports that a congressional committee is in the process of reviewing the three biggest federal gambling laws, with the aim of drafting new legislation “that also will address daily fantasy sports and other forms of gaming.”

The politician leading the charge is US Rep. Frank Pallone of New Jersey, who tells ESPN the current laws are “obsolete” and “in desperate need of updating.” Pallone’s state of New Jersey (and to an extent, Philadelphia) has been a leader in the effort to get PASPA repealed, for the tax benefit that gaming would bring to the state. New Jersey has already filed two appeals to the Supreme Court to review PASPA.

Pallone is the top Democrat on the House Energy and Commerce Committee, which held a hearing in May to discuss federal gambling law, specifically as it relates to daily fantasy sports.

PASPA, the Professional Amateur Sports Protection Act of 1992, has been criticized as outdated and overreaching. But there are two additional federal laws that apply to single-game betting, one of them much older, the other newer: the Interstate Wire Act of 1961, which makes the use of the Internet for sports betting a federal crime, and UIGEA, the Unlawful Internet Gambling Enforcement Act of 2006, the law that banned online poker.

There are many competing interests at play in this news, and any review process is sure to play out slowly.

Daily fantasy sports companies like DraftKings and FanDuel counted the New York bill as a major victory, but have hesitated to label themselves “betting” operators, even while some elected officials have said they believe DFS is gambling but should be legal. (In Nevada, the Gaming Control Board told daily fantasy companies they could only continue to do business in the state if they applied for gaming licenses; the companies bowed out.)

Brick-and-mortar casino operators would likely rejoice at the ability to open up sportsbooks in new states, but a change to the Wire Act would also open the floodgates to iGaming, which means competition for casinos, since people can lay down bets from their smartphones.

Pro sports leagues, meanwhile, and the cable networks that show their games, would likely gain viewers from people interested in games because of betting. In a recent study, the AGA, using data from Nielsen, found that adults who placed a bet on the NFL watched 19 more games last season than adults who didn’t bet, and that if sports betting were legalized, the number of regular-season sports viewers betting on games would jump from 40 million to 57 million.

And the sports leagues saw this coming. While no commissioner has been as vocal in their support of sports betting as Silver of the NBA, the three biggest leagues have been quietly making deals with sports betting companies. Last year, the NBA became a part owner of FanDuel, and a part owner of numberFire, a sports-betting statistics firm; the NFL invested in Sportradar, a sports-betting statistics firm owned by a Swiss parent company that provides services to sportsbooks; and MLB inked a partnership with Sport Integrity Monitor, a London firm that monitors sports betting patterns to flag suspect activity and that is owned by a company whose clients include sportsbooks.

If Pallone and his cohorts are successful in their efforts, American pro sports leagues stand to benefit, and know it. And they’ve already been setting themselves up for when that day comes.

Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite. Sportsbook is our recurring sports business video series.

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