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U.S. Regulated Gambling Entering a New Era of Litigation

Posted on by John Lathram

US GamblingNot only are anti-gambling groups filing lawsuits to prevent unconstitutional expansions of gambling, online operators are now squaring up against each other.

Over the years, there has been no shortage of gambling-related litigation. Some has resulted in favorable results for proponents of online gambling (i.e. Murphy vs NCAA – the case that revoked PASPA), other not so much (i.e. United States vs DiChristina – in which the original verdict that poker is a game of skill was subsequently overturned on appeal).

Of course, the biggest court case of the moment is the New Hampshire Lottery Commission vs William Barr – a case that may determine how the Wire Act is enforced. It is also a case that may drag on for years. The judge hearing the case – District Judge Paul J. Barbadoro – has already commented the case might not get finally resolved until it reaches the Supreme Court, and now that Sheldon Adelson´s Campaign to Stop Internet Gambling has got involved, that´s where it´s likely headed.

Meanwhile, Battles Look Likely Elsewhere

Elsewhere, anti-gambling campaigners are actively pursuing states that breach their constitutions by expanding gambling without a state-wide ballot. Following the success of a court case in New York, campaigners have now turned their attention to Rhode Island, while issuing warnings to the states of New York, Michigan, Ohio, and Florida that, if they expand gambling unconstitutionally (as they are planning to do), they will be next in the firing line.

However, it´s not just anti-gambling campaigners that may be keeping lawyers busy over the next years. Following the company´s exclusion from online sports betting in Illinois, FanDuel has said it will “pursue whatever legal avenues we can” to get a foothold in the Illinois market; while the Lottery Commission is in the frame in Oregon for awarding its single sports betting contract to SBTech, despite allegations the company has a strong presence in the gray market.

Both of these cases could set important precedents for future online gambling legislation. If FanDuel is successful in overturning the bad actor clause in Illinois´ gambling expansion bill, it could pave the way for other bad actors to contest their exclusions (I´m thinking PokerStars, but it could equally apply to Americas Cardroom). Similarly, if companies with operations in the unregulated market are awarded licenses in the regulated market it could have a positive effect on competition in the regulated market.

What´s the Motivation for all This Legal Action?

In a word “money”. The states want to get their hands on as much tax revenue as possible, while the Coalition to Stop Internet Gambling was set up to protect Sheldon Adelson´s brick-and-mortar casino operations. Although other anti-gambling groups may not have the best interests of Sheldon Adelson at heart, they are not going to turn down his support of their moral objections to expanded gambling.

For FanDuel and the company causing a stink about irregularities in Oregon – Scientific Gaming – failing to get an online sports betting license can be very expensive. FanDuel is the biggest online operator in NJ with revenues approaching $20 million per month, and the population of Illinois is 30 percent larger than the Garden State. In Oregon, although the population may be only half that of NJ, SBTech is set to be the sole online operator and will probably generate close to $20 million per month also.

Unfortunately, if all this litigation goes ahead, the states defending unconstitutional cases and the sports betting companies looking to overturn bad actor legislation only have one source of incomeus. So, for all the benefits that may (or may not) come from regulated gambling in the U.S., we´re the ones that ultimately pay for it via higher state taxes and less valuable promotions. It makes you wonder if regulation is worth the bother!

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