In May, the Supreme Court overturned a federal law that banned commercial sports betting in most states because it was believed to be unconstitutional. The Supreme Court’s decision in Murphy v. NCAA will effectively open the door for each state to legalize sports betting at its discretion.
This case and its outcome have not come as a total surprise, though. Close to twenty states have at least introduced legislation to regulate sports betting, usually at existing casinos and racetracks. A handful of states have actually passed bills legalizing sports betting already, in anticipation of this result, and it will probably be only a matter of a month or two for these states (Connecticut, Mississippi, New Jersey, New York, Pennsylvania, and West Virginia) to have their sports betting systems up and running. And in Nevada, nothing changes – full sports betting was grandfathered in when PASPA became law, and the sportsbooks there will operate as normal.
Why is this taking effect now?
The social and political landscape has changed dramatically over the last few decades from marijuana regulation to immigration policy, and now sports betting. With the interesting constitutional question—”Does the Professional and Amateur Sports Protection Act (PASPA) violate the Constitution by prohibiting states from authorizing sports gambling?”—this was a natural moment for the Supreme Court to make a decision. Sports betting itself has become normalized in the public consciousness. Newspapers are regularly printing the daily point spread for professional and college games, and sports television programs spend hours discussing the favorites, the underdogs, and the over/under, all betting terms that, years ago, would have been considered the parlance of backroom bookies.
Will the SCOTUS decision impact small business?
The most immediate impact will obviously be for those small businesses that are connected in some way with the sports or gambling industries, or for those who have some role serving state government. Those states that choose to legalize it will need to set up some kind of regulating system and those systems will need support in many different facets – payments, software solutions, data security, etc. This can be a boom for small businesses in these markets.
Businesses in other industries are less plainly affected by this decision, though any business whose employees have a March Madness pool can tell you the risks of lost productivity from increased opportunities for gambling.
The important thing to remember about this case though is that it does NOT automatically legalize sports betting. It strikes down a federal law that was preventing states from legalizing and regulating sports betting on their own terms. So, whether people will be able to legally bet on sports will depend entirely on their state.
For most states, any legal sports betting will probably come in 2019 or 2020. Lawmakers will take their time figuring out the logistics and rules that will need to be in place if they even want to allow gambling on sports in the first place. Notably, some states have explicitly said that they have no intention of legalizing the practice. It’s also important to remember that this decision only impacts intrastate gambling, not interstate gambling, which is still illegal under the Federal Wire Act.