On December 19, 2018, a federal bill was introduced by Senator Charles Schumer (D-New York) and Senator Orrin Hatch (R-Utah), known as the Sports Wagering Market Integrity Act (SWMIA) of 2018. The bill would have the U.S. Justice Department set minimum standards for states to offer sports betting.
The 101-page bill does not address any such fees paid by sportsbook operators to leagues based on the amount wagered on respective games.
The purpose of SWMIA is to create federal framework designed to “maintain a distinct Federal interest in the integrity and character of professional and amateur sporting contests.”
“I knew that Congress had an obligation to ensure that the integrity of the games we love was never compromised,” Schumer said of the Sports Wagering Market Integrity Act of 2018. “That is why I believe the time is now to establish a strong national integrity standard for sports betting that will protect consumers and the games themselves from corruption.”
Hatch said that once the Supreme Court ruling in May to strike down PASPA happened, “I began working with stakeholders to ensure we were doing everything possible to protect the integrity of sports from corruption.”
“The legislation we’ve introduced today is the culmination of eight months of high-level meetings, discussions, and negotiations, and will serve as a placeholder for the next Congress, should they decide to continue working to address these issues,” said Hatch, who is retiring at the end of his term.
The bill would provide federal funding from sports betting taxes for programs to help address problem gambling. It also would establish a nationwide self-exclusion list that people with gambling problems can add their names to in order to prohibit sports betting providers from allowing them to bet, similar to state lists that casinos maintain.
The bill would also create a National Sports Wagering Clearinghouse to receive and share sports wagering data and suspicious transaction reports among sports wagering operators, state regulators, sports organizations and federal and state law enforcement.
Since the PASPA ruling in May, laws on sports gambling have varied from state-to-state. Leagues like the NBA, NFL, MLB, and NHL have all sought one uniform set of rules nationwide. The NFL, MLB, PGA, and NCAA have all expressed support for the new bill.
Schumer said he will push hard for the bill, noting that his political differences with Hatch indicate it is something that has support from both parties.
“No bet is ever a guaranteed win, but it’s a smart bet that I will strongly advocate for this bill to move forward and that Congress will vote to pass federal legislation very soon,” Schumer said.
The bill will not pass in this session of Congress, which has less than two weeks remaining.
“There is much work to be done,” Hatch said in a statement announcing SWMIA, “but I hope this bill will serve as a placeholder for the next Congress, should they decided to continue working to address these issues.”
The bill will have to be formally reintroduced after the new Congress begins its session in 2019.
The eight states that already offer sports betting could still continue to offer it while the Justice Department evaluates the state’s laws. States interested in passing sports betting laws would need to comply with federal standards and seek approval from the U.S. Attorney General. The federal standards would include:
• Establish an entity for the purposes of regulating sports betting.
• Restrict online wagers to individuals located in the state, with limited exceptions.
• Allow sports governing bodies to request that certain types of wagers be prohibited.
• Require sportsbook operators to use official league data to grade wagers.
The Associated Press reported that states already actively regulating sports betting would be allowed to continue to operate while the U.S. Attorney General reviews their laws. The states, including Nevada, however, would not be exempt from complying with the federal standards.
The U.S. Attorney General is authorized to file a civil action against anyone allegedly in violation of the proposed law. The bill also creates a mechanism to go after unlicensed operators that serve U.S. bettors, including the popular online sportsbooks located offshore.
Justice Samuel Alito, who wrote the decision on behalf of the Supreme Court to overturn PASPA, made clear that “Congress can regulate sports gambling directly.”
“[D]irect federal regulation of sports-gambling schemes nationwide … falls within Congress’ power to regulate activities having a substantial effect on interstate commerce,” wrote Justice Ginsburg in a separate opinion.
The American Gaming Association, which represents the casino industry, called SWMIA the “epitome of a solution in search of a problem.” The AGA did, however, express support for the bill’s recognition that the illegal sports betting market is the biggest impediment to the growth of the new legal market.
Both the Wire Act of 1961 and the Sports Bribery Act of 1964 would receive modern updates under the new bill.
The Wire Act, which addresses sports betting that crosses state lines, would be amended to accommodate interstate sports wagering compacts between two or more states that have legalized sports gambling.
The Sports Bribery Act, a criminal law, is expanded under SWMIA to include extortion and blackmail. A whistleblower protection clause also is added.
Whether or not the bill will pass remains to be seen. It is unknown at this time if the bill has enough support in the incoming Congress.
