AGA to US Congress: Empower States, Respect Consumers

Two dogs struggling for control of a tennis ball in a green grassy field

The American Gaming Association (AGA) has declared in an open letter to the US Congress that it will work toward state-level (rather than federal) legislation and regulation of sports-betting activities across the country.

The American Gaming Association, the leading US-based lobbying group representing the country’s casino-entertainment industry, has written an open letter to the US Congress advising against that legislative body’s launching a renewed effort to legislate sports betting across the country.

The AGA’s public pronouncement comes in the wake of the Supreme Court of the United States’ (SCOTUS) recent nullification of PASPA (the Professional and Amateur Sports Protection Act), the law that has blocked almost all US states from offering legalized sports wagering if they choose.

With PASPA effectively stricken from the books, the matter would fall to each state to decide unless the federal government imposes either a redesigned nationwide ban or a series of new restrictions designed to cripple the activity at the state level. That latter scenario is a possibility, following former PASPA sponsor US Sen. Orrin Hatch’s announcement that he will introduce federal legislation on the topic in the near future.

A comment from Hatch’s office declaring that “to ensure there are some federal standards in place to ensure that state regulatory frameworks aren’t a race to the bottom” was destined for state-level pushback and the AGA’s open letter is one of the first efforts in that direction.

As the AGA letter states, “In the wake of the Court’s ruling, some have called for Congress to enact a federal framework to regulate sports betting. AGA believes this is unwise, unnecessary, and out of step with public sentiment indicating 7 in 10 Americans think this decision should be left to each state, not the federal government.”

States, consumers should be priorities

Rather than rewriting a newer version of PASPA’s failed history, the AGA believes the federal government should let the individual states deal with the matter as they choose, cognizant that the intent behind all the laws, federal or state, is the same: To end the tens of billions of unregulated sports betting that occurs in the US each year and instead capture a new, regulated revenue stream, while also offering consumer protections. The AGA believes that state regulatory frameworks are already in place and that states have experience through their work with other forms of gambling.

The AGA offers five basic priorities that the lobbying group believes should be at the forefront of the US’s sports-betting regulatory wave:

  • Empower State Regulation: More than 40 states and 260 jurisdictions have proven to be effective gaming regulators. AGA will be a resource to state policymakers and regulators as they consider sports betting legalization. AGA will also combat any attempts by the federal government to neuter state regulatory power.
  • Place Consumers First: AGA encourages all stakeholders to understand the intricacies of the illegal marketplace and why consumers turn to it. AGA will promote strong consumer protections – which the illegal market fails to offer – and consumer-centric conveniences such as intrastate mobile wagering.
  • Strengthen Game Integrity: Rigorous sports betting regulation strengthens game integrity, a primary aim shared by the gaming industry and sporting bodies. New technologies make it possible to track legal wagering and identify suspicious activities. The gaming industry supports establishing a national data repository to share any suspicious betting information with law enforcement, gaming regulators, and sporting bodies.
  • Promote Responsible Gaming and Responsible Advertising: The gaming industry encourages effective responsible gaming programs in all jurisdictions that enact regulated sports betting. To this end, the gaming industry will voluntarily pursue the creation of a self-regulatory model to guide sports betting advertising.
  • Encourage Contracts over Statutes: Sports betting can benefit sporting bodies and gaming companies alike. The gaming industry supports strong contracts between these parties to address issues such as data and the value of other activities. The gaming industry will vigorously oppose efforts to use federal or state legislation to set basic business terms.

End the excise tax

How this all plays in Washington, DC, remains to be seen, as a federal-vs-states battle looms. The AGA did have advice for the feds, though, if indeed the claims of Hatch and others regarding illicit offshore sportsbooks are true. That’s a call to end the federal excise tax that already exists on sports betting, which amounts to 0.25% of the total handle on any event being booked.

Though that 0.25% rate is far less than it was decades earlier, it’s still enough of an impact to allow illicit offshore books to provide better odds to gamblers, according to the AGA. And the excise tax was never designed as a federal revenue stream; instead, it was implemented to provide financing for any needed enforcement actions.

That excise tax’s purpose is now moot, according to the AGA, given the newer regulatory regimes that are already or soon will be in place. The AGA letter declares: “This 1951 tax was originally intended to serve as an enforcement tool against illegal gambling, but instead hinders the ability of the legal market to compete with illegal operations that do not pay any taxes.”