Peter Hanna
Associate Editor
Loyola University Chicago School of Law, JD 2026
It has been quite the whirlwind since the 2018 landmark case of Murphy, Governor of New Jersey v. National Collegiate Athletic Association. It ultimately declared The Professional and Amateur Sports Protection Act (PASPA) of 1992 to be in violation of the Tenth Amendment of the United States Constitution. The act effectively outlawed sports betting across the nation, with a few exceptions. The Supreme Court held that PASPA conflicted with the Anti-Commandeering Doctrine of the Tenth Amendment. Additionally, the Court held that the power to regulate this type of activity must be reserved solely to the several states. Since this decision, 38 states and the District of Columbia have legalized sports betting in various forms, with 29 states authorizing online or mobile bets. The rapid growth of the sports gambling industry has brought opportunities for both sports fans, as well as new revenue sources for states. However, it has also exemplified the urgent need for more federal regulation. There are newfound risks to the integrity of sports, a rise in the rates of gambling addiction, all while it becomes increasingly difficult to ensure fair market practice regulations.
How federal regulation can protect consumers
Statistics indicate that in 2022, almost one-in-five U.S. adults have personally bet money on sports in some way, and that the number only grew the following year. With such a high rate of sports gambling in the U.S., the need of a federal framework that protects the consumers of sports gambling is high. Aside from legalization, one reason that could account for such a high surge in the rates of sports gambling is the massive spike in advertising by sports betting operators and online sports wagering services. One study showed that people who watch sports spend up to 20% of every game watching gambling advertisements. There are very few regulations in place to stop these widespread advertisements from being viewed by minors or former addicts; without a true framework of federal supervision, states run the danger of failing to create the necessary consumer protection laws. To slow down exploitative practices, federal regulation can ensure that all states follow strict advertising guidelines and regulations. This may include prohibitions on advertising during live sporting events, limitations on targeting marketing to minors, and legal disclosure requirements on the dangers of gambling. More federal regulation on the advertisement of sports gambling sites, or “sportsbooks” is only the first step in implementing a consistent federal framework that mitigates the risks and issues associated with sports gambling.
The need for regulatory framework across the entire sports betting market
One of the major concerns with the new state-to-state approach on sports gambling is the fact that states only have the right to regulate sports betting within their borders. Furthermore, the Wire Act, a federal law, prohibits the use of the internet or a mobile device to place interstate wagers on sporting events, so that any sports betting activity does not cross state lines. This resulted in a divided market with differing tax rates, varying procedures for licensing, and unique operational standards and norms from state to state. In addition to providing operators an unfair playing field because of the variance from state to state, this absence of uniformity may lead to regulatory arbitrage— businesses deciding to operate out of jurisdictions with looser laws and regulations in their respective fields. The market’s fairness and competitiveness are weakened by such actions, driving all the business to states with the weakest regulations. State by state consistency in licensing and operational requirements are possible if a federal regulatory structure is implemented. This would effectively even out the playing field for all operators and make it easier to establish a nationwide sports betting market.
Why is this so important?
Sports gambling has turned into an enormous source of revenue for the states, as well as a taxable activity by the federal government. The industry boosted $52.7 Billion in tax impacts, with $66.65 Billion in Gross Gaming Revenue. Further, it supported the creation of about 1.8 million jobs in the country. Americans wagered a record setting $119.84 Billion on sports betting in 2023, which was a 27.5% increase from 2022. All these numbers support the notion that a more precise regulatory framework is necessary so that we can ensure safe, fair practices in gambling markets along with the utmost protection for consumers. Stricter advertising requirements and more consistency in operation across states would be a solid first step in creating this regulatory framework. Continuing down the same path we are currently on may lead to dangerous outcomes for millions of consumers and the idea of fair market practices in the United States.