Sen. Hatch Outlines Plans for Federal Sports Betting Oversight

Orrin Hatch

A 37-page discussion draft, originating from the office of outgoing Senator Orrin Hatch, has outlined plans for federal oversight of the U.S. sports betting market. The proposed legislation would force each individual state to seek the approval of the U.S. attorney general prior to introducing new sports betting regulations, require licensed operators to use official league data to determine the outcome of wagers through at least Dec. 31, 2022 and “create a mechanism for authorities to target unlicensed” domestic sportsbooks and unregulated off-shore operators. A National Sports Wagering Clearinghouse would also be formed to track all bets placed, in real-time, to monitor for potential signs of corruption (think: suspicious betting patterns). Hatch’s plan also calls for measures to limit sports betting advertising and to prevent against problem gambling.

Howie Long-Short: Hatch (R-Utah) has been calling for federal sports betting oversight since PASPA got struck down in May, but the discussion draft referenced is the 1st piece of legislation to make its way to Capitol Hill since. Unfortunately for those lobbying for its support, the proposed bill is unlikely to have legs; the congressional session ends on January 3rd and Hatch is in his final term, meaning someone else will need to champion the cause during Congress’ 115th 2nd session for the legislation to pass. It’s possible that Senator Chuck Schumer (D-NY) could serve as the bill’s torch bearer come 2019, there are rumblings he and Senator Hatch could meet in the coming weeks with the intent of introducing a bi-partisan product before the current session adjourns.

I had the chance to connect with Dustin Gouker Managing Editor of LegalSportsReport.com and asked him if he’s expecting federal sports betting legislation to pass in 2019.

Dustin: I don’t see the will for Congress to get involved here, especially with the way this bill is written. Having the states pass laws and then implementing a mechanism for the federal government to approve them, isn’t a real way to regulate sports betting at the federal level.

U.S. pro sports leagues are in favor of Hatch’s federal framework (which also covers collegiate athletics) because of the requirement that gaming operators use official league data (needed for: reliability, transmission speed) to grade bets. It’s not the integrity (or royalty) fee some had hoped for, but it’s the leverage the leagues needed to ensure their slice of the sports betting revenue pie. Those opposed to federal legislation (AGA, gaming operators) say gaming integrity can be maintained without official league data; Las Vegas sportsbooks have managed to do it since the 1950s.

The concept of a clearinghouse is fascinating, if not a particularly new one. In fact, U.S. sportsbook operators (in collaboration with state and tribal gaming regulators, and law enforcement) recently announced the formation of the Sports Wagering Integrity Monitoring Association (SWIMA); a private, national, non-profit organization that will monitor integrity and fight fraud (including multi-state criminal enterprises) as sports betting continues to expand across the country.

As it currently stands, 8 states have legalized sports betting legislation to their books (Delaware, Mississippi, New Jersey, New Mexico, Pennsylvania, Rhode Island and West Virginia).

I asked Dustin Gouker (Managing Editor, LegalSportsReport.com) what Nevada casinos do (without a clearinghouse) to prevent a racket from going book-to-book placing large bets?

Dustin: The books communicate with each other and there are data companies who work with them. It’s not like you can go in anonymously and place these giant bets and manipulate the market; they know who you are, if you’re placing sizable bets. It’s not a clearinghouse, but if there is something suspicious going on, it’s going to get flagged by the data companies, with the data companies or with the leagues. There’s communication going on, it’s just not formal in terms of a publicly known organization.

Fan Marino: MGM has inked non-exclusive official data partnerships with the NBA, NHL and MLB. Each league will provide real-time official data (via Sportradar, the exclusive sports betting data provider to MGM GVC Interactive) that MGM will use to create in-game betting odds. It’s in the leagues’ best interest to sign non-exclusive partnerships because of their ability to sell the data countless times over, but there’s another reason (beyond avoiding accusations of forging a data monopoly); forcing all licensed operators to use official league data will help to stop off-shore gambling (because without the data, they can’t offer in-game odds) and move those bettors back to regulated markets.

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Author: John Wall Street

At the intersection of sports & finance.

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