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Michigan Sports Betting May Be On Its Way - What Happened and What's Happening

If you paid any attention to this over the summer, the U.S. Supreme Court issued an opinion that cleared away a long-standing federal ban on sports betting and allowed the states to regulate sports betting on their own. Since then, there’s been a lot of talk and a lot of anticipation, but very little actual change in the betting industry, due mainly to the fact that most states (including Michigan) are carefully navigating the choppy waters while attempting to create legislation. The Michigan House of Representatives passed the Lawful Internet Gaming Act over the summer to begin the process of regulating gambling within the state. However, the Act fell short of regulating sports betting, and a proposed bill is expected to be presented in the House of Representatives now that the legislature is back in session. So what happened in the Supreme Court? How come Las Vegas got a pass on all these years? What can we expect to see here in Michigan?

The Federal Ban on Sports Betting

In 1992, U.S. Congress passed the Professional and Amateur Sports Protection Act of 1992 (PASPA) after congressional hearings determined that sports betting was a national problem and that the federal government therefore had a compelling reason to ban sports books. This is certainly not a new concept, as gambling in general has been historically regarded as a morally reprehensible activity that is somehow sanctioned by demons. PASPA indirectly outlawed states from having sports books not by making sports books a federal crime, but instead by giving the Attorney General and professional and amateur sports leagues the ability to seek injunctive relief of any sports books existed outside of states that were grandfathered in as sports betting states.

Furthermore, PASPA allowed states one year to introduce their own legislation specifically allowing sports books to be grandfathered. This one-year window was widely considered an invitation to the state of New Jersey in particular, who had indicated a desire to create sports book legislation. However, New Jersey was unable to enact a law within the one-year window, which left Nevada, the only state to have a sports betting law on its books, to be grandfathered in as the only state to have legal sports books. More on New Jersey later, as the state’s continual internal struggle on whether sports betting is good or bad will ultimately come back around in a big way.

The only other carve-outs from PASPA’s ban were parimutuel betting for horse and dog racing (i.e. the “win-place-show” model) and, for whatever reason, jai alai. Jai alai never quite took off as a household American sport, so since 1992, the culture of American sports betting has been to go to Vegas if you want to bet something other than dogs or horses.

One last thing that should be noted is that back in 1992, the Department of Justice took a strong stance against enactment of PASPA, arguing that enactment of the law would greatly curtain states’ rights to raise their own revenue, unnecessarily blur the lines of the federal system of government, and give too much power to the sports leagues themselves to enforce the federal law. The Supreme Court would not weigh in on these issues until 2018.

Supreme Court Overturn of PASPA

In 2017, the issue of PASPA’s infringement on states’ rights arrived in the Supreme Court with Murphy v. NCAA, and it involved a lot of the same key players involved with the 1992 PASPA legislation. The case started after New Jersey, still regretting its failure to opt out of PASPA’s sports betting ban back in 1992, purposefully enacted sports betting legislation in direct violation of PASPA to draw a lawsuit out of the major sports leagues and pursue an appeal to overturn PASPA. It worked, and New Jersey faced a lawsuit from the NCAA and other professional sports leagues. The sports leagues were also joined by the Department of Justice, who previously opposed PASPA in 1992, but apparently didn’t enjoy New Jersey’s tactic of bluntly defying PASPA. New Jersey lost the case at the Third Circuit Court and the Supreme Court declined to grant certiorari.

However, New Jersey wasn’t done. Now with the blessing of the Department of Justice, who recently opposed the state’s efforts, the state enacted legislation simply repealing portions of its own laws from 1977 banning sports betting. Once again, New Jersey was quickly met with a lawsuit from the sports leagues, claiming that the repeal was a roundabout way to once again affirmatively authorize sports betting. The case proceeded to the Third Circuit Court, where New Jersey’s efforts were again shut down as a violation of PASPA. New Jersey once again asked the Supreme Court to hear the case, and this time, the Supreme Court agreed.

The case ultimately presented itself to the Supreme Court in 2017, with the state of New Jersey arguing that PASPA is an unconstitutional commandeering of states’ rights while fending off counter-arguments from the NBA, NFL, NHL, MLB, and NCAA. In May of 2018, the Supreme Court held in favor of New Jersey, holding that Congress could not issue direct orders to state legislatures telling them what they could or could not do, and that PASPA was therefore unconstitutional. New Jersey’s victory was one for all of the states (except Nevada), and unlocked the ability for the states to once again regulate sports betting on their own terms.

So What Is Happening In Michigan?

Nothing yet, but many expect something to happen soon. In June, the Michigan House of Representatives passed the Lawful Internet Gaming Act, before going on a three month recess, which generally allows for internet gaming by licensed casinos in the State of Michigan for a hefty fee. The Act also establishes a Division of Internet Gaming within the Michigan Gaming Control Board which “may permit an internet gaming licensee licensed by the division to conduct internet wagering under this act on any amateur or professional sporting event or contest.” However, the Act falls short of actually authorizing Michigan casinos to operate sports books, and instead creates a Division within the Michigan Gaming Control Board which would regulate any future sports books.

The bill is currently awaiting passage at the Michigan Senate. Surprisingly, during hearings on the bill at the House, the only major casino to support the bill was MGM Grand Detroit. The bill was opposed by Motor City Casino, Greektown Casino, and the tribal casinos. This is likely due to something other than the general premise of the bill, such as the costly license fees or other strict regulations, as MGM Grand Detroit supported “the concept” of the bill, while Motor City and Greektown opposed the bill “as introduced.” Quite simply, they want sports books, but didn’t like this bill very much.

If new legislation is passed as anticipated, sports betting will be legal in licensed Michigan casinos once the State of Michigan creates a Division of Internet Gaming and regulations for the Division to enforce. We’re still waiting on the law authorizing licensed casinos to operate a sports book, but with the legislature back from its summer vacation, one may be making its way across the House floor very soon.

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