Most Influential Federal Branch On Gambling? Not Congress

August 2, 2022
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Of the three branches of the federal government created by the U.S. Constitution, the Supreme Court has had more impact on the gaming industry in the 21st Century than Congress or the White House.

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Of the three branches of the federal government created by the U.S. Constitution, the Supreme Court has had more impact on the gaming industry in the 21st Century than Congress or the White House.

One only needs to look at the landmark 6-3 decision on May 14, 2018, which overturned a federal prohibition of sports betting and revolutionized the gaming industry almost overnight.

U.S. Supreme Court Justice Samuel Alito, who wrote this year’s controversial opinion overturning the Roe v. Wade decision on abortion, also authored the ruling four years ago which opened the floodgates for states to legalize and regulate wagers on sporting events.

Of course, the gambling industry through its chief lobbying shop in Washington, D.C., the American Gaming Association (AGA), continues to monitor the U.S. House of Representatives and the Senate relentlessly for potentially troublesome legislation.

But you have to go back to September 30, 2006 to find the last significant gambling law passed by Congress in the Unlawful Internet Gambling Enforcement Act, which was rammed through the Senate in the dead of night on the last day of a congressional session.

As for the White House, the last four Presidents have been virtually mute on gambling.

After expressing concern about the “exponential” growth of gambling, President Bill Clinton signed a bill on August 3, 1996 ordering a two-year study of the industry by a federal panel called the National Gambling Impact Study Commission (NGISC).

The recommendations of the NGISC in 1999, and its predecessor — the National Gambling Commission in 1976 — have faded into irrelevance.

What does it mean for the judicial branch to exert more influence than the legislative and executive branches of the federal government on the gaming industry?

It is fair to say — so far, so good.

The traditional lobbying strategy of the industry is to achieve policy objectives in state legislatures and avoid involvement with the federal government whenever possible.

The same can be said about the tribal gaming industry which flexed its impressive political muscle in Florida this year when the Seminole Tribe blocked DraftKings, FanDuel and Las Vegas Sands from entering the coveted market of the Sunshine State.

California gaming tribes hope to achieve a similar result on November 8 when voters decide if they prefer a tribal sports-betting proposition over a measure backed by DraftKings, FanDuel, BetMGM and Fanatics.

“Typically, lobbying at the state level is much easier than the federal level,” said John Holden, an assistant professor of business at Oklahoma State University.

“I think the benefits of going state-by-state for the industry exceed the costs. While they won’t win everywhere, losses can be isolated unlike at the federal level where you’re basically throwing all your chips on the table,” Holden said.

The larger role of states vis-à-vis the federal government in gambling regulation is not a 21st Century phenomenon, according to Bob Jarvis, a gaming law professor at the Shepard Broad College of Law in Davie, Florida.

“Except for four discrete areas — shipboard (or riverboat) gambling, Indian gambling, internet gambling and until recently, sports gambling — the federal government has deferred to the states,” Jarvis said.

Jarvis is not persuaded the gambling industry prefers a state-based lobbying approach, which he said can result in “a crazy quilt jumble of laws.”

“However, given that when Congress has legislated, it has been anti-gambling — with the exception of the Indian Gaming Regulatory Act of 1988 — the industry has realized that they have more of a chance with at least some of the states,” Jarvis said.

The AGA did not immediately return a request for comment.

The dysfunction of Congress and the reticence of the White House have opened the door for the Supreme Court to fill the vacuum in federal gambling regulation.

This is particularly true of sports betting, but Ryan Rodenberg, a professor at Florida State University, said this scenario could change quickly and dramatically.

Rodenberg cited the U.S. Wire Act of 1961, which prohibits the transmission of wagers and sports-betting information across state lines.

“If an aggressive U.S. attorney (as a member of the executive branch of the federal government) invokes the Wire Act to prevent a state from taking bets, the status quo could be disrupted,” Rodenberg said.

But for the time being, the Supreme Court is where the action is for gambling oversight by the federal government, and that seems to suit the industry just fine.

Supreme Court Justice Neil Gorsuch, who was nominated by President Trump in 2017, appears to be a reliable advocate for Indian tribes and their gaming operations.

Gorsuch wrote the majority opinion in a 5-4 decision in June allowing the Ysleta del Sur Pueblo, also known as the Tigua Tribe, to continue electronic bingo operations in El Paso, Texas.

“He brought along Amy Coney Barrett, another conservative justice, with him on the Tigua decision, and we hope that trend continues,” said a tribal gaming lobbyist in Washington, D.C. who requested anonymity.

Gorsuch also may have been the critical fourth vote by justices who agreed to grant certiorari, or a hearing in 2017, for arguments in the sports-betting case.

Before Gorsuch joined the court, justices denied a sports-betting hearing without comment in June 2014.

Gorsuch also is one of five justices still on the court who voted in 2018 to overturn the federal betting ban in the Professional and Amateur Sports Protection Act of 1992.

The other four are Chief Justice John Roberts and Justices Samuel Alito, Elena Kagan, and Clarence Thomas.

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