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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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Speaker 1: and on Bloomberg dot com slash podcasts. Yesterday, in Dover, Delaware,

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Speaker 1: Governor John Carney placed the state's first legal sports bet.

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Speaker 1: I want to place a ten bet on the Philadelphia

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Speaker 1: Fighting Fills, So beat the Chicago Cubs. Full scale sports

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Speaker 1: books opened at one thirty yesterday afternoon at Delaware's three casinos,

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Speaker 1: just three weeks after the Supreme Court rule that states

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Speaker 1: were free to do so. Joining me is Daniel Walach,

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Speaker 1: a shareholder at Becker Law. New Jersey, fought for sports

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Speaker 1: betting all the way to that Supreme Court decision. How

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Speaker 1: did Delaware beat it to the finish line? H reasons?

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Speaker 1: New Delaware already has a sports betting infrastructure in place

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Speaker 1: um as a result of that federal law called PASPA,

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Speaker 1: which was recently struck down. Delaware was grandfathered under that

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Speaker 1: federal law and for years has run a multi game

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Speaker 1: parlory you know, sports wagering, you know system conducted through

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Speaker 1: the state lottery, so so they had sports betting, you

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Speaker 1: just had to bet on multiple games. So they had

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Speaker 1: the infrastructure, they had the law, and then they had

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Speaker 1: the operators, the casinos, the race tracks, and the risk

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Speaker 1: managers like William Hill and now I g T. So

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Speaker 1: they're ready to go without even making a tweak to

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Speaker 1: their state legislation. So it was just simply as easy

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Speaker 1: as flipping a switch. So what other states are in

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Speaker 1: the race to legalize sports betting besides New Jersey obviously, Well,

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Speaker 1: we've got five that have either past laws or think

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Speaker 1: that they have tasted laws. So we've got we've got

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Speaker 1: new I'll tell you one second. But New Jersey and

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Speaker 1: Delaware are the first to you know, that are off

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Speaker 1: the map or on the map. And then West Virginia

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Speaker 1: passed a sports betting bill several months ago. They're going

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Speaker 1: to ramp it up over the summertime issue regulations. And

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Speaker 1: of course Mississippi should be the third state to market.

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Speaker 1: They passed a sports betting law last year, and their

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Speaker 1: Gaming Commission promulgated regulations to govern the licensing and regulation

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Speaker 1: of sports betting about three weeks ago, and those will

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Speaker 1: be effective on June twenty one, so potentially as early

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Speaker 1: as July sports betting could take place in the state

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Speaker 1: of Mississippi. Uh and certainly by the beginning of the

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Speaker 1: NFL season. So we got one, two, three, four, and

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Speaker 1: the fifth one. Oh yeah, it's obviously Nevada. Uh. So

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Speaker 1: they're gonna be five to six states that are in

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Speaker 1: the definite box. Now, when I say I think they

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Speaker 1: have passed sports legislation, I think that states such as

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Speaker 1: Delaware and West Virginia that have state constitutions which only

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Speaker 1: allow the lotteries to conduct you know, I guess lottery gaming. Um,

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Speaker 1: there may be a problem in a state like Delaware,

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Speaker 1: which prohibits all forms of gambling except for lotteries operated

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Speaker 1: by the state lottery, and then of course horse racing,

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Speaker 1: which isn't relevant here. And for lotteries you need to

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Speaker 1: have a predominant amount of chance or luck, like a

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Speaker 1: scratch off ticket, or in the case of multi game

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Speaker 1: parlay wagering, you've gotta pick three out of three. Correctly,

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Speaker 1: there's there's more luck than skill involved in that. But

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Speaker 1: when you pivot over to single game sports wagering, it

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Speaker 1: does become much more of a contest of skill, and

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Speaker 1: there there are legal opinions where advisory opinions from the

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Speaker 1: attorney generals of four different states, as well as a

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Speaker 1: position taken by the U. S. Department of Justice that

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Speaker 1: single game wagering is involves a predominant amount of skill

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Speaker 1: over chance, and several attorney generals have said that sports

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Speaker 1: betting does not fit within the you know, does not

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Speaker 1: fit within a lottery. So potentially, Delaware, while it has

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Speaker 1: moved forward with sports betting, I think it remains somewhat

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Speaker 1: vulnerable to a legal challenge. I don't know whether that

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Speaker 1: will ever come to pass. But if lotteries are aims

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Speaker 1: of chance, and sports betting is a concept of skill

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Speaker 1: and the lottery and the state constitution only permits you know, lotteries,

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Speaker 1: which are games of chance, I see a potential legal impediment.

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Speaker 1: Let's talk about online now. It's still in person betting

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Speaker 1: in Delaware, although the states Secretary of Finance and they're

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Speaker 1: discussing an app that would allow gamblers to make bets

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Speaker 1: over the phone if they're physically present in Delaware. Do

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Speaker 1: other states intend to have betting outside casinos and particularly online? Yeah,

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Speaker 1: many states are most of the states that have introduced

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Speaker 1: bills have an online or mobile component. I think state

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Speaker 1: lawmakers recognize that there's a sound public policy in trying

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Speaker 1: to eliminate the black market and migrate as much of

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Speaker 1: the betting from illegal black markets to legal, regulated markets,

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Speaker 1: and really the only effective way to accomplish that is

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Speaker 1: through online sports betting, because to require a consumer to

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Speaker 1: drive thirty or forty miles to a race track is

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Speaker 1: really not the most effect active way of eliminating the

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Speaker 1: black market. So to the extent um that there's a

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Speaker 1: will political will in those states, UH, you're seeing states

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Speaker 1: like New Jersey, West Virginia, UH and the vast majority

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Speaker 1: of states, even New York, that have a strong online

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Speaker 1: and mobile component. The only limitation is that because of

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Speaker 1: the Federal Wire Act, the the online betting has to

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Speaker 1: take place completely within the states, so you need to

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Speaker 1: be physically present in New York to bet through a

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Speaker 1: you know, a mobile app, you know issued through a

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Speaker 1: casino or a racetrack. So I think mobile and online

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Speaker 1: exists in the vast preponderance of the up to twenties

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Speaker 1: different state bills that are out there. Mississippi, on the

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Speaker 1: other hand, is a land based environment only and even

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Speaker 1: in those states that allow or will allow online or

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Speaker 1: mobile betting, they have to be tied to an existing

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Speaker 1: land based casino or racetrack. So you know, in New

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Speaker 1: Jersey the casinos can have online partners, but those partners

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Speaker 1: can't exist in a vacuum. They have to be partners

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Speaker 1: with the land based tinos and race tracks. So far down,

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Speaker 1: no state law has what's called or so called integrity

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Speaker 1: fee attached, which is a percentage of money that the

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Speaker 1: leagues want. Will that become an issue? Do the league's

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Speaker 1: have any leverage here? Well, they have leverage in several respects. Uh. One,

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Speaker 1: they are a significant player from a lobbying perspective. And

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Speaker 1: in any state that is considering legislation that the leagues

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Speaker 1: are are staunchly opposed to. Uh, that will greatly diminish

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Speaker 1: the likelihood of a bill being signed into law. I mean,

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Speaker 1: gambling bills are are very steep climbs anyway, because of

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Speaker 1: all the competing interests among stakeholders. But I have yet

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Speaker 1: to see besides New Jersey and West Virginia any legislation

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Speaker 1: passed over the objection of the sports leagues, and New

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Speaker 1: Jersey is not there yet. The government first all the

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Speaker 1: two chambers haven't formally approved the bill, and Governor Murphy

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Speaker 1: may delay in signing. And of course, with West Virginia,

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Speaker 1: the leagues were a little bit late to the negotiating table,

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Speaker 1: but not so in all of the other states that

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Speaker 1: are in play. In New York, Connecticut, Kansas, in Indiana, UH,

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Speaker 1: several of the introductory bills did include an integrity fee.

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Speaker 1: So I think that battle plays out state to state

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Speaker 1: to state. The league's may win a few, they may

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Speaker 1: lose a few, but the ultimate casualty I believe will

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Speaker 1: be bills not passing. And given the competing interests in

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Speaker 1: the difficulties and overriding UH the objections of key stakeholders,

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Speaker 1: I think we're gonna end up with fewer states passing

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Speaker 1: laws than the double digits that many had anticipated earlier

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Speaker 1: in the year. I think we're seeing that that I

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Speaker 1: would expect to see no more than five to seven

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Speaker 1: states have legal sports betting by the end of two

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Speaker 1: thousand and eighteen, So we have about a minute here.

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Speaker 1: There are so many questions here, but so is gambling

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Speaker 1: going to help the states collect revenue or not? Because

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Speaker 1: there are some studies that say that it's really not

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Speaker 1: going to help that much or take away from other

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Speaker 1: kinds of consumer spending. I don't necessarily agree with that.

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Speaker 1: The casino and the horse racing industy, we can, you know,

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Speaker 1: can could use the I guess, the extra visitation to

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Speaker 1: their properties if you offer legal sports betting. I think

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Speaker 1: there will certainly be direct tax revenues associated with the

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Speaker 1: gambling on the sporting events. But there are thousands of

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Speaker 1: hundreds and thousands of people who are gonna start visiting

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Speaker 1: casinos and racetrack to play their beds. All right, we've

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Speaker 1: got it. We've got to end it there. Sorry, Dan,

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Speaker 1: we'll pick up with this another time. That's Daniel Walack

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Speaker 1: of Becker Law. Thanks for listening to the Bloomberg Law podcast.

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Speaker 1: You can subscribe and listen to the show on Apple Podcasts, SoundCloud,

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Speaker 1: and on Bloomberg dot com slash podcasts. I'm June Brosso.

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Speaker 1: This is Bloomberg