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Bradley C Bower/AP
Delaware Gov. Jack Markell 

Bid to Legalize Sports Betting in Delaware Defeated in State Legislature

May 06, 2009 06:15 PM
by Denis Cummings
A proposal to legalize sports wagering in Delaware, which would have likely had a widespread effect on the U.S. gambling industry, was narrowly defeated in the state House of Representatives Tuesday.

Delaware Sports Wagering Bill Defeated by Two Votes

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A proposal by Delaware Gov. Jack Markell to legalize sports betting in the state was defeated in the Delaware House of Representatives Tuesday night. The bill—with 23 votes in favor, 15 against and three abstentions—fell two votes shy of the three-fifths majority necessary to pass.

Markell proposed legalizing parlay bets on sports at the state’s three racetrack/casinos, but also called for the state to receive a larger share of the casinos’ slot machine revenue. Though the casinos have long been advocates for legalized sports wagering, all three came out against Markell’s bill, claiming that the lost revenue would bankrupt them.

According to estimates by its supporters, the proposal would have generated $55 million for Delaware, which like many states is facing a budget shortfall due to the recession. Markell said that he would continue working with legislators to get a sports betting bill passed.

Delaware is just one of four states—along with Nevada, Montana and Oregon—allowed by the federal government to legalize sports gambling, having been granted exemptions under the 1992 Professional and Amateur Sports Protection Act. Markell had asked the state Supreme Court for an opinion on the constitutionality of his proposal, but the court refused to issue an opinion until after a bill was passed.

Legalized sports betting in Delaware would likely have nationwide ramifications for the U.S. gambling industry. If sports wagering had succeeds in Delaware, other states—particularly neighboring states—would be encouraged to push for the right to legalize it.

“A state will usually start out with very strict regulations,” said University of Nevada-Reno economics professor Mark W. Nichols to The Baltimore Sun. “Then a nearby state sees its residents traveling to that neighboring state to gamble and that serves as a justification to legalize gambling in that other state.”

In neighboring New Jersey, state Sen. Raymond Lesniak filed a lawsuit in March seeking to overturn PAPSA, arguing that it unconstitutionally discriminates against the 46 states where sports gambling is prohibited.

In a press conference announcing the lawsuit, Lesniak declared, “This federal law deprives the State of New Jersey of over $100 million of yearly revenues, as well as depriving our casinos, racetracks and internet operators of over $500 million of gross income. … PASPA represents a substantial intrusion into States' rights and restricts the fundamental right of States to raise revenue to fund critical State programs.”

Background: Sports betting in the United States

In 1992, Congress passed the Professional and Amateur Sports Protection Act, which forbade states from sponsoring or legalizing wagering on sporting events. It “all but stopped the expansion of legal-land-based sports wagering in the United States,” according to the Global Gaming Business, though four states that allow forms of sports gambling were allowed to continue doing so.

These exemptions were created in order to allow Nevada, which has an economy highly dependent on gambling, to continue allowing sports books, but they also applied to Montana, Oregon and Delaware. Delaware was granted the exemption based on a state lottery game than ran in 1976 that involved picking NFL games against the spread.

New Jersey, home to Atlantic City, was also granted an exemption of sorts; PAPSA allowed states that had legal gambling for the previous 10 years to pass a law legalizing sports gambling within a year. The New Jersey legislature was unable to pass such a law, and thus it is not currently allowed to legalize sports gambling.

Other forms of gambling, most notably slots, have expanded significantly since 1992 and now 37 states have legalized gambling. Pennsylvania and Maryland have each approved slots recently, driving money away from gambling options in Delaware and New Jersey; sports betting could help bring the money back.

“Sports betting can draw people away from the other states,” said Delaware House Speaker Pete Schwartzkopf to USA Today. “And while there is money to be made on sports betting, the real dollars are in the carryover to casinos.”

Legalized sports wagering can have economic drawbacks, however. Professional sports leagues and the NCAA are strongly opposed to gambling on sports, and treat states that allow it unfavorably.

Oregon dropped its sports lottery game in 2006 after the NCAA said it wouldn’t allow the state to host tournament games. “The rationale was that the state could realize more economic benefit from hosting NCAA (basketball) tournament games,” said Oregon Lottery spokesman Chuck Baumann to USA Today.

Analysis: Delaware’s proposal

Markell’s plan would allow only parlay bets, which are a combination of at least two bets. Joe Weinert, senior vice president of the Spectrum Gaming group, explained to gambling site Covers, “The law has determined that sports betting must be a game of chance, and not skill.”

Parlay bets, where the odds of winning are at least one in four, would therefore qualify as a game of chance, while a straight bet, where the odds are one in two, would qualify as a game of skill.
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