Handicapping Legalized Sports Betting

Handicapping Legalized Sports Betting, Grown in the USA, and Can Prison Reform Pass Go?

Here’s What You Need To Know

With last week’s ruling overturning a 1992 federal law prohibiting states other than Nevada from authorizing betting on professional sports, the Supreme Court cleared the way for states to get in on the action. The Court’s ruling does not explicitly legalize sports betting across the country but allows states to legalize the practice on their own. So, before you go out to place your legal bet on the upcoming game, the dust from stakeholders scrambling to create the new regulatory environment needs to settle. Exactly what that environment looks like, and which stakeholders will benefit most, remains to be seen. Here is our handicapping of who will shape the new regulatory environment:

  • The Leagues: The National Football League, Major League Baseball, National Basketball Association, and National Hockey League were supportive of the 1992 law that made sports betting illegal and were on the losing side of last week’s ruling. This opposition stemmed from concerns that widespread betting could result in the potential for game outcomes being rigged, but that opposition softened a few years ago and the leagues even began outreach to casinos and state lawmakers to determine what a future regulatory environment might look like. With some team owners expecting intensified fan interest to double franchise values across the “big four,” the leagues’ push for so-called integrity fees, a small percentage to “help protect the integrity of their games and exploit data-licensing opportunities,” would reap them billions of dollars if enacted. Yet, this fee could erode the profits of bookmakers and incentivize consumers to instead shun the legal betting market for better odds and bigger payouts elsewhere.
  • State Government: In anticipation of the Court’s ruling, New Jersey, Pennsylvania, West Virginia, Delaware, and Mississippi enacted sports gambling legislation so that they were ready to stand up legal betting as soon as possible. Other states across the country have proposals in various stages of the legislative process also, and some like Connecticut are now considering calling a special session of the state legislature to push through sports gambling expansion. Most of the bills at the state-level are focused on basic statutes that will allow bets to be placed in brick-and-mortar establishments soon, rather than implement the regulatory makeup favored by the leagues, but as states are already planning to offer mobile sports betting in the future, a whole new host of new issues raised from that course of action will likely prompt federal legislation to remedy.
  • Congress: Leagues are calling for legislation at the federal-level to implement integrity fees, as well as other policies they favor. Federal action to do this seems unlikely for now, though, because it is simply hard for Congress to find consensus on a course of action – particularly in an election year – and because states are already creating the new landscape by developing their own regulatory frameworks. Then, the challenge becomes the resulting patchwork of differing regulations at the state-level, which is what Sen. Orrin Hatch (R-UT) is hoping to prevent by laying the groundwork for federal legislation that “ensures there are some federal standards” in place, as legal sports betting could easily cross state lines via the internet. And, as it stands, current federal law prohibits “bets and the transfer of gaming information between states,” something that will likely need to be revisited in light of the Court’s ruling.
  • The Banks: Fearing that they would be on the hook in the event that borrowers who gamble on credit did not repay their debts, credit card issuers have traditionally prevented cardholders from using their products for gambling. However, large U.S. issuers like JP Morgan Chase, Citigroup, and American Express are revisiting these policies, which would free them up to capture more spending by customers seeking to place bets on individual sporting events. This trend seems likely to come to pass, not only because the estimated $150 billion on sports bets that Americans place is expected to increase, but because gambling processors such as WorldPlay Inc. and payment networks like Visa and Mastercard have already “spent years laying the groundwork to authorize card transactions for gambling.”

Only time will tell if real-time odds will be prominently displayed on scoreboards in stadiums, and whether kiosks allowing fans in attendance to place bets will line the concourses next to concession stands. What is clear is that there is a lot of money on the line as this regulatory landscape is built for various stakeholders, suggesting that the weeks and months ahead will see competing narratives in the public arena from all sides of this issue. You can bet on it.

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CAN PRISON REFORM PASS GO?

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What do you call a bill in 2018 that has the support of President Trump, Jared Kushner, the Koch brothers, Rep. Hakeem Jeffries (D-NY), and leftwing activist and former Obama Administration official Van Jones? By any measure, with such broad support in such a partisan climate, you may figure it would be called “a law,” but opposition against the FIRST STEP Act puts its enactment in jeopardy. The legislation is the culmination of bipartisan work on criminal justice reform to reduce recidivism through better access to rehabilitation programs for non-violent offenders, and while imperfect, it presents the best opportunity to “implement fixes that civil rights advocates have sought for years.”

Opponents of the bill who argue that it does not go far enough have tried to “tank the effort by waging an opposition campaign,” which according to Rep. Jeffries, is “riddled with factual inaccuracies” and criticisms that are “without any basis in reality.” It remains to be seen how this policy fight will play out, but here are two pieces of advice that one should take to heart for future policy battles: 1) an opposition effort detached from facts must be challenged and exposed, and 2) be prepared to overcome the opposition early and often – before you are in the homestretch.

GROWN IN THE USA

This year, expect shortages on a range of agricultural products, from avocados to celery to asparagus. Why? Because of the American farm economy’s worker shortage that is receiving less media attention in the immigration debate than it should. The shortage is not due to free trade deals like NAFTA, but rather due to farm workers moving onto higher-paying construction jobs and no new influx of workers to replace the older generation who came before them. The situation is compounded by an “overly complicated” H-2A visa process, which produce growers are advocating to make simpler and more streamlined so that they can bring workers into the U.S. to harvest their crops.

Policymakers looking for a way forward on immigration have proposed measures that would cap the amount of farm worker visas. However, given the economic impact that such a diminished quota would have on American jobs, at the precise time when the industry is having to import produce and is already losing money on crops that cannot be picked, this aspect of the debate deserves more consideration before policies codify an already perilous situation.

CHINA’S PROPA-GAMBLE

A recent proclamation in Chinese newspapers instructed readers to “carve Xi Jinping’s speech into our bones and dissolve his spirit into our blood,” thereby continuing the Chinese President for life’s persistence in building a robust propaganda machine that is influencing (read: controlling) many aspects of public life at home and abroad. When coupling such over-the-top rhetoric with the Chinese Communist Party’s tactic of flooding the public arena with “happy, inspirational content intended to distract from controversial issues,” China’s propaganda effort distinguishes itself for its lack of credibility and substance.

While this may meet Xi’s needs with the domestic population in the near term, our experience in fact-based, compelling narratives suggests that its success will be limited if it continues to be viewed as editorially-biased and devoid of substance, to say nothing of the ultimately spurious notion that an authoritarian government can control all aspects of information in perpetuity.

A SOLUTION IN SEARCH OF A PROBLEM

A number of prominent Democrats are lining up behind policy proposals that focus on a federal jobs guarantee. This guarantee echoes policy proposals that were part of President Franklin Roosevelt’s New Deal during the depths of the Great Depression, when roughly one-third of the American non-farmer workforce was unemployed and the gross national product decreased from $103.8 billion to $55.7 billion.

Yet, a look at the facts of today’s U.S. economy suggests quite a different reality: low-unemployment that has dropped below 4% for the first time since 2000, and a gross national product that reached an all-time high in the last quarter of 2017. These facts beg the question as to whether a federal jobs guarantee, in lieu of concrete policies to address workforce participation and underemployment, is a solution in search of a problem.