Frank Rosenthal is credited as the man responsible for bringing sportsbooks to Vegas.[1] Growing up in a Jewish family on the West Side of Chicago, he started spending time at the local horse tracks at the age of thirteen.[2] He learned the intricacies of the racing form, the program given to handicappers with all the pertinent information for the would-be horse bettor: past performances, post positions, jockeys, owners, and trainers.[3] This initiated a love of gambling that fully bloomed in the bleachers of Wrigley Field and Comiskey Park.[4] There, the teenaged Rosenthal met Stacy, a man willing to bet on every single pitch and swing.[5] Soon, Rosenthal went from gambler to oddsmaker, subscribing to out-of-town newspapers in the hopes of getting an edge on every game, professional or college, that he could.[6]
Rosenthal started working with the local mob, the Chicago Outfit.[7] Between that time and starting work with the casinos in 1971, Lefty, as Rosenthal was called, held only one legitimate job.[8] During that time, he appeared before a congressional committee investigating organized crime, pled nolo contendere to bribing a college basketball player, was banned from horse and dog tracks in Florida for allegedly bribing the Miami Beach police, and was indicted in 1969 by the Justice Department in an interstate gambling and racketeering conspiracy case.[9] By 1974, Rosenthal was in charge of four Las Vegas casinos, living in a one million dollar house with his wife and two children.[10]
Ten years later, Rosenthal was under investigation as the suspected head of a multimillion-dollar skimming operation.[11] His connections to organized crime prevented him from receiving a gaming license and forced him to step down as head of the casinos, at least publicly.[12] Lefty avoided jail time, but he couldn’t avoid the wrath of the mob. On October 4, 1982, in the parking lot of a Marie Callender’s Restaurant, Rosenthal’s car blew up.[13] He survived the explosion,[14] and his story was memorialized in Nicholas Pileggi’s book, Casino: Love and Honor in Las Vegas[15] and even more famously in Martin Scorsese’s film, Casino.[16]
Rosenthal’s oddsmaking prowess had everything to do with his informational advantage. Reading out-of-town newspapers and making calls to colleagues across the country enabled him to know more than anyone else. Sometimes, this advantage led to a major windfall. A star player’s last-minute injury might not make it to every bookie in time to properly adjust their betting lines, but elite handicappers like Rosenthal would know. According to Pileggi, Rosenthal recounts a story where he learned of an unreported injury to Cleveland Indians’ second baseman Bobby Avila.[17] He reported the news to his boss, a bookmaker, who might suffer a huge loss without adjusting the odds.[18] This is how sports wagering operated in the prohibition era; men and women like Frank Rosenthal exploited this type of insider information, and the gambling public suffered.
Congress sought to upend the criminal syndicates employing people like Frank Rosenthal. They passed the Professional and Amateur Sports Protection Act in 1992 (PASPA), hoping to protect the integrity of organized sports and combat the organized crime accompanying sports gambling.[19] After numerous judicial challenges, the Supreme Court struck down PASPA on anti-commandeering grounds in Murphy v. National Collegiate Athletic Ass’n.[20] While the Court’s decision in Murphy made sports gambling legal in the United States, this Note argues that Congress should regulate the practice due to the interstate nature of contemporary sports wagering. This Note does not propose that states should be prevented from instituting their own regulatory schemes. Instead, this Note argues that, due to the interstate nature of sports gambling, Congress should pass legislation that should serve as a baseline requirement. This proposed legislation is inspired by the mandatory disclosure requirements found in United States securities law.[21] Insider information is an issue in both securities markets and sports gambling. This Note does not propose Congress regulate sports gambling the way it regulates securities. Rather, this Note suggests that Congress include mandatory disclosure in its regulation.
This Note proceeds in three Parts. Part I details the history of sports gambling legislation and case law in the United States. Part I also gives an overview of securities law in the United States. Part II analyzes why Congress should assist in regulating sports gambling, as well as why securities law serves as a good model for such regulation. Part III recommends that Congress pass legislation requiring sports teams, leagues, and bookmakers to disclose certain information, in a similar way that a public corporation files a registration statement with the Securities and Exchange Commission (SEC).
After the Court’s decision in Murphy v. National Collegiate Athletic Ass’n, there is no federal law outlawing sports wagering in the United States.[22] Currently, thirteen states have regulated sports betting industries.[23] Six other states have bills in process to legalize and regulate the industry.[24]
A. The History of Sports Gambling Regulation in the United States
The law in the United States has never looked favorably upon gambling. Indeed, common law doctrine recognizes that wagering is in contravention of public policy, making contracts to wager unenforceable.[25] When Congress has regulated gambling, its purpose was to assist states to enforce local laws.[26] The first regulation came in 1951 with the promulgation of the Gambling Devices Act of 1951.[27] More commonly known as the Johnson Act, this legislation was specifically designed to combat organized crime vis-à-vis slot machines and other similar devices.[28] Congress also hoped this Act would assist state and local officers in enforcing their anti-gambling statutes.[29] Ten years later, Congress passed the Wire Act, which banned the use of wire communication for the purposes of betting or wagering.[30] Much the same as the Johnson Act, the Wire Act was implemented to assist the enforcement of state and local anti-gambling laws, but did not serve as a federal ban on gambling.[31] Historically, courts have limited application of the Wire Act to those taking the bets,[32] while excluding bettors from prosecution.[33]
In 1970, Congress passed the Illegal Gambling Business Act[34] as part of the Organized Crime Control Act.[35] This legislation introduced a fine and imprisonment of no more than five years for anyone involved in the management of an illegal gambling business.[36] While still in service of assisting state regulation, Congress passed the Interstate Horseracing Act in 1978, which was a marked departure from their otherwise anti-wagering position.[37] Other than PASPA, Congress also passed the Unlawful Internet Gambling Enforcement Act,[38] part of the SAFE Port Act, in 2006. With the exception of online lotteries, fantasy sports, and horse racing, the SAFE Port Act effectively prohibited the use of the Internet to receive sports wagers by prohibiting otherwise legal gambling operators from accepting payments from persons participating in unlawful Internet gambling.[39]
Enacted “to prohibit sports gambling conducted by, or authorized under the law of, any State or other governmental entity,” PASPA banned sports wagering across the United States.[40] Testifying in favor of the bill were the commissioners of the National Football League, Major League Baseball, National Basketball League, and National Hockey League, as well as athletes, doctors, and religious leaders.[41] The Judiciary Committee’s concern was with the potential effect sports gambling had on the integrity of sports leagues, as well as the increasing risk of teenage gambling.[42] At the time, thirty-two states and the District of Columbia had state-sponsored lotteries with plans for sports to be considered.[43] When PASPA was enacted, thirteen states were considering legislation that would permit sports gambling.[44] Because Congress saw sports gambling as a “national problem” with effects being felt beyond just the few states that had legal gambling, it felt national legislation was required.[45]
Section 3702 of PASPA provided Congress with the authority to prohibit intrastate sports regulation.[46] Section 3703 vested enforcement power in the Attorney General of the United States to commence a civil action to enjoin a violation of Section 3702 in an appropriate U.S. district court.[47] Section 3704 defined PASPA’s applicability. Exempted from the statute were any wagering schemes conducted between January 1, 1976 and August 31, 1990.[48] Any sports gambling schemes authorized by a state statute in effect on October 2, 1991 and actually conducted pursuant to the law of that state between September 1, 1989 and October 2, 1991 were exempt.[49] This exemption had the practical consequence of exempting Nevada, Oregon, and Delaware’s state-sponsored gambling.[50] Finally, PASPA did not apply to sports wagering in casinos that were in effect up to one year after the Act’s effective date.[51]
PASPA was largely ineffective in achieving its goals. First, PASPA did not prevent the spread of Internet sportsbooks.[52] In 2003, Forbes estimated that between eighty billion dollars and $380 billion in illegal wagers were placed in the United States annually.[53] This figure exceeded the total amount of legal wagers placed in Nevada in 2010.[54] PASPA also failed to prevent sports gambling from gaining mainstream acceptance.[55] In particular, the advent of Internet wagering provided teenagers unfettered access to sportsbooks.[56] Perhaps most importantly, the prevention of legal sportsbooks from entering the market allowed large foreign, publicly-traded corporations to fill the void.[57] Unlike the underground gambling rings Congress feared, these entities practiced strict self-regulation.[58] Prior to PASPA’s repeal, the National Gambling Impact Study Commission acknowledged PASPA’s ineffectiveness.[59] Instead of damaging the integrity of sports in the United States, the growth of illegal sports gambling went hand-in-hand with an increase in organized sports’ popularity and revenue.[60]
The first judicial challenge to PASPA came from Delaware in 2009.[61] PASPA exempted Delaware’s gambling system, and state officials sought to widen the scope of their existing system by enacting the Sports Lottery Act.[62] Specifically, the Act sought to permit “parlay” betting at existing and future facilities in Delaware.[63] In response, the four major sports leagues,[64] as well as the National Collegiate Athletic Association (NCAA), filed a complaint seeking to prevent Delaware from implementing the Sports Lottery Act.[65] The U.S. District Court for the District of Delaware denied the plaintiff’s motion for a preliminary injunction; the plaintiff then appealed the district court’s decision to the U.S. Court of Appeals for the Third Circuit.[66] The Third Circuit held that Delaware’s proposed expansion of its gambling scheme went beyond what was permitted by PASPA’s “grandfathering” provision.[67] The court found that exempted gambling schemes needed to be conducted before PASPA’s effective date, not simply authorized before.[68] Further, Delaware’s sovereign status did not permit it to implement a betting scheme that was barred by PASPA.[69] Therefore, because the betting scheme proposed by the Sports Lottery Act was not conducted between 1976 and 1990, such betting was not exempted by Section 3704(a)(1) and was therefore prohibited.[70] The Supreme Court denied certiorari.[71]
The next challenge came from the U.S. District Court for the District of New Jersey in Interactive Media Entertainment & Gaming Ass’n v. Holder.[72] While the case was ultimately dismissed for failure to satisfy the injury and redressability requirements of Article III,[73] the case raised novel arguments.[74] First, the plaintiffs argued that Congress had violated the Commerce Clause by failing to “legislate uniformly amongst the several states.”[75] Second, the plaintiffs alleged PASPA violated the Equal Protection Clause of the Fourteenth Amendment because PASPA permitted citizens from certain states to place sports wagers, while prevented those from the other forty-six states.[76] Lastly, the plaintiffs claimed PASPA violated the Tenth Amendment’s reservation of rights to the states.[77] The plaintiffs contended that raising revenues, with respect to state laws authorizing sports gambling, was a right reserved to the individual states.[78] Despite the district court’s dismissal, these arguments would become the core of PASPA’s judicial demise.
The penultimate judicial challenge came as a result of an amendment to New Jersey’s Casino Control Act in 2011.[79] The amendment permitted New Jersey to introduce sports wagering at Atlantic City casinos and racetracks.[80] On August 7, 2012, the four major sports leagues, along with the NCAA, filed a complaint in the U.S. District Court for the District of New Jersey, seeking to prevent implementation of the law via PASPA’s private right of action.[81] Echoing the arguments made in Interactive Media, New Jersey argued PASPA violated the Tenth Amendment’s anti-commandeering principle, as well as contended PASPA exceeded Congress’s power under the Commerce Clause and violated equal sovereignty.[82]
In 2013, however, the district court granted summary judgment for the sports leagues, holding PASPA was a valid exercise of Congress’s Commerce Clause power, that it did not violate the Tenth Amendment, and that it preempted New Jersey’s law.[83] First, the district court found a rational basis in the conclusion that legalized sports gambling would impact interstate commerce, and PASPA was rationally related to preventing the evils inherent in legalized sports gambling.[84] With respect to the Tenth Amendment claim, the district court held PASPA did not constitute commandeering, and rejected that argument on the basis that PASPA was a restriction, rather than an affirmative command.[85] Lastly, while not persuaded by the argument that New Jersey could be treated as a person for the purposes of equal protection, the district court nevertheless subjected PASPA’s “grandfathering” provision to rational basis scrutiny.[86] Having already accepted that PASPA was rationally related to Congress’s goal of halting the spread of legalized sports gambling, the district court finally determined that the “grandfathering” clause, implemented to satisfy the substantial reliance interests of the states who already had legal sports gambling, was rationally related to that interest.[87] The court permanently enjoined New Jersey from implementing a sports gambling scheme.[88]
In 2013, after New Jersey appealed to the U.S. Court of Appeals for the Third Circuit,[89] but before oral arguments were heard, the Supreme Court issued its opinion in Shelby County v. Holder.[90] Shelby County adjudicated a challenge to the Voting Rights Act of 1965, which contained sections that only applied to certain states.[91] The Voting Rights Act requires permission from the federal government for states to implement a law that they would otherwise be able to implement.[92] The Court held that Section Four of the Voting Rights Act violated the Equal Sovereignty doctrine and struck the section as unconstitutional.[93]
New Jersey’s appeal of the district court’s opinion contained the same three arguments at the lower level, as well as one predicated on the Supreme Court’s decision in Shelby County.[94] The Third Circuit affirmed the district court’s decision and declined to apply the expanded Equal Sovereignty doctrine from Shelby County.[95] Specifically with respect to equal sovereignty,[96] the Third Circuit held that (1) PASPA and the Voting Rights Act were distinguishable;[97] (2) there was no “one-size-fits-all” test for equal sovereignty analysis;[98] (3) Shelby County didn’t require extension in this context;[99] (4) even if Shelby County applied, PASPA’s discriminatory provision was sufficiently related to its purpose of curbing the spread of sports gambling;[100] and (5) instead of disfavoring a few states, PASPA treated more favorably one state.[101] Finally, the Third Circuit noted in dicta that PASPA does not prevent states from repealing their own prohibitions on sports gambling.[102]
New Jersey’s 2014 petition for certiorari was denied.[103] In response to the Third Circuit’s ruling, New Jersey legislators passed a new law which partially repealed New Jersey state laws prohibiting sports wagering in Atlantic City casinos and racetracks for those above the age of twenty-one.[104] The leagues sued again, successfully challenging the revised Act in the U.S. District Court for the District of New Jersey.[105] The Third Circuit, sitting en banc, affirmed, finding that the revised law “violated PASPA by ‘author[izing]’ sports gambling.”[106] Unconvinced by the legislature’s attempt to frame the Act as a “repealer,” the Third Circuit reiterated its prior decision that PASPA did not violate the anti-commandeering doctrine.[107]
After the Third Circuit’s decision in Christie II, New Jersey’s petition for certiorari was granted in June 2017.[108] The Supreme Court reversed the Third Circuit’s decision in a seven-to-two decision authored by Justice Samuel Alito.[109] First, the Court held PASPA’s prohibition of state-authorized sports gambling violates anti-commandeering principles.[110] Rejecting the league’s argument that anti-commandeering occurs when Congress “commands” action, Justice Alito made clear that commandeering happens whenever Congress issues a direct order to state legislatures.[111] For that same reason, the Court held PASPA’s prohibition of state licensing of sports gambling was also in violation of the anti-commandeering doctrine.[112]
The Court also determined PASPA’s anti-authorization provision was not a preemption provision.[113] Preemption first required “the exercise of a power conferred on Congress by the Constitution.”[114] Second, the Act must be read as regulating private actors.[115] The Court noted the Supremacy Clause did not constitute a power that satisfied the first prong.[116] More strongly, the Court noted PASPA’s anti-authorization provision could not be described as a regulation of private actors,[117] because it neither “confer[red] any federal rights” or “impose[d] any federal restrictions” on private actors.[118]
The Court finally looked at whether these unconstitutional provisions could be severed, or whether PASPA had to be struck down entirely.[119] Its analysis turned on whether Congress would have enacted the rest of PASPA without the anti-authorization provision.[120] Looking at the provisions individually, the Court determined that Congress would not have done so, and did not find the provisions severable.[121] In answering this question, the Court contemplated whether Congress would have wanted to enact PASPA with a ban on state operation of sports gambling, while allowing states to authorize and license sports gambling.[122] The Court found it unlikely that Congress would have wanted to legalize sports gambling in privately owned casinos, while banning state-run lotteries.[123]
The decision in Murphy left the sports gambling landscape in the United States open for exploitation. The Court simply ruled PASPA unconstitutional, and left it to either the states or Congress to regulate the newly legal field of sports gambling.[124] As Congress considers permissive legislation to regulate the industry, the holding in Murphy will constrain the extent to which they may intervene.
During the existence of PASPA, Congress established one regulatory system for a certain type of wagering. Passed in 1978, the Interstate Horseracing Act regulates the interstate horseracing industry, in support of states that allowed wagering on horseracing.[125] As a primary matter, horseracing has occupied a unique place in the U.S. gambling landscape. The first historically significant thoroughbred horse race held on American soil took place in 1752.[126] Although organized racing did not maintain a consistent presence in the United States until the late nineteenth century, the implementation of pari-mutuel betting[127] in 1908 marked the beginning of over 100 years of legal wagering on horseracing.[128] In addition to betting at the racetrack, “off-track” betting became popular as a way for bettors to make legal wagers on racetracks across the country.[129] However, Congress recognized that, if not checked, off-track betting would hurt the industry by decreasing attendance at racetracks, thereby reducing the number of horses competing, and ultimately, the amount of people employed in the industry.[130]
Although introduced as a ban on off-track betting, Congress determined that regulation could be a viable alternative.[131] The Act provides that each state may prohibit off-track betting within the state, and may prohibit any of its racetracks from contracting with an off-track betting facility outside of the state.[132] In effect, Congress has prohibited interstate betting on horseracing without the consent of all parties involved.[133]
B. Implementation of Federal Securities Regulation
Congress first regulated the securities market with the passage of the Securities Act of 1933 (‘33 Act).[134] The ‘33 Act generally requires the registration of all securities when made publicly available.[135] Congress believed that investors would be protected if the securities being offered were fairly disclosed.[136] In compliance with the ‘33 Act, issuers file a registration statement with the SEC in advance of any public sale of securities.[137] The ‘33 Act provides investors with a private right of action for any harm resulting from a violation of the law’s requirements.[138]
The following year, Congress passed the Securities Exchange Act of 1934 (‘34 Act),[139] broadening the range of participants and transactions subject to regulation.[140] The ‘34 Act regulates all aspects of public trading of securities.[141] This includes sellers and purchasers of securities, and regulation of daily trading.[142] In turn, the ‘34 Act requires periodic reporting.[143] This includes annual reports,[144] quarterly reports,[145] and other interim reports.[146] The disclosure required by these reports was expanded with the enactment of the Sarbanes-Oxley Act of 2002.[147]
The promulgation of the ‘33 and ‘34 Acts required the creation of the Securities Exchange Commission.[148] The SEC serves as the repository for all the filings required by the ‘33 and ‘34 Acts, as well as the enforcement arm of federal securities regulation.[149] The SEC can bring civil suits for injunctions and ancillary relief against violators.[150] In the event of a criminal violation, the SEC will refer the case to the Department of Justice.[151]
The Supreme Court’s decision in Murphy concerned only the constitutionality of PASPA. Currently, the sports betting landscape is destined to be dominated by the states, with many states already in the process of passing their own regulations.[152] This is consistent with casino gambling, which has traditionally been left to the states.[153] When Congress regulated gambling, it had the purpose of assisting states in enforcing local laws.[154] Assuming the states continue to pass legislation regulating sports wagering, Congress should continue this trend and assist the states.
A. Federal Regulation of Sports Gambling Is a Valid Exercise of Congress’s Commerce Clause Power
As an initial matter, it is necessary to note that although PASPA was deemed an unconstitutional commandeering of the states, Congress may still regulate sports gambling under the Commerce Clause power granted under Article I, Section 8 of the Constitution.[155] United States v. Lopez guides contemporary Commerce Clause analysis.[156] Regulating sports gambling likely falls under Chief Justice Rehnquist’s third prong: substantial relationship to interstate commerce. Sports gambling is inherently commercial in nature.[157] The sports leagues and teams are international multi-million and multi-billion dollar businesses.[158] Even a bet placed on a game between two intrastate teams would implicate interstate commerce, including national broadcasting rights, revenue-sharing agreements, sponsorships, and advertisements.[159] In Lopez, the Court struck the Gun-Free School Zones Act as unconstitutional due to the remote relationship between the act and interstate commerce.[160] Contrarily, the relationship to interstate commerce with respect to sports has long been accepted by courts.[161]
Federal regulation of sports gambling may also be proper under the second prong of the test promulgated in Lopez, which protects the instrumentalities of interstate commerce,[162] even from intrastate activities.[163] Even as sports gambling continues to proliferate across the nation, it is unlikely to be legal in all fifty states. For example, Utah has a complete ban on all forms of gambling.[164] Even horseracing, which has a unique place in American gaming jurisprudence, is prohibited.[165] After the Court’s decision in Murphy, prominent Utah politicians explicitly stated that the illegal status of sports gambling would not change.[166] Still, Utahns want to gamble.[167] Bordering states are aware of this and have taken steps to exploit this reality. The city of West Wendover, Nev., situated on the border with Utah, owes its existence to gambling.[168] Forty-two percent of Utahns have gambled in West Wendover, and the city itself spends $150,000 a year on advertising, largely targeted at Utahns.[169] When these would-be gamblers cross state lines, which evidence says they assuredly will do,[170] they implicate the instrumentalities of interstate commerce. The argument is even stronger with respect to the Internet, which is per se interstate commerce.[171]
Federal courts have recognized the interstate nature of sports leagues,[172] and Justice Alito, in his majority opinion in Murphy, gave Congress the imprimatur to regulate sports gambling.[173] Congress should utilize its Commerce Clause power to regulate betting in this area.
B. Congress Has Already Recognized Sports Betting as a National Issue
Congress made clear when enacting PASPA that it believed sports gambling was a national problem.[174] The Senate Judiciary Committee Report explicitly stated the “harms” inherent to sports gambling are felt nationwide, even when sports betting is only locally legalized.[175] The Committee focused on a few specific problems that widespread legalized sports betting would cause. Sports gambling, they argued, would threaten the public confidence in amateur and professional sports.[176] The Committee was concerned that if a player missed an easy shot at the end of the game, fans would question whether this was done on purpose, insofar as the point-spread was implicated.[177] They also contemplated the effect on America’s youth.[178] New technologies were making it easier for both adults and teenagers alike to make wagers.[179] The Committee even estimated that one million teenagers in the United States were compulsive gamblers.[180] Former NFL Commissioner Paul Tagliabue argued millions of Americans would be “seduced” into gambling if the states were allowed to regulate sports gambling.[181]
Congress was also motivated by the threat of organized crime. Even with state regulation, senators like Bill Bradley were concerned that unauthorized gambling establishments would continue to operate.[182] This concern was nothing new for Congress and was contemplated during the passing of the Wire Act in 1961. State gambling laws were no match for these national crime syndicates, who openly flouted local laws by using telegraph and telephone services to operate across state lines.[183] Interstate bet bans, specifically designed to combat the use of telephone and telegraph wires for the purpose of receiving wagers, date back to the Eisenhower Administration.[184] Not until Robert Kennedy proposed what became the Wire Act did Congress intervene.[185] Like other federal acts confronting sports wagering, Congress passed the Wire Act in the service of assisting the state government’s enforcement of their own bookmaking laws.[186] The very same reasons that led Congress to create PASPA, and its predecessor acts, apply when considering whether Congress should regulate sports gambling now that it is legal to do so.
Congress established the National Gambling Impact Study Commission (NGISC) in 1996 to study the social and economic impacts of gambling.[187] Dr. Tim Kelly, Executive Director of the NGISC, reported to Congress in 2000 the widespread existence of student bookies, often with the assistance of organized crime, operating on college campuses across the country.[188] At the time of his testimony, gambling rings had been uncovered at Michigan State, University of Maine, University of Rhode Island, Bryant University, Northwestern University, and Boston College.[189] This is evidence of how far-reaching illegal gambling operations have spread. Although the NGISC ultimately recommended halting sports gambling in the United States,[190] its findings nevertheless point to the states’ inability to police sports wagering on their own.
C. Internet Gambling Implicates Interstate Commerce
Congress was acutely aware of the need for federal regulation of sports gambling when they enacted PASPA, but those concerns are magnified with the advent and proliferation of the Internet.[191] Many states have enacted statutes banning Internet gambling, while others have amended their general gaming statutes to be inclusive of the Internet.[192] Even with these laws in place, state attorneys general admit they need federal help.[193] Ohio Attorney General Betty Montgomery, on behalf of the National Association of Attorney Generals, which represents all U.S. states, testified before the Senate Judiciary Subcommittee on Technology, Terrorism, and Government Information, asking for federal legislation.[194] More recently, the Justice Department issued a legal opinion in January 2019, declaring the Wire Act applies to all Internet gambling, as opposed to only online sports betting.[195]
When PASPA was enacted, gambling was not as easily accessible as it is today.[196] While bookmakers standing on shady corners—with no doubt—survive to the present, illegal sportsbooks are more easily maintained and accessed via the Internet. In 2003, an estimated eighty billion dollars to $380 billion in wagers were placed illegally in the United States annually, with most coming from online activity.[197] In 2003, only 61.7% of United States citizens were on the Internet.[198] As of 2016, this number has grown to 88.5% of the population, totaling over 285 million people.[199] Therefore, the number of U.S. citizens gambling online certainly has grown, leading to parallel growth in the already staggering amount of money bet on sports.[200]
To the extent the states have, or will develop, systems to deal with the potential exploitation of sports gambling, it is nearly impossible for them to regulate effectively when wagering is done on the Internet.[201] New Jersey, for example, has a robust licensing system for its casinos.[202] Every owner, officer, and director of a casino, as well as those of any holding or intermediary company, must file an extensive license application.[203] This system also applies to vendors that provide products and services to the casinos, including nongaming products like soap or towels to a hotel casino. It is hard to imagine the state analogue for Internet wagering. While states may be able to enforce licensing requirements on online sportsbooks incorporated in their jurisdiction, it would be nearly impossible for them to adequately protect their citizens with sportsbooks incorporated in other states.[204] Even if a state could properly assess the fitness of each individual sportsbook, it would be too onerous for states to then review each of the vendors or service providers these companies use.[205] It would be similarly impossible to ask a sportsbook to individually comply with every state’s individual licensing standards. This is the benefit of a minimum federal standard: consumers are protected while legitimate sportsbooks can be compliant without excessive transaction costs.
D. Why the Securities Acts Serve as a Good Model
The motivations behind the ‘33 Act and the ‘34 Act (collectively, the Securities Acts) in many ways parallel the concerns related to sports gambling. This is because securities and sports wagers are similar. Both involve contracts where the purchaser, or bettor, attempts to earn a profit based on some future event.[206] Inherent in both is the threat of illicitly-gained informational asymmetries.[207] Neither securities regulation nor existing sports betting regulations seek to punish those who undertake advanced statistical analysis. However, the threat of privately held information being sold, or used for unlawful gain, is an issue inherent in both securities trading and sports gambling.[208] Prior to the promulgation of the Securities Acts, states regulated individually.[209] While there should be no impression as to the threat of any analogous crash in the sports gambling context, the failure of Blue Sky laws is evidence of the need for federal regulation in this type of market.[210]
A significant motivator for the Securities Acts was the lack of public confidence in the securities markets.[211] One scholar has estimated that approximately half of the fifty billion dollars of securities sold in the ten years following World War I were fraudulent and worthless.[212] In an effort to restore investor confidence, Congress instituted the disclosure-based system, which still remains the primary system of regulation in the United States.[213] Similarly, public confidence in the sports leagues was a primary concern of PASPA’s proponents.[214] This is not a perfect analogy, because the Securities Acts sought to restore confidence in the securities markets,[215] whereas PASPA sought to maintain confidence in the games themselves, and not the gambling market.[216] However, one follows the other. Without confidence in the games, there will be no confidence in the gambling market.[217] If gambler and non-gambler alike suspect every match is fixed, there would be nobody willing to wager on or even watch the games.[218] Given the similarities between the securities and gambling markets, the success of a disclosure-based system in the former forecasts success in the latter, should it be implemented.[219]
III. Proposal: Congress Should Provide Baseline Regulation of Sports Gambling
To protect the rights of investors, the integrity of professional and amateur sports, and promote an efficient sports gambling market, Congress should regulate the newly legal sports gambling market. Far from another PASPA-like Act, this regulation should serve as a minimal standard that everyone involved in sports gambling will have to meet. This will avoid the states’ rights issues that doomed PASPA.[220]
This Note simply proposes a mandatory disclosure requirement. Administrative tasks in connection with regulated sports betting will be handled on a state level.[221] Proponents of disclosure-based regulation argue corporate managers will be more honest because they know their actions will be broadcast to the world.[222] Stopping fraud before it happens reduces the costs of the regulatory agency charged with monitoring it—i.e., the SEC—while also reducing costs of shareholders to monitor their officers.[223] This has applicability in the gambling context. Both the leagues and teams who provide information to the sportsbooks, as well as the sportsbooks themselves, are at risk of dishonest dealing. Would-be gamblers will be comforted by the knowledge that those in power cannot act without the potential embarrassment, as well as the criminal and civil penalties attached to their fraudulence being made public.
Disclosure helps encourage the growth of the informed investor. By forcing information into the public domain, the informational asymmetries inherent in the securities market are mitigated.[224] This too has applicability in the gambling context. It is easy to imagine a situation where a heavily favored team’s star player suffers an injury in the days leading up to the game. Once this injury becomes public, the odds will shift, sometimes dramatically. Someone with that knowledge could wager on the underdog while the “price” is still favorable, preempting the rest of the gambling public.[225] Disclosure also promotes price stability and decreases market volatility.[226] Finally, disclosure keeps security prices static, and in the gambling context, will help keep odds stable, increasing bettor confidence that the odds they are taking will be accurate.[227] Mandatory disclosure does not seek to erase all informational asymmetries.[228] However, granting the public a minimum level of information that is guaranteed to be accurate helps ensure the informed bettor.
This all comes together to protect the inexperienced investor, one of the stated goals of the Securities Acts.[229] Protection is the rationale for disclosure-based regulation that has the most utility in the gambling context. Approximately eighty percent of Americans gamble at least once per year.[230] Studies have shown that four to six percent of gamblers are at risk of addiction.[231] These concerns are well known to Congress,[232] and some of the most exploitable members of society frequently gamble. The activity is widespread among senior citizens.[233] With the millions of Americans losing billions of dollars a year gambling,[234] it is clear there must be measures taken to protect these unsophisticated bettors. Through mandatory disclosure, bettors can be protected with minimal interference from the government.[235]
This would also avoid any states’ rights issues. Each state will have different standards that they will want to apply to protect their citizens. For example, Florida may want to protect their elderly population with more stringent standards.[236] States like New Hampshire, which ranks second on Cato Institute’s freedom index, may want to have more relaxed standards.[237] And of course, states like Utah still have the right to prohibit sports gambling in their jurisdictions.[238] By setting a baseline, the practice may still be prohibited in whichever jurisdictions choose to do so. This type of legislation would also be consistent with how the federal government has acted historically vis-à-vis sports gambling.[239]
Much like the registration requirements of the Securities Acts, sportsbook operators[240] would be required to file a registration statement.[241] This is already standard in the casino industry,[242] and helps to prevent organized crime and other nefarious individuals from involvement in gambling. Further, the operators would disclose where they get the data used to set odds.[243] Due to high costs, sportsbooks typically do not set their own odds,[244] and disclosure of which sports books use which companies will encourage fair dealing and assist regulators with tracking down illicit activity.
More challenging will be the role of sports teams and leagues in this system. Major sports leagues were PASPA’s biggest supporters,[245] and teams will likely not be interested in disclosing player information for the purpose of assisting gamblers.[246] However, protecting against the use of insider information requires teams to disclose certain important events, such as player injuries or transactions. Teams could satisfy the disclosure requirements by reporting to an agency, analogous to the SEC, which could act as a central repository of information and make periodic disclosures to the public.[247] This could be accomplished by requiring teams to disclose all injuries at a set time before each game, which would give all bettors and oddsmakers the same information at the same time.[248] The creation of an administrative agency to regulate sports gambling will assist with this regulation. The National Indian Gaming Commission is precedent for such an agency.[249] This hypothetical agency could serve as the aforementioned repository of information, and would otherwise serve similar functions to the SEC.[250] One of the functions would be enforcement. Like the SEC, this agency would be able to seek injunctive relief against alleged violators.[251] In the gambling context, this would not only be a ban from wagering, but in the case of those involved in the sports themselves, an industry ban.[252] With respect to monetary relief, the agency could seek disgorgement of profits, as well as civil penalties authorized by statute.[253]
The competing interests of the public to have equal access to information, and sports teams to minimize what they need to disclose so as to not give their opponent an on-field advantage, presents a difficult hurdle to overcome. The easiest solution is to allow leagues to opt-out of the disclosure requirements. This would be similar to the consent from the Interstate Horseracing Act, discussed in Section I.A.[254] While sportsbooks would suffer from potentially losing the ability to offer odds on certain teams, or an entire league, the teams would be incentivized to consent to the disclosure requirements by receiving a portion of the tax revenue they may stand to gain.[255]
Given the history of gambling legislation in the United States, it is unlikely that the states will want to cede any authority to Congress with respect to sports gambling.[256] With so many states on the path toward regulation, the momentum will be difficult to stop. There are strong arguments in favor of state regulation. State governments will know more about the specific needs of their constituents and about how to best combat crime and corruption within their borders.[257] Additionally, certain states already have systems in place, and to the extent those are successful, other states can follow suit.[258] However, the proposed baseline requirements would not preempt either of these two potential benefits.
Critics of potential federal legislation point to Congress’s lack of experience in federal gaming regulation.[259] The most recent federal law regulating sports gambling, the Unlawful Internet Gambling Enforcement Act of 2006, has intense opposition with respect to the usefulness of the law.[260] However, this Note does not propose substantive regulation, but rather a minimum standard that nevertheless insures wagerers. While there is precedent for federal agencies performing regulatory functions, including the SEC, this comes with the risk of over-regulation.[261] One of the benefits of mandatory disclosure is that it does not over-regulate.[262] This should prove particularly true with the proposed legislation, which is intended to serve as a background for states to meet.
Beyond the state versus federal argument, there are also downsides to disclosure-based regulation. The disclosure required by the Securities Acts is often too complicated to be used by an ordinary investor.[263] These documents are typically written by attorneys in technical legal terms.[264] While this issue may very well be present in the documents respecting sportsbook operators, this problem should be alleviated with respect to the disclosures by the teams. Player injuries and transactions are more difficult to complicate in legalese.[265] Would-be gamblers have the ability to receive player news from many different outlets and will not be required to read what the teams actually disclose.[266]
There is also the concern of too much information. Information is helpful as long as it is understood by the recipient and able to be properly utilized.[267] Information overload can result in confusion and poor decisionmaking.[268] This represents a serious problem in the securities context, given the aforementioned complex disclosure documents. However, big data has already become mainstream in the sports world.[269] Multiple professional teams are using advanced analytics with success.[270] Rather than confuse consumers with more data than necessary, the disclosure required by the proposed legislation would supplement what sports fans have already been consuming. This will also have the side effect of making the data even more valuable, as sportsbooks and teams will compete for the best data.[271]
The prohibition of sports gambling seems to be over. This will likely have significant benefits to the United States, especially when it comes to increased tax revenues. Although not yet legal federally, marijuana has become legal in several states, and those that have legalized it have seen huge benefits.[272] Congress should embrace this opportunity with sports gambling now that the Supreme Court has made it legal. Given how quickly states have begun enacting regulations of their own, the momentum behind sports gambling will be difficult to stop. Rather than let the states handle this on their own, and risk the same problems that led Congress to affirmatively outlaw the practice, Congress should assist the states to make sports gambling as safe and profitable as possible.
[1] Nicholas Pileggi, Casino: Love and Honor in Las Vegas 2 (1995).
[8] Id. at 2. Rosenthal worked as a military policeman between 1956 and 1958. Id. at 2–3.
[11] Id. “Skimming is the illegal practice of syphoning off gambling profits from the casino floor to an outside party in order to avoid paying gaming tax.” Skimming, Casinopedia, https://www.casinopedia.org/terms/s/skimming [https://perma.cc/QJ7H-NDB7].
[12] Pileggi, supra note 1, at 9.
[16] Casino (Universal Pictures 1995).
[17] Pileggi, supra note 1, at 24.
[19] Jeffrey Rodefer, Professional and Amateur Sports Protection Act of 1992., Gambling-Law-US.com, http://www.gambling-law-us.com/Federal-Laws/sports-protection.htm [https://perma.cc/SM6F-JUKW] (last updated Mar. 5, 2007).
[20] Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461 (2018).
[21] 15 U.S.C. §§ 77a–77z (2018); 15 U.S.C. §§ 78a–78l-l (2018).
[23] These states are Arkansas, Delaware, Indiana, Iowa, Mississippi, Nevada, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, and West Virginia. Dustin Gouker, Legislative Tracker: Sports Betting, Legal Sports Rep., https://www.legalsportsreport.com/sportsbetting-bill-tracker [https://perma.cc/424T-HUA2] (last updated Sept. 4, 2019).
[25] Michael C. Macchiarola, Securities Linked to the Performance of Tiger Woods? Not Such a Long Shot, 42 Creighton L. Rev. 29, 33 (2008). This traces back to England’s Statute of Anne, enacted in 1710, which prohibited the enforcement of gambling debts. Joseph Kelly, Caught in the Intersection Between Public Policy and Practicality: A Survey of the Legal Treatment of Gambling-Related Obligations in the United States, 5 Chap. L. Rev. 87, 87 (2002).
[26] Jonathan Gottfried, The Federal Framework for Internet Gambling, 10 Rich. J.L. & Tech. 26 (2004).
[27] 15 U.S.C. §§ 1171–1178 (2018); Macchiarola, supra note 25, at 34 (“[The Gambling Devices Act] made it a crime to transport gambling devices across state lines to locations not specifically exempted by local or state law.”).
[28] Comment, Regulation of Gambling Devices in Interstate Commerce, 4 DePaul L. Rev. 256, 256 (1955).
[31] United States v. Yaquinta, 204 F. Supp. 276, 277 (N.D. W. Va. 1962) (citing S. Rep. No. 87-588 (1961)). The Wire Act was also similarly designed to suppress organized crime. U.S. Attorney General Robert F. Kennedy told the Senate, “[i]t is quite evident that modern, organized, commercial gambling operations are so completely intertwined with the Nation’s communications systems that denial of their use to the gambling fraternity would be a mortal blow to their operations.” David G. Schwartz, Cutting The Wire: Gambling Prohibition and the Internet 99 (William R. Eadington ed., 2005) (internal quotation marks omitted).
[32] United States v. Tomeo, 459 F.2d 445, 447 (10th Cir. 1972) (“The statute deals with bookmakers—persons engaged in the business of betting or wagering.” (internal quotation marks omitted)).
[33] United States v. Anderson, 542 F.2d 428, 436 (7th Cir. 1976).
[35] Organized Crime Control Act of 1970, Pub. L. No. 91-452, 84 Stat. 922.
[36] 18 U.S.C. § 1955(a). “[I]llegal gambling business” is defined as a gambling business, which is in violation of the law of the state in which it is conducted, involves five or more people, or operates continuously for a period in excess of thirty days, or has a gross revenue of $2,000 in any single day. 18 U.S.C. § 1955(b)(1)(i)–(iii).
[37] 15 U.S.C. § 3004 (2018). This Act, discussed infra notes 125–133, allowed interstate betting on horseracing.
[38] 31 U.S.C. §§ 5361–5367 (2018).
[39] Office of Thrift Supervision, Unlawful Internet Gambling Enforcement Act (2010), https://web.archive.org/web/20100601165540/https://www.ots.treas.gov/_files/422372.pdf [https://perma.cc/DSH7-GSXS] (“The Act prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law . . . .”).
[40] S. Rep. No. 102-248, at 3 (1991).
[44] James C.W. Goodall, Note, Bringing Down the House: An Examination of the Law and Policy Underpinning the Professional and Amateur Sports Protection Act of 1992, 67 Rutgers U. L. Rev. 1097, 1105 (2015).
[45] S. Rep. No. 102-248, at 5 (1991), as reprinted in 1992 U.S.C.C.A.N. 3553, 3556. Congress believed the establishment of legal gambling would “initiat[e] a process that would inevitably cause a domino effect of moral erosion among the states,” necessitating its intervention. Goodall, supra note 44, at 1106.
It shall be unlawful for—
(1) a governmental entity to sponsor, operate, advertise, promote, license, or authorize by law or compact, or
(2) a person to sponsor, operate, advertise, or promote, pursuant to the law or compact of a governmental entity, a lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly . . . on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games.
28 U.S.C. § 3702 (2018).
[47] 28 U.S.C. § 3703 (2018). This section also provided a professional or amateur sports organization whose game is alleged to be the basis of such violation to commence an action in district court. Id. Section 3701 defines these organizations as “a person or governmental entity that sponsors, organizes, schedules, or conducts a competitive game in which one or more [amateur or] professional athletes participate,” or “a league or association of persons or governmental entities described [above].” 28 U.S.C. § 3701 (2018).
[48] 28 U.S.C. § 3704(a)(1) (2018).
[50] Goodall, supra note 44, at 1108.
[51] 28 U.S.C. § 3704(a)(3)(A).
[52] Chil Woo, Note, All Bets Are Off: Revisiting the Professional and Amateur Sports Protection Act (PASPA), 31 Cardozo Arts & Ent. L.J. 569, 589 (2013).
[53] Id.; Ari Weinberg, The Case for Legal Sports Gambling, Forbes (Jan. 27, 2003, 11:55 AM), http://www.forbes.com/2003/01/27/cx_aw_0127gambling.html [https://perma.cc/W5N6-YRGX]. Much of these wagers were placed through online sportsbooks. Woo, supra note 52.
[57] Id. at 590–91. These corporations are subject to foreign regulations. For example, William Hill PLC, one of the largest sportsbooks in the U.K., is publicly traded on the London Stock Exchange. WMH William Hill PLC Ord 10P, London Stock Exchange, https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB0031698896GBGBXSTMM.html [https://perma.cc/Y97L-L97V].
[58] Woo, supra note 52, at 590 n.123 (describing William Hill PLC).
[59] Nat’l Gambling Impact Study Comm’n, National Gambling Impact Study Commission Report 1–5 (1999), https://govinfo.library.unt.edu/ngisc/reports/1.pdf [https://perma.cc/4T9M-4QEG] (“[A]dvocates have successfully deployed many other arguments for legalizing . . . gambling . . . [including] undermining illegal gambling and the organized crime it supports . . . .”).
[60] Woo, supra note 52, at 590 n.119.
[61] Office of the Comm’r of Baseball v. Markell, 579 F.3d 293 (3d Cir. 2009).
[63] In short, parlay bets are a combination of other standard wagers. If there are three wagers in a parlay, and only two come to fruition, the bettor has lost the parlay bet. Id. at 295 n.1.
[64] The four major sports leagues are Major League Baseball (MLB), National Basketball Association (NBA), National Football League (NFL), and National Hockey League (NHL).
[65] Markell, 579 F.3d at 293–94.
[71] Markell v. Office of the Comm’r of Baseball, 559 U.S. 1106 (2010).
[72] Interactive Media Entm’t & Gaming Ass’n v. Holder, No. 09-1301 (GEB), 2011 WL 802106, at *1 (D.N.J. Mar. 7, 2011).
[73] U.S. Const. art. III, § 2, cl. 1.
[74] Holder, 2011 WL 802106, at *8, *10.
[75] Goodall, supra note 44, at 1112 (citing Complaint and Demand for Declaratory Relief at 18–21, Holder, 2011 WL 802106 (No. 09-1301 (GEB))).
[76] Id. Delaware, Montana, Nevada, and Oregon were the four states exempted from PASPA. Id.
[80] New Jersey Sports Wagering Law, N.J. Stat. Ann. §§ 5:12A-1 to -6, -24, -194 (West 2012) (repealed 2014).
[81] See Complaint for Declaratory and Injunctive Relief at 10–11, Nat’l Collegiate Athletic Ass’n v. Christie, 926 F. Supp. 2d 551 (D.N.J. 2013) (No. 12-4947(MAS)(LHG)).
[82] Memorandum in Support of Defendants’ Cross-Motion for Summary Judgment & in Opposition to Plaintiffs’ Motion for Summary Judgment at 22–38, Christie, 926 F. Supp. 2d 551 (No. 3:12-cv-04947 (MAS) (LHG)).
[83] Christie, 926 F. Supp. 2d at 561, 573, 577.
[84] Id. at 559–60 (pointing to the Senate Judiciary Committee’s finding that the “‘harms [legalized sports gambling] inflicts are felt beyond the borders of those States that sanction it.’ . . . Additionally, the Senate Judiciary Committee found that ‘[w]ithout Federal legislation, sports gambling is likely to spread . . . and ultimately develop irreversible momentum’” (citations omitted)).
[85] Id. at 571 (“The ability of Congress to restrict States’ legislative prerogatives in the areas discussed in [Rowe v. N.H. Motor Transp. Ass’n, 552 U.S. 364 (2008) and Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992)] was not even subjected to a Tenth Amendment challenge because the power to restrict, rather than compel, the actions of States in preempted spheres was, and remains, a settled issue.”).
[89] Nat’l Collegiate Athletic Ass’n v. Christie, 730 F.3d 208 (3d Cir. 2013).
[90] See Joshua Winneker et al., Sports Gambling and the Expanded Sovereignty Doctrine, 13 Va. Sports & Ent. L.J. 38, 48–49 (2013).
[92] Shelby Cty. v. Holder, 570 U.S. 529, 544 (2013) (“It suspends ‘all changes to state election law—however innocuous—until they have been precleared by federal authorities in Washington, D.C.’ States must beseech the Federal Government for permission to implement laws that they would otherwise have the right to enact and execute on their own . . . .” (citation omitted)).
[93] Id. at 544, 556–57. Section Four of the Act:
provides the “coverage formula,” defining the “covered jurisdictions” as States or political subdivisions that maintained tests or devices as prerequisites to voting, and had low voter registration or turnout . . . . In those covered jurisdictions, [Section] 5 of the Act provides that no change in voting procedures can take effect until approved by specified federal authorities . . . .
Id. at 529.
[94] See Goodall, supra note 44, at 1124.
[95] Nat’l Collegiate Athletic Ass’n v. Christie, 730 F.3d 208, 215, 237–38 (3d Cir. 2013); see Winneker et al., supra note 90, at 50. Other than the novel Shelby County arguments, the Third Circuit affirmed on the same grounds as the district court.
[96] Pollard v. Hagan, 44 U.S. 212, 216 (1845) (“The Constitution says, the latter must be admitted into the union on an equal footing with the rest.” (emphasis added)).
[97] Christie, 730 F.3d at 237–38. The Voting Rights Act affected the power to regulate elections, ones that the Framers gave to the states. PASPA involves regulation via the Commerce Clause. See id.
[98] Id. at 238 (“This position is overly broad in that it requires the existence of a one-size-fits-all test for equal sovereignty analysis . . . .”).
[99] Id. at 239 (“[T]here is nothing in Shelby County to indicate that the equal sovereignty principle is meant to apply with the same force outside the context of ‘sensitive areas of state and local policymaking.’” (citation omitted)).
[100] Id. (“When the true purpose is considered—to stop the spread of state-sanctioned sports gambling—it is clear that regulating states in which sports-wagering already existed would have been irrational.”).
[101] Id. at 237–38. Instead of striking down the entire Act, New Jersey should have sought invalidation of the grandfathering provision. Id. at 238.
[102] Id. at 232 (“But we do not read PASPA to prohibit New Jersey from repealing its ban on sports wagering.”).
[103] Nat’l Collegiate Athletic Ass’n v. Christie, 730 F.3d 208 (3d Cir. 2013), cert. denied, Christie v. Nat’l Collegiate Athletic Ass’n, 134 S. Ct. 2866 (2014) (mem.).
[104] Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461, 1472 (2018); 2014 N.J. Laws 602.
[105] Nat’l Collegiate Athletic Ass’n v. Christie, 61 F. Supp. 3d 488 (D.N.J. 2014).
[106] Murphy, 138 S. Ct. at 1472.
[107] Nat’l Collegiate Athletic Ass’n v. Christie (Christie II), 832 F.3d 389, 401 (3d Cir. 2016) (“PASPA does not command states to take affirmative actions . . . . Our reasoning in Christie I that PASPA does not commandeer the states remains unshaken.”).
[108] Id., cert. granted, Christie v. Nat’l Collegiate Athlethic Ass’n, 137 S. Ct. 2327 (2017) (mem.).
[109] Murphy, 138 S. Ct. at 1461.
[110] Id. at 1478 (“That provision unequivocally dictates what a state legislature may and may not do.”). Anti-commandeering emerged as a limitation on Congress in New York v. United States, 505 U.S. 144 (1992), preventing them from “‘commandee[ring] the legislative processes of the States by directly compelling them to enact and enforce a federal regulatory program.’” New York, 505 U.S. at 161 (internal quotation marks omitted).
[111] Murphy, 138 S. Ct at 1476–79.
[120] Id. (citing Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 684 (1987)).
[123] Id. at 1482–83. While this severability argument divided the Justices more so than the anti-commandeering analysis, this discussion is beyond the scope of this Note.
[124] Id. at 1484–85 (“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own.”). Presumably, Congress could enact a federal ban on sports wagering without commandeering the states. This is unlikely to happen. Senator Orrin Hatch spoke on the Senate floor in August 2018, admitting, “We can’t put the genie back in the bottle. Prohibition [of sports gambling] is not a possibility or a prudent path forward.” SenatorOrrinHatch, Hatch Gives Update on Sports Betting Legislative Proposal, YouTube (Aug. 23, 2018), https://www.youtube.com/watch?v=eanUCMgBMiU [https://perma.cc/A798-4F9J].
[125] 15 U.S.C. §§ 3001–3007 (2018) (originally enacted as the Interstate Horseracing Act of 1978, Pub. L. No. 95-515, 92 Stat. 1811).
[126] John Eisenberg, Off to the Races, Smithsonian Mag. (Aug. 2004), https://www.smithsonianmag.com/history/off-to-the-races-2266179 [https://perma.cc/AQB2-3CMK].
[127] Pari-mutuel betting is a system wherein all bets of a particular type are placed into a pool. After the deduction of taxes and the institution’s cut of the pool, payoff odds are calculated by sharing the pool among all winning bets. This system is ubiquitous in the horseracing industry.
[128] The History of Horse Racing, HorseRacing.com, http://www.horseracing.com/pages/history-of-horse-racing [https://perma.cc/YY2Y-SZAB].
[129] Kentucky Div., Horsemen’s Benevolent & Protective Ass’n v. Turfway Park Racing Ass’n, 20 F.3d 1406, 1414 (6th Cir. 1994).
[131] Id. Section 3004(a) of Title 15 in the U.S. Code contains a consent clause, allowing off-track betting when the interested parties consent. These parties are the host racing association, the host racing commission, and the off-track racing commission. 15 U.S.C. § 3004(a) (2018).
[132] Turfway, 20 F.3d at 1414.
[133] This requires the consent of the host racing association, the host racing commission, and the off-track racing commission. Section 3002 defines these terms:
(9) “host racing association” means any person who, pursuant to a license or other permission granted by the host State, conducts the horserace subject to the interstate wager;
(10) “host racing commission” means that person designated by State statute or, in the absence of statute, by regulation, with jurisdiction to regulate the conduct of racing within the host State;
(11) “off-track racing commission” means that person designated by State statute or, in the absence of statute, by regulation, with jurisdiction to regulate off-track betting in that State . . . .
15 U.S.C. § 3002 (2018).
[134] 15 U.S.C. §§ 77a-77z (2018).
[135] Thomas Lee Hazen, Federal Securities Laws I.A (Kris Markarian ed., 3d ed. 2011)
[139] 15 U.S.C. §§ 78a-78ll (2018).
[144] 17 C.F.R. § 249.310 (2005) (Form 10-K).
[145] Id. § 249.308a (Form 10-Q).
[146] Id. § 249.308 (Form 8-K).
[147] Hazen, supra note 135, at IV.A (citing Public Company Accounting Reform & Investor Protection Act of 2002, Pub. L. 107-204, 116 Stat. 745 (as codified in 18 U.S.C. §§ 994, 1341, 1343, 1512, 1513, 3553)) (“Those additional disclosure items include the following: entry into a material nonordinary course agreement; termination of a material non-ordinary course agreement; creation of a material direct financial obligation or a material obligation under an off-balance sheet arrangement; triggering events that accelerate or increase a material direct financial obligation or a material obligation under an off-balance sheet arrangement; material costs associated with exit or disposal activities; material impairments; notice of delisting or failure to satisfy a continued listing rule or standard; transfer of listing; and nonreliance on previously issued financial statements or a related audit report or completed interim review (restatements).”).
[153] See Thomas v. Bible, 694 F. Supp. 750, 760 (D. Nev. 1988), aff’d, 896 F.2d 555 (9th Cir. 1990) (“Licensed gaming is a matter reserved to the states within the meaning of the Tenth Amendment to the United States Constitution.”); State v. Rosenthal, 559 P.2d 830, 836 (Nev. 1977) (“We view gaming as a matter reserved to the states within the meaning of the Tenth Amendment to the United States Constitution.”); Chun v. New York, 807 F. Supp. 288, 292 (S.D.N.Y. 1992) (“The scope of laws regulating gambling and lotteries is clearly a matter of predominantly state concern.”).
[154] Gottfried, supra note 26.
[155] U.S. Const. art. I, § 8, cl. 3 (“The Congress shall have Power . . . [t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes . . . .”).
[156] United States v. Lopez, 514 U.S. 549 (1995). Chief Justice Rehnquist defined three broad categories of activity that Congress may regulate under its commerce power: (1) Congress may regulate the use of the channels of interstate commerce; (2) Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities; and (3) Congress’s commerce authority includes the power to regulate those activities having substantial relation to interstate commerce. Id. at 558–59.
[157] Woo, supra note 52, at 579–80.
[158] Cork Gaines, Chart of the Day: NFL Players and Owners Are Fighting over the Biggest Pie in Sports, Bus. Insider (Mar. 22, 2011, 10:56 AM), http://www.businessinsider.com/nfl-biggest-pie-in-sports-2011-3#ixzz1iW0YUx1Q [https://perma.cc/ZFF8-SA6R].
[159] Woo, supra note 52, at 580.
[160] Lopez, 514 U.S. at 567 (“The possession of a gun in a local school zone is in no sense an economic activity that might, through repetition elsewhere, substantially affect any sort of interstate commerce.”).
[161] See Radovich v. Nat’l Football League, 352 U.S. 445, 452 (1957) (“Likewise, the volume of interstate business involved in organized professional football places it within the provisions of the [Clayton] Act.”).
[162] “Instrumentalities and channels which serve as the media for the movement of goods and persons in interstate commerce or for interstate communications . . . .” 29 C.F.R. § 776.29 (2020). Examples of instrumentalities are interstate highways and railroads.
[164] Utah Gambling Laws, FindLaw, https://statelaws.findlaw.com/utah-law/utah-gambling-laws.html [https://perma.cc/2WJU-BX35]; Utah Code Ann. §§ 76-10-1101 to -1109 (West 2019).
[165] Although constantly changing, only nine states prohibit making wagers via the Internet on horseracing. Steve Beauregard, States Where It Is Legal to Bet on Horse Racing Online, Gamboool!, https://gamboool.com/states-where-it-is-legal-to-bet-on-horse-racing-online [https://perma.cc/FP9R-9C5R] (last updated Apr. 26, 2019).
[166] Utah House Speaker Greg Hughes said, “I tend to believe that it will not be legalized in our state and through our legislative process.” Dennis Romboy, Utah GOP Lawmakers Hail Decision on Sports Betting as Win for States’ Rights, Deseret News (May 14, 2018, 2:56 PM) (internal quotation marks omitted), https://www.deseretnews.com/article/900018566/utah-gop-lawmakers-hail-decision-on-sports-betting-as-win-for-states-rights.html [https://perma.cc/7LY7-VE5B]. Senator Todd Weiler said the ruling would have “zero” impact on Utah, and Governor Gary Herbert, according to his spokesman, “appreciates the court’s reaffirmation of states’ rights to regulate gambling, a right Utah will exercise by continuing to prohibit gambling within [his] state.” Id. (internal quotation marks omitted).
[167] A 2005 poll showed seventy-five percent of Utahns have gambled in their lifetimes, with forty-five percent having wagered on commercial gaming within the year the survey was given. Lee Davidson, The Big Gamble: Utahns Support Gaming in Both Word and Deed, Deseret News (June 26, 2005, 8:11 PM), https://www.deseretnews.com/article/600144183/The-big-gamble-Utahns-support-gaming-in-both-word-and-deed.html [https://perma.cc/2VW2-KCUN].
[168] Id. (“‘If it weren’t for gaming, West Wendover would not exist,’ says City Manager Chris Melville.”).
[171] Joel Weinberg, Everyone’s a Winner: Regulating, Not Prohibiting, Internet Gambling, 35 Sw. U. L. Rev. 293, 301 (2006).
[172] See, e.g., Mackey v. Nat’l Football League, 543 F.2d 606, 616 n.19 (8th Cir. 1976) (“It is undisputed that the NFL operates in interstate commerce. It is also recognized that the business of professional football enjoys no special exemption from the antitrust laws.” (citing Radovich v. Nat’l Football League, 352 U.S. 445 (1957))).
[173] Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461, 1484–85 (2018) (“Congress can regulate sports gambling directly . . . .”).
[174] S. Rep. No. 102-248, at 5 (1991), as reprinted in 1992 U.S.C.C.A.N. 3553, 3556 (“Sports gambling is a national problem.”).
[175] Id. (“The harms it inflicts are felt beyond the borders of those States that sanction it.”).
[177] Id. A point spread is the amount of points that one team is favored to win by over another. See What Is a Point Spread or Side Bet—Point Spread Explained Definition Betting, TheSpread.com, http://www.thespread.com/sports-betting/what-is-a-point-spread-or-side-bet-point-spread-explained-definition-be.html [https://perma.cc/F43G-9YLA]. For example, Team A may be favored to win by ten points. If Team A wins by eight points, they did not “cover the spread” and bettors who wagered on Team A would not win any money.
[178] S. Rep. No. 102-248, at 5 (1991), as reprinted in 1992 U.S.C.C.A.N. 3553, 3556.
[181] Professional and Amateur Sports Protection Act: Hearing Before the Subcommittee on Economics and Commercial Law of the Committee on the Judiciary on H.R. 74, 102d Cong. 52 (1991) (statement of Paul Tagliabue).
[182] Woo, supra note 52, at 586–88.
[183] Eric Meer, Note, The Professional and Amateur Sports Protection Act (PASPA): A Bad Bet for the States, 2 UNLV Gaming L.J. 281, 283–84 (2012).
[184] Schwartz, supra note 31, at 93.
[186] Jeffrey Rodefer, Federal Wire Wager Act, Gambling-Law-US.com, http://www.gambling-law-us.com/Federal-Laws/wire-act.htm [http://perma.cc/87UH-FU6K] (“The Wire Act was intended to assist the states, territories and possessions of the United States, as well as the District of Columbia, in enforcing their respective laws on gambling and bookmaking and to suppress organized gambling activities.”); United States v. McDonough, 835 F.2d 1103, 1104–05, 1105 n.7 (5th Cir. 1988) (“The legislative history sets forth a dual purpose—to assist the various states in enforcing their gambling laws ‘and to aid in the suppression of organized gambling activities . . . .’”).
[187] National Gambling Impact Study Commission Act, Pub. L. No. 104-169, § 2(1)–(5), 110 Stat. 1482 (1996).
[188] Amateur Sports Integrity Act and Gambling in Amateur Sports: Hearing Before the Committee on Commerce, Science, and Transportation on S.2340, 106th Cong. 33–36 (2000) (prepared statement of Tim Kelly).
[190] Nat’l Gambling Impact Study Comm’n, supra note 59, at 3–18.
[191] Internet Gambling: Hearing Before the Subcommittee on Technology, Terrorism, and Government Information of the Committee on the Judiciary on Issues Relating to Internet Gambling Including Youth Gamblers, Addiction, Bankruptcy, Unfair Payout, Crime, the Wire Act, and the Proposed Internet Gambling Prohibition Act, 106th Cong. 1–3 (1999) [hereinafter Internet Gambling] (Opening Statement of Honorable Jon Kyl, Ariz. Senator) (“But this is a case where this national problem is a Federal problem . . . and States cannot protect their citizens, enforcing their own laws from Internet gambling, if anyone can transmit into their States.”).
[192] Gottfried, supra note 26, at 43 (“Some states have enacted statutes explicitly targeting Internet gambling, while in other states, Internet gambling may also run afoul of general gambling state statutes.”).
[193] Richard Blumenthal, then Connecticut State Attorney General, now Senator, has said federal legislation is required to address “the sordid, despicable nature of an unregulated, faceless, nameless Internet gambling industry.” Proposals to Regulate Illegal Internet Gambling: Hearing Before the Committee on Banking, Housing, and Urban Affairs on Proposals to Regulate Illegal Internet Gambling, Including S. 627, to Prevent the Use of Certain Payments Instruments, Credit Cards, and Fund Transfers for Unlawful Internet Gambling, 108th Cong. 35 (2003) (prepared statement of Richard Blumenthal, Attorney General of Connecticut, on behalf of the National Association. of Attorneys General).
[194] Internet Gambling, supra note 191, at 9 (Statement of Betty Montgomery, Attorney General of Ohio, on behalf of the National Association of Attorneys General) (“We understand the law enforcement resources of Ohio or Wisconsin or any of the States, even well-coordinated, cannot get to the reach that the Internet has. That is why, Senator Kyl, your legislation is so needed.”).
[195] Tom Hamburger et al., Justice Department Issues New Opinion that Could Further Restrict Online Gambling, Wash. Post (Jan. 14, 2019, 10:47 PM), https://www.washingtonpost.com/politics/justice-department-issues-new-opinion-that-could-further-restrict-online-gambling/2019/01/14/a501e2da-1857-11e9-8813-cb9dec761e73_story.html?utm_term=.52221a079032 [http://perma.cc/PAJ6-688Z]. While this may represent a renewed interest in the potential dangers of Internet gambling, it’s worth noting that this restriction has been advocated for by casino magnate and GOP donor Sheldon Adelson. Id. Without Internet gambling, would-be gamblers would be encouraged to patronize casinos like Adelson’s.
[196] Sports gambling has grown dramatically since the early 1990s. A Look Inside the Numbers of Sports Betting in the U.S. and Overseas, Sports Bus. J. (Apr. 16, 2018), https://www.sportsbusinessdaily.com/Journal/Issues/2018/04/16/World-Congress-of-Sports/Research.aspx [http://perma.cc/WB2C-N5R9]. This increase in sports gamblers mirrors the increase in access to the Internet. Jacob Davidson, Here’s How Many Internet Users There Are, Money (May 26, 2015), http://money.com/money/3896219/internet-users-worldwide [http://perma.cc/L7NS-BV4S] (“The number of Internet users has increased from 738 million in 2000 to 3.2 billion in 2015 . . . .”).
[197] Weinberg, supra note 53.
[198] United States Internet Users, Internet Live Stats, http://www.internetlivestats.com/internet-users/us [http://perma.cc/M4EF-VX4E] (last updated July 1, 2016).
[200] In 2006, the United States accounted for half of the global online gambling market. Indrajit Basu, US-barred Gambling Set to Roll in Asia, Asia Times (Oct. 31, 2006), http://www.atimes.com/atimes/South_Asia/HJ31Df01.html [http://perma.cc/AVM6-S7ZP].
[201] Internet Gambling, supra note 191, at 15 (Statement of James R. Hurley, Chairman, N.J. Casino Control Commission) (“From what we know about Internet gambling . . . I do not believe the same kind of protections are in place or they ever could be put in place.”).
[204] Courts have recognized the difficulty in regulating traffic between states. See, e.g., Am. Libraries Ass’n v. Pataki, 969 F. Supp. 160, 177 (S.D.N.Y. 1997) (“An Internet user may not intend that a message be accessible to New Yorkers, but lacks the ability to prevent New Yorkers from visiting a particular Website . . . .”).
[205] E.g., Internet service providers, third-party credit card processors, and data companies used to determine odds and point-spreads.
[206] Keith C. Miller & Anthony N. Cabot, Regulatory Models for Sports Wagering: The Debate Between State vs. Federal Oversight, 8 UNLV Gaming L.J. 153, 173 (2018).
[211] Susanna Kim Ripken, The Dangers and Drawbacks of the Disclosure Antidote: Toward a More Substantive Approach to Securities Regulation, 58 Baylor L. Rev. 139, 150 (2006) (“Because the entire country was affected by the economic collapse of the market . . . Congress held hearings to study the problem and devise a strategy for restoring public confidence in the securities market. The result was the enactment of the [Securities Acts] . . . .”).
[214] S. Rep. No. 102-248, at 5 (1991), as reprinted in 1992 U.S.C.C.A.N. 3553, 3555 (“Sports gambling threatens to change the nature of sporting events . . . . It undermines public confidence in the character of professional and amateur sports.”).
[215] Miller & Cabot, supra note 206.
[216] See S. Rep. No. 102-248, at 5.
[217] John Nofsinger, It Takes Trust to Invest: Trusting the Stock Market, Psychol. Today (Dec. 24, 2008), https://www.psychologytoday.com/us/blog/mind-my-money/200812/it-takes-trust-invest [https://perma.cc/AG9X-GF4T] (“Without trust, people won’t invest in the stock market.”).
[218] Richard H. McLaren, Is Sport Losing Its Integrity?, 21 Marq. Sports L. Rev. 551, 551–52 (“[The erosion of integrity is] gnawing away at the public image and respect of sport and [is] the greatest threat[] to the continuing commercial success of professional sport.”).
[219] Justice Brandeis once said, “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.” Louis Dembitz Brandeis, Other People’s Money and How the Bankers Use It 92 (1914).
[220] See infra notes 245–247.
[221] See, e.g., New Jersey’s requirements to obtain a casino license. N.J. Stat. Ann. 5:12-82 (West 2013). States can also define who may and may not wager on certain mandatorily disclosed information. This also has an analog in the securities context. See, e.g., Matt Levine, Insider Trading on Tender Offers Is Still Illegal, Bloomberg (Feb. 12, 2015, 7:00 AM) https://www.bloomberg.com/opinion/articles/2015-02-12/insider-trading-on-tender-offers-is-still-illegal [https://perma.cc/ZZB7-AU78] (discussing the prophylactic rules with respect to tender offers).
[222] Louis Lowenstein, Financial Transparency and Corporate Governance: You Manage What You Measure, 96 Colum. L. Rev. 1335, 1339 (1996) (“[C]orporate executives, like the rest of us, behave more honestly, diligently and competently when they know that their stewardship of other people’s money is open to scrutiny.”).
[223] Paul G. Mahoney, Mandatory Disclosure as a Solution to Agency Problems, 62 U. Chi. L. Rev. 1047, 1048–51 (1995) (“[T]he ‘agency cost model,’ contends that the principal purpose of mandatory disclosure is to address certain agency problems that arise between corporate promoters and investors . . . . Disclosure can help reduce the cost of monitoring promoters’ and managers’ use of corporate assets for self-interested purposes.”).
[224] Mark A. Sargent, State Disclosure Regulation and the Allocation of Regulatory Responsibilities, 46 Md. L. Rev. 1027, 1044–46 (1987) (“By mandating such disclosure, the law attempts to redress the informational imbalance between promoters and investors.”).
[225] As an illustration of this, consider the odds for Team B to defeat Team A are +5000. This means a $100 bet will profit $5000. In other words, Team B is a significant underdog. Team A’s best player, X, suffers a broken ankle which prevents her from playing. Once X’s injury becomes public, Team B’s odds shift to +120, signaling to the gambler that the predicted outcome of the game is almost even. Having knowledge of X’s injury before it becomes public allows one to make a wager at the +5000 price. This is tantamount to an investor learning that a company’s CEO is about to be indicted for fraud and selling her shares before the price drops. For an explanation of how moneyline odds work, see, e.g., Allen Moody, How a Moneyline Works in Sports Betting, liveaboutdotcom, https://www.thoughtco.com/sports-betting-understanding-money-lines-3116852 [https://perma.cc/N68Y-PUUX] (last updated Sept. 11, 2018).
[226] Ripken, supra note 211, at 154.
[228] Jeanne L. Schroeder, Taking Stock: Insider and Outsider Trading by Congress, 5 Wm. & Mary Bus. L. Rev. 159, 171 (2014) (“American law does not generally impose a parity-of-information type of fairness standard in markets generally.”).
[229] Alison Grey Anderson, The Disclosure Process in Federal Securities Regulation: A Brief Review, 25 Hastings L.J. 311, 313 (1974); see also S. Rep. No. 73-47, at 6-7 (1933); Robert L. Knauss, Disclosure Requirements—Changing Concepts of Liability, 24 Bus. Law. 43 (1968); Thomas J. Schoenbaum, The Relationship Between Corporate Disclosure and Corporate Responsibility, 40 Fordham L. Rev. 565, 575–76 (1972).
[230] John Aziz, How Did Americans Manage to Lose $119 Billion Gambling Last Year?, Week (Feb. 5, 2014), https://theweek.com/articles/451623/how-did-americans-manage-lose-119-billion-gambling-last-year [https://perma.cc/82UM-ZJUX].
[231] Marilyn Lancelot, How Many People Gamble?, AddictionBlog.org (Feb. 17, 2011), https://gambling.addictionblog.org/how-many-people-gamble [https://perma.cc/8TKS-ZMKR].
[232] See, e.g., Internet Gambling: Hearing Before the Subcommittee On Technology, Terrorism, and Government Information of the S. Comm. on the Judiciary on Issues Relating to Internet Gambling Including Youth Gamblers, Addiction, Bankruptcy, Unfair Payout, Crime, the Wire Act, and the Proposed Internet Gambling Prohibition Act, 106th Cong. 106–70 (1999) (opening statement of Honorable Jon Kyl, Chairman, Subcommittee On Technology, Terrorism, and Government Information) (“We also know that [electronic gambling] has an impact on crime. Gambling on the Internet is apt to lead to criminal behavior. Indeed, up to 90 percent of pathological gamblers commit crimes to pay off their wagering debts . . . .”).
[233] One study showed sixteen percent of senior citizens surveyed take assisted-care facility sponsored trips to casinos at least once a month. Dennis P. McNeilly & William J. Burke, Gambling as a Social Activity of Older Adults, 52 Int’l J. Aging & Hum. Dev. 19, 19 (2001).
[235] Ripken, supra note 211, at 155 (“Thus, the advantage of disclosure regulation is that it promotes the protection of investors and the public interest without interfering too greatly in the operation of the free market.”).
[236] As of January 2019, over twenty percent of Florida residents are over the age of sixty-five. Quick Facts: Florida, U.S. Census Bureau, https://www.census.gov/quickfacts/fl [https://perma.cc/YH9D-3R28].
[237] William Ruger & Jason Sorens, Freedom in the 50 States, Cato Inst., https://www.freedominthe50states.org [https://perma.cc/XR28-F2VR]. The freedom ranking is a combination of personal and economic freedom. Id.
[238] See Utah Gambling Laws, supra note 164.
[239] Anthony Cabot, The Absence of a Comprehensive Federal Policy Toward Internet and Sports Wagering and a Proposal for Change, 17 Vill. Sports & Ent. L.J. 271, 275 (2010) (“Rather than preempting the state laws, federal gambling laws were designed to aid states in the enforcement of their gambling laws.”); see also United States v. Yaquinta, 204 F. Supp. 276, 277 (N.D. W. Va. 1962) (“The ‘purpose’ of the [Wire Act] is succinctly stated in Report No. 588 . . . as ‘[] to assist the several States in the enforcement of their laws pertaining to gambling and to aid in the suppression of organized gambling activities . . . .’”).
[240] This definition could parallel the Nevada definition of a “race book,” which means “the business of accepting wagers upon the outcome of any [sporting] event.” Nev. Rev. Stat. Ann. § 463.01855 (2019).
[241] Similar to the ‘33 Act, the issuer, in this case the sportsbook operator, would file a registration statement making certain disclosures. Registration Under the Securities Act of 1933, U.S. Sec. & Exchange Commission, https://www.sec.gov/fast-answers/answersregis33htm.html [https://perma.cc/33QK-YKSN]. In a securities context, this would include a description of the security to be offered and financial statements certified by independent accountants. Id. In a sports gambling context, this might include similar financial and management disclosures, as well as sports they intend to accept wagers on and states in which they intend to operate.
[242] See supra notes 201–203 and accompanying text.
[243] For an overview of how sportsbooks set their odds, see, e.g., How Do Bookmakers Generate Sports Odds?, Sports Betting Dime, https://www.sportsbettingdime.com/guides/betting-101/how-bookmakers-generate-odds [https://perma.cc/7PDV-NPJ8] (last updated Sept. 9, 2019).
[244] Id. (“[M]any sportsbooks are placing less emphasis on creating unique lines and devoting less of their budget to oddsmaking.”).
[245] A notable exception was the NBA, whose commissioner, Adam Silver, wrote an op-ed in the New York Times arguing for legalization and regulation of sports betting. Adam Silver, Legalize and Regulate Sports Betting, N.Y. Times (Nov. 13, 2014), https://www.nytimes.com/2014/11/14/opinion/nba-commissioner-adam-silver-legalize-sports-betting.html [https://perma.cc/37EF-TC3U]. Testifying in favor of PASPA were the commissioners of the NFL, MLB, NHL, and the NBA. S. Rep. No. 102-248, at 3 (1991), as reprinted in 1992 U.S.C.C.A.N. 3553, 3554.
[246] For example, NHL teams typically obfuscate the extent of a player’s injury by using broad terms like “upper body” or “lower body” injury. This practice has widespread acceptance. Chris Hine, NHL Injuries Often a Mystery, and the League Approves, Chi. Trib. (Feb. 26, 2015, 8:18 PM), https://www.chicagotribune.com/sports/hockey/blackhawks/ct-secrecy-injuries-blackhawks-spt-0227-20150226-story.html [https://perma.cc/3KDT-DYXA].
[247] This would mirror the ‘34 Act, which requires periodic disclosures filed with the SEC. The Laws that Govern the Securities Industry, U.S. Sec. & Exchange Commission, https://www.sec.gov/answers/about-lawsshtml.html [https://perma.cc/HRM2-B3PH].
[248] This is not a novel idea. The NFL has a robust injury reporting policy that all teams must follow, with the express purpose of instilling public confidence in the NFL. 2017 Personnel (Injury) Report Policy, Nat’l Football League, https://operations.nfl.com/media/2683/2017-nfl-injury-report-policy.pdf [https://perma.cc/8GVR-MNNW].
[249] 25 U.S.C. §§ 2701–2702, 2704 (2018).
[250] For a description of these functions, see Lowenstein, supra note 222, at 1340.
[251] SEC v. Pardue, 367 F. Supp. 2d 773, 776 (E.D. Pa. 2005).
[252] Perhaps the most famous industry ban in history is Pete Rose. Rose is one of the greatest hitters in baseball history, but after reports surfaced implicating him in illegal gambling, he signed an agreement with MLB Commissioner A. Bartlett Giamatti preventing him from ever being associated with the league again. Banning of Pete Rose, Baseball Reference, https://www.baseball-reference.com/bullpen/Banning_of_Pete_Rose [https://perma.cc/9GW5-RLSK] (last updated Dec. 16, 2017).
[253] The SEC has the same enforcement powers. Pardue, 367 F. Supp. 2d at 777.
[254] See supra note 133 and accompanying text. If consent from all involved parties wasn’t given, then interstate wagers weren’t allowed. Teams, or entire leagues, could opt-out of being listed by sportsbooks.
[255] This would be a so-called “integrity fee.” The NBA testified to the New York Legislature that it would endure costs associated with maintaining the fairness of its games once sports gambling was legalized. Elaine S. Povich, Show Me the Money: Sports Betting Off and Running, Pew (Sept. 10, 2018), https://www.pewtrusts.org/research-and-analysis/blogs/stateline/2018/09/10/show-me-the-money-sports-betting-off-and-running [https://perma.cc/GT5H-RUKV]. Leagues are also free to negotiate these fees or alternative arrangements directly with the sportsbooks. This has already happened, with the NHL brokering a deal with MGM. See Brett Smiley, MGM Resorts Becomes NHL’s Official Sports Betting Partner in Historic New Deal, SportsHandle (Oct. 29, 2018), https://sportshandle.com/nhl-sports-betting-partnership-mgm-marketing-deal [https://perma.cc/GE68-9SXN].
[256] See Gouker, supra note 23. Many states are already passing legislation.
[257] See supra notes 236–237 and accompanying text. States will have different concerns based on their unique demographics.
[258] Miller & Cabot, supra note 206, at 164.
[260] Professor Nelson Rose has written two articles about the failings of the UIGEA. See, e.g., I. Nelson Rose, Viewpoint: The Unlawful Internet Gambling Enforcement Act of 2006 Analyzed, 10 Gaming L. Rev. 537 (2006). As an example, Professor Rose writes, “For a law designed to stop the flow of money, it is bizarre to make it a crime only to receive the funds, but not to send them or transmit them . . . .” Id. at 539.
[261] Miller & Cabot, supra note 206, at 174 (“That is, the new entity might fulfill the standard view of the federal government as a bloated bureaucracy which stifles innovation and competition by imposing burdensome regulations.”).
[262] Howell E. Jackson, Regulation in a Multisectored Financial Services Industry: An Exploration Essay, 77 Wash. U. L.Q. 319, 344 (1999) (“The great advantage of disclosure-based strategies is that they constitute a minimalist form of government intervention. Consumer knowledge is enhanced, while consumer preferences are left largely undisturbed.”).
[263] Ripken, supra note 211, at 185.
[264] Alan B. Levenson, The Role of the SEC as a Consumer Protection Agency, 27 Bus. Law. 61, 68 (1971).
[265] There exists the risk of teams attempting to obfuscate the gravity of an injury with complicated medical language. A standard form with defined terms could assist consumers with understanding these reports.
[266] For an overview of how far sports media spreads, see Jasneel Chaddha, The New Face of Sports Media, Huffington Post, https://www.huffingtonpost.com/entry/the-new-face-of-sports-media_us_59a4b9f2e4b0d6cf7f404fd9 [https://perma.cc/P7US-RYC8] (last updated Aug. 29, 2017).
[267] Ripken, supra note 211, at 160.
[269] Sabermetrics, the empirical analysis of baseball, was popularized in the movie Moneyball, which is a nonfictional account of the 2002 Oakland Athletics baseball team, which found success despite a limited budget and the use of traditionally undervalued players. Moneyball (Columbia Pictures 2011).
[270] Aaron Timms, Are Super-Nerds Really Ruining US Sports?, Guardian (Aug. 16, 2018, 5:00 PM), https://www.theguardian.com/sport/2018/aug/16/sports-nerds-analytics-data [https://perma.cc/A2T5-CGNH] (“With a string of [data-friendly] teams in place across all the major leagues . . . [proponents of advanced statistics] can legitimately say they hold the strongest currency of all in professional sports: the currency of success.”).
[271] For an overview of how legal sports gambling will affect the data market, see, e.g., James Glanz & Agustin Armendariz, When Sports Betting Is Legal, the Value of Game Data Soars, N.Y. Times (July 2, 2018) https://www.nytimes.com/2018/07/02/sports/sports-betting.html [https://perma.cc/K7QB-N5AT].
[272] Colorado reported over $240,000,000 in tax revenues from marijuana sales in 2017. Zoe Chevalier, Recreational Marijuana: A Business Boon for States?, U.S. News (Aug. 1, 2018, 12:01 AM), https://www.usnews.com/news/best-states/articles/2018-08-01/the-legalization-of-recreational-marijuana-an-economic-opportunity-for-states [https://perma.cc/J585-8GSY?type=image].