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U.S. Congress to take first concrete step toward legalizing sports gambling

Coming soon to a state near you? (Ethan Miller/Getty Images)

Calling the federal laws that mostly prohibit sports gambling “obsolete” and “in desperate need of updating,” U.S. Rep. Frank Pallone Jr. announced Friday that his congressional committee will conduct a review of the laws and introduce new legislation that also will cover daily fantasy sports.

Pallone, the ranking Democrat on the House Energy and Commerce Committee, announced his plans in a statement to ESPN’s David Purdum.

“The laws need a wholesale review to see how they can actually work together and create a fairer playing field for all types of gambling, both online and offline, including sports betting and daily fantasy sports,” Pallone said. “At the same time, we must ensure the laws are actually creating an environment of integrity and accountability, and include strong consumer protections. I plan to continue discussions with the key stakeholders and then will introduce comprehensive legislation to finally update these outdated laws.”

State-sponsored sports gambling is prohibited in all but four states by the Professional and Amateur Sports Protection Act of 1992, a.k.a. PASPA, which has been the subject of a number of legal challenges by Pallone’s home state of New Jersey. Officials there want to introduce sports gambling to prop up the sagging fortunes of the Atlantic City casinos, a number of which have closed as nearby states have opened up gambling halls of their own in recent years. New Jersey’s attempts to circumvent the law have failed in federal courts, though the state has appealed the rejection of its latest attempt to the U.S. Supreme Court, which has yet to decide whether it will take the case.

Sports gambling also is regulated by the Interstate Wire Act of 1961, which outlaws the placing of sports bets over the telephone, and the Unlawful Internet Gambling Enforcement Act of 2006, which prohibits gambling businesses from accepting payments over the Internet. But despite these prohibitions on sports gambling, the American Gaming Association estimates that Americans spend $149 billion annually on illegal sports wagers, mostly through unregulated offshore sports books.

Because of that and the rise of legal fantasy sports — which, at their essence, are no different than gambling — the national consensus on legalized sports gambling seems to be changing, a fact recognized by NBA Commissioner Adam Silver, who repeatedly has said that he favors a congressional framework for legalizing sports betting. The NFL and NCAA, however, remain opposed, with NFL Commissioner Roger Goodell reiterating that point this week as he discussed the possibility of the Oakland Raiders moving to Las Vegas, the epicenter of legal sports gambling in the United States.

Getting the “stakeholders” — as Pallone euphemistically called the sports leagues, casino businesses and financial institutions that would be most affected by any change — involved in the discussion is a must, according to Daniel Wallach, a gaming and sports-law attorney who has been following the developments closely.

“Every initiative has to start from the beginning, and there’s no better place than the ranking Democrat on the committee” that would be charged with regulating sports gambling, Wallach said in a telephone interview Friday, adding that Pallone’s initiative would be greatly helped with the addition of bipartisan support so he isn’t a “lone wolf” on the matter.

Wallace predicted that hearings would begin next year and that, eventually, sports gambling will indeed be legal in the United States whether via congressional or judicial mandate.

“Best-case scenario: one to three years. Outer limit: three to five years,” he said. “In 10 years, there’s going to be legal sports gambling. You’ll be able to bet on games inside the arena using mobile phones. But without the stakeholders involved, nothing meaningful will happen.”