Gambling and the Law: States grandfathered-in under PASPA

3 January 2018

By I. Nelson Rose

The Professional and Amateur Sports Protection Act freezes sports betting into whatever form it took in 1991. It allows states to continue whatever form of sports wagering they had a quarter of a century ago. But Congress expressly barred states from legalizing any new form of sports wagering.

There is a general assumption that PASPA allows only the states of Nevada, Delaware and Oregon to have legal sports betting. Because this federal statute locks in the states, it is necessary to see what forms of gambling were permitted under state laws in 1991. Delaware and Oregon were operating state lotteries with parlay betting on sports events. Mississippi had a statute that allowed licensed operators to run sports pools. However, the Mississippi Supreme Court ruled that the statute did not mean what it said, and that the state’s casinos cannot have betting on races and sports events; although, it does appear that casinos can accepts sports bets if the sports event takes place on the casino’s property. Montana not only had a state lottery with authority to take sports bets, it allowed sports cards, sports pools and other forms of parimutuel betting on sports events. New Mexico statutes permitted “Keirin,” parimutuel wagering on bicycle races. North Dakota expressly allowed nonprofit organizations to run sports pools on professional sports events. It also allowed eligible organizations to conduct calcuttas, a primitive type of parimutuel betting where gamblers bid for the right to “own” an athlete, for example, in a foot race. Washington state expressly allowed what every other state tolerated: Anyone could conduct low-limit sports pools. Wyoming, like North Dakota, allows calcuttas, limited to amateur sports events.

Horse racing may or may not be a “sport,” but certainly jai alai (a Basque game similar to handball) is. But PASPA expressly exempts parimutuel betting on both. Wagering on jai alai was authorized in 1991 in Connecticut, Florida, Nevada and Rhode Island.

Congress grandfathered-in about a dozen states with true sports betting. But it locked out the 38 or so other states, overruling voters and state legislatures, as happened recently in New Jersey. Federal courts even ruled that the states that were grandfathered-in were limited to the exact same games they operated decades earlier: Delaware could only continue having parlay bets, and could not start taking straight head-to-head bets like Nevada sports books do.

Imagine a statute passed in 1928, declaring that it is a felony to offer movies with sound. The Act expressly exempts only those states whose theaters are already showing talking pictures. Regardless of changes in opinions or technology, Congress has decreed that only a dozen states can have talkies.