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Legal Action Threat to “Unconstitutional” Gambling Regulation

Posted on by John Lathram

US Online Poker RegulationStates circumnavigating their constitutions to pass gambling legislation are increasingly likely to face legal action from unhappy anti-gambling campaigners.

Rhode Island´s constitution is similar to a number of others inasmuch as the state has no authority to expand gambling without a statewide referendum approving the proposals. Fortunately for Rhode Island´s gamblers, voters have twice approved constitutional amendments to allow for the construction of two Class III casinos which now offer in-person sports betting facilities.

Unfortunately for the state of Rhode Island, gamblers have had the upper hand since in-person sports betting went live in November. Rather than raise anything like the projected tax revenues of $11.5 million, the state had collected only $150,000 from regulated sports betting by the end of March. The legislature subsequently passed a bill authorizing mobile sports betting in order to increase revenues.

Anti-Gambling Campaigners Unhappy with the Bill

Although mobile sports betting wasn´t going to be available to Rhode Island´s gamblers before the fall, anti-gambling campaigners have been quick to launch a legal challenge to the bill. A group led by former mayoral candidate Dr. Daniel Harrop claim the bill is unconstitutional because it represents an expansion of gambling not authorized by the electorate.

The group also claims that, when the General Assembly was given advice about the legality of authorizing mobile sports betting without a referendum, the legal opinions presented to them were based on reports funded by DraftKings and the Twin River Casino. Furthermore, when the electorate approved Class III gaming in 2012 and 2016, sports betting did not even appear on the ballot papers.

Who´s Afraid of the Big, Bad Supreme Court?

It has also come to light that, at the time Rhode Island´s legislature was considering the regulation of sports betting, Senate President Dominick Ruggerio – the chief advocate for sports betting in the General Assembly – initially supported getting an advisory legal opinion from the state´s Supreme Court, but subsequently changed his mind after receiving additional legal advice.

Speaking with the Providence Journal, Ruggerio said he was confident the state will prevail in the legal challenge; however, Joe Larisa Jr., one of the lead lawyers for the plaintiffs, believes the Superior Court will be unable to resolve the case and that it will eventually end up before the state Supreme Court – the same court from which Ruggerio was unwilling to solicit a legal opinion.

There´s a Precedent in Favor of the Plaintiffs

In 2015, New York´s legislature reclassified Daily Fantasy Sports as a game of skill in order to regulate it and raise tax revenues. Anti-gambling campaigners brought a court case against the state, contesting that Daily Fantasy Sports was skill-based, and claiming the legislature had reclassified the activity to circumnavigate the constitution which prohibits an expansion of gambling without a referendum.

Last October, Acting Supreme Court Justice Gerald W. Connolly found in the plaintiff´s favor – stating that no amount of skill by a person playing Daily Fantasy Sports games can predict future athletic performances, and therefore the games contained a considerable element of chance. You can still play Daily Fantasy Sports in New York, but it´s unregulated and technically it´s illegal.

A Lesson for Michigan, Ohio, Florida, etc.

At present, three states are trying to push through gambling bills that circumnavigate their constitutions prohibiting an unapproved expansion of gambling – Michigan, Ohio, and Florida. In Michigan, the Coalition to Stop Internet Gambling is likely to contest the legality of an online gambling bill that doesn´t expand gambling, but instead expands “gambling opportunities”.

In Ohio, legislators are classifying sports betting purely as a game of chance so it can be considered a constitutionally-allowed lottery game; and, in Florida, legislators are contemplating a fairly similar approach to their colleagues in Rhode Island – ignore the constitution and do it anyway. Maybe if they just asked the voters first, they could avoid all this grief!

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