Why Do You Need to Legally Operate a Sportsbook?

The legalities surrounding sports betting grew complicated this year. The Supreme Court of the United States decided to review a case involving the Professional and Amateur Sports Protection Act (PASPA), finding that parts of it were unconstitutional. The case is on hold until the end of June 2017 when it is scheduled to be heard by the Court.

The PASPA lawsuit has implications for bookmakers and other sports-related businesses, many of which are located in New Jersey. If the Supreme Court upholds PASPA, the businesses could be forced to shut down. However, if it overturns the law, then the industry could flourish.

PASPA Is The Law

In general, it is illegal to operate a sportsbook in New Jersey. The only legal betting in the state is on NFL games, as those games are covered by a federal law (the Professional Football Conference (PFC) Antibetting Regulations). New Jersey’s sports betting ban was initially put in place in 2014, but it went into effect in 2015. The state government enacted the law after it was proven that professional sports leagues and teams were losing billions of dollars due to illegal betting schemes.

What Is A Sportsbook?

A sportsbook is an entity that accepts wagers on sporting events. They operate online or through physical locations, like casinos or betting shops. The two most popular sportsbooks in the United States are the William Hill and the DraftKings, worth between $15-$20 billion in annual revenue, according to a Fortune 500 company.

A sportsbook’s purpose is to take bets from people interested in sports teams and events. The company records the bets and pays out winnings to the individuals once the games have ended. Most people use sports betting as an occasional way to make extra money, though some people use it as a way of life.

Why Do You Need To Be Legally Operated?

Being legally operated is crucial for any business, and it is especially so for a sportsbook. The reason is that there is a lot of competition in the sports betting industry and a lot of risk associated with it. To stand out among the other sportsbooks, you need to follow the legal guidelines set by your state or governing body. Otherwise, you could find yourself in legal trouble or shut down by authorities.

Even more so for offshore sportsbooks. If you are based in New Jersey and decide to take the offshore route, you will be required to follow the Foreign Sports Betting Law. If you decide to offshore your business, you will need to ensure that your territory complies with relevant laws, particularly in the UK, where gambling is illegal. In addition, you will need to obtain a gambling license from the Gambling Commission.

Key Differences Between Legal And Illegal Sportsbooks

If you decide to go the legal route, you must comply with the following:

  • The Federal Wire Act
  • The Professional and Amateur Sports Protection Act
  • And Any Other Federal, State, And Local Law That Pertains To Your Operations

All of these laws make it very difficult to operate an illegal sportsbook. You will also face severe penalties, including prosecution and incarceration, if you are found to be violating them. It is also important to note that if you are found to be operating an illegal sportsbook, you could lose all of your cash, as well as any funds you have raised through crowdfunding platforms, like Kickstarter or GoFundMe.

On the other hand, a legally operated sportsbook must follow the following:

  • The Federal Wire Act
  • The Professional and Amateur Sports Protection Act
  • And Any Other Federal, State, And Local Law That Pertains To Your Operations

However, beyond the federal law, you must also comply with your state’s betting laws and regulations. This means you will need to obtain a license from your state government and register with the appropriate agency, like the State Gaming Commission in New Jersey. You will also have to adhere to the rules and guidelines set by your governing body, which could include things like limiting how much you can wager on any given sporting event or operating during specific times or days.

The Implications Of A Supreme Court Decision

If the Supreme Court decides in favor of PASPA, it will have a significant impact on the sports betting industry. Many bookmakers, like William Hill and the FanDuel, could be forced to close down. The industry could also be impacted by the decision, as it is a heavily regulated one. If the Supreme Court decides against PASPA, it will provide some relief to the industry, as New Jersey’s betting ban would not apply to them anymore. However, there will still be a lot of competition, so entrepreneurs in the space will need to figure out some way to stand out above the rest and convince people to use their service instead of the others.