Last year, the United States Supreme Court struck down a federal law that banned American citizens from participating in sports betting. The court ruled that the law unconstitutionally restricted the freedom of interstate travel by prohibiting Americans from participating in sports betting even when they are in a foreign country. In August 2019, the justices rejected the government’s appeal and affirmed their earlier decision.
The court’s 5-to-4 decision in New York v. Milonni marks a significant victory for those hoping to legally wager on sports. A number of states have since adopted legislation to comply with the court’s ruling, and 2020 is likely to see a wave of new legal sportsbooks open for business.
While the ruling in Milonni ensures that American citizens will no longer be prevented from betting on sporting events when traveling abroad, it does not guarantee that all states will extend the right to place wagers to their residents. Four states—New York, New Jersey, Illinois, and Missouri—still maintain laws that prohibit their residents from participating in most forms of sporting action. Those looking to wager on sporting events in these states will thus need to do so legally or at the discretion of the sportsbooks, which is often not the most convenient option. Furthermore, the federal ban on sports betting applies only to individuals, not businesses or organizations. Therefore, it is still a federal offense to knowingly distribute betting materials in interstate commerce. For these reasons, the fight for legal sports betting will continue to be an issue.
The Highs And Lows Of The Decision
The court’s ruling in Milonni was a landmark decision, largely because it brought an end to a decades-long prohibition on American citizens engaging in legal sports betting. It also represented a major victory for the sports betting industry, which had challenged the federal ban in the courts. The court’s decision in Milonni therefore ranks among the most significant of its kind, at least in recent history. Here are the high- and low-lights of the decision:
Highlight #1
One of the most significant aspects of the court’s ruling in Milonni is that it ensured that American citizens could engage in legal sports betting when traveling abroad. It’s no secret that the spread of legal sportsbooks to other countries is responsible for much of the increase in global sports betting. Before the court’s ruling, Americans were prevented from gambling in other countries due to Federal Wire Act prohibitions against American sportsbooks operating in a foreign country. The court’s decision in Milonni struck down this particular restriction, meaning that American citizens could now legally gamble in other countries. This aspect of the court’s ruling undoubtedly represents the biggest single win for American sports bettors and the sports betting industry.
Lowlight #1
Although the court’s decision in Milonni marked a significant victory for those hoping to wager on sports, it was immediately countered by a new set of legal challenges. The Federal Government has pledged to appeal the ruling to the Supreme Court again, so it remains to be seen whether or not the right to place wagers legally will be upheld, at least in part. If the court declines to hear the case a second time, it would effectively put an end to the fight for legal sports betting. It’s an issue that has raged for years, and one that continues to be a point of contention even today.
Highlight #2
Another major aspect of the court’s ruling in Milonni is that it struck down the Professional and Amateur Sports Protection Act (PASPA). Enacted in 1974, this law prohibited ‘state and local governments’ from ‘legalizing sports wagering’ and imposed a number of restrictions on the industry, including a minimum legal age of 21 and residency requirements. PASPA was a response to the explosion in sports betting that had taken place in the 1970s. Prior to the law’s enactment, Americans were able to wager on sports in most states, but PASPA prohibited residents of some states, including New Jersey, from participating in most forms of sports betting. PASPA was effectively repealed by the court’s decision in Milonni, meaning that states are once again free to legalize sports betting.
Lowlight #2
Although PASPA was largely responsible for the explosion of legal sports betting in the 1970s, the law did create certain benefits for the sports betting industry. One of the most significant of these was the minimum legal age of 21 that was established by the law. This was an effort to keep young people from gambling, as it was assumed that most people who participated in sports betting were doing so for leisure and that they would therefore be influenced by youth culture and be drawn to gambling. The court’s decision in Milonni did not accept this argument, meaning that anyone—regardless of age—is now free to participate in legal sports betting.
Highlight #3
Another significant aspect of the Supreme Court’s decision in Milonni is that it expanded the definition of ‘sports’ to include not only actual sporting events but also fantasy sports contests and betting. Previously, the court had ruled that fantasy sports contests constituted illegal gambling. The inclusion of this type of wagering in the court’s ruling in Milonni effectively ensures that the growth in interest in legal sports betting will continue unabated. It also represents a major victory for the fantasy sports industry, which had been fighting for years to have its content treated legally as ‘gambling’.
Lowlight #3
Although the definition of ‘sports’ was expanded in the court’s ruling in Milonni, there are still a number of rules and regulations that apply. For example, the court’s ruling in Milonni made it illegal for states to enforce their bans on sports betting with respect to games played out of state. This effectively means that states cannot control what happens within their boundaries, as it is up to the individual sportsbooks operating in those states to follow the laws and restrictions imposed by the state. The court’s ruling in Milonni is therefore significant in that it allows for interstate competition while still ensuring that Americans are not encouraged to gamble.
Highlight #4
One of the best parts of the Supreme Court’s decision in Milonni is that it applied a fair and reasonable interpretation of the Commerce Clause of the U.S. Constitution. Up until that point, the court had largely treated the federal government’s position that sports betting was a form of interstate commerce as unconstitutional overreach. The decision in Milonni therefore ensures that the federal government cannot regulate sports betting in a manner that would hinder commerce between the states. The court’s ruling in Milonni also corrects an imbalance that had developed in favor of the states in a number of previous cases over the years. In New York v. Akron hockey, for example, the court had ruled that a state was permitted to ban all forms of hockey, including ice hockey, despite the fact that the game constituted interstate commerce. The court’s decision in Milonni instead stands for the opposite: that states must respect the freedom of interstate commerce, even when it comes to regulating sports.
Lowlight #4
Although the court’s ruling in Milonni was a victory for those hoping to engage in legalized sports betting, it came at a significant cost. Not only did PASPA have to be struck down, but several other federal statutes, including the Wire Act, were also declared unconstitutional. This means that not only do state restrictions no longer apply, but the federal government cannot punish those who participate in or enable sports betting.
Highlight #5
The federal government has a number of options available to it with respect to appeal the decision in Milonni. The first of these is to ask the court for a rehearing. One of the things that might make the court take its case back is a change in circumstances, as the definition of ‘sports’ was expanded in that decision to include a number of different types of contests and betting activities. Another option would be to ask Congress to pass a new law or amend an existing one, provided that state and local governments continue to allow legal betting.