US Supreme Court repeal of PASPA

On Monday, May 14, 2018, the Supreme Court of the United States held in the Murphy v. National Collegiate Athletic Association case that the federal Professional and Amateur Sports Protection Act (“PASPA”) violated the Tenth Amendment of the U.S. Constitution.

The Tenth Amendment limits the power of the federal government to that which is granted to it by the U.S. Constitution. In other words, the court held that the federal government exceeded its authority by enacting a federal law restricting the ability of states to regulate sports betting because the U.S. Constitution does not give the federal government this power. As a result, PASPA is no longer enforceable against states, businesses or individuals.

Notably, however, the court ruling does not, in itself, change the legality of sports betting anywhere. It simply makes it possible for individual states to pass statutes that would legalize sports gambling within their borders. Some states such as New Jersey, West Virginia and Pennsylvania have already taken steps to legalize and regulate sports gambling. Meanwhile, other states such as New York, Connecticut, Illinois, Rhode Island, Delaware, Mississippi and Massachusetts may soon follow.

From an e-payments perspective, this raises some interesting legal questions. Because the Supreme Court decision simply overturns a federal law that prohibited states from allowing sports betting, it remains up to each state to decide whether and how it will allow sports betting in the future. The states that have so far proposed legalizing sports betting intend to license only a limited number of entities to offer sports betting in environments like race tracks or casinos. While some bills are encouraging mobile and online betting options, these will be harder to regulate because of the difficulty behind restricting online betting in jurisdictions where it remains illegal. Without these options, however, gambling advocates warn that bettors will still turn to offshore accounts and illegal bookmakers.

In one key state where legislation is currently pending, New Jersey, sportsbooks will be able to take bets via phone or computer, but not right away. There will be a licensing process that could take weeks — possibly a few months — before books will be able to take bets remotely. Even then, only intrastate wagers will be permitted.

Because of the time and complexity behind applying for a license in New Jersey or other states that may soon follow its example to offer online sports betting and related payment services, entities interested in being among the first to process online sports betting payments in states where it may soon be permitted are encouraged to contact the experts at Gropay who can assist with all aspects of the local licensing and regulatory processes. We have payments lawyers licensed to practice in multiple states who can provide you with expert guidance and support to navigate the complex process.

Need more information on these new changes. Feel free to contact us or take advantage of our first free consultation offer.