What Is PASPA | How PASPA’s Repeal Changed Sports Betting

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The Philosophy Behind PASPA

PASPA was, in a sense, a continuation of a longstanding political and legal effort in the United State to contain and strictly curtail the expansion of sports betting. This goes back to the 1961 passage of the Interstate Wire Act, which was designed to stop the use of communications equipment to transmit sports betting information across state lines. This law, commonly considered the one what is PASPA’s effective forebear, was conceived of by then-Attorney General Robert F. Kennedy as a means of cutting off one of the major revenue streams used by organized crime syndicates. Of course, this perhaps wasn’t true, and many historians and industry insiders believe that the Wire Act – like PASPA to come next – was more a governmental monopolization effort than a broadside attack on crime.

However, while the Wire Act served to preserve state monopolies on lotteries (which seems to have been ultimate goal of the law, regardless of its “focus” on sports gambling), PASPA was actually an effort to set up an East Coast monopoly on sports betting in New Jersey, home of Atlantic City (the second largest US gambling center after Las Vegas). Indeed, the law’s most vocal proponent was NJ senator and former NBA player Bill Bradley, which is why PASPA is sometimes referred to as the Bradley Act. Bradley essentially worked language into PASPA that would permit any state that had at least ten uninterrupted years of legal gambling operations (at the time of the bill’s passage) to establish a full-fledged Vegas-style sports wagering industry within one year of PASPA going into effect. Under these terms, only one state actually qualified for this window: New Jersey!

Hilariously, of course, the NJ government was not able to pass any sports betting bills during the grace period, and on January 1, 1994, the state was officially barred from offering any sports wagering products going forward. Thus, a law intended to give NJ a sports betting monopoly actually gave Nevada the monopoly and led to the long-running bankruptcy and financial struggles of entire casino industries nationwide, with NJ’s Atlantic City the hardest hit.

PASPA In The Age Of Legal Online Sports Betting

Though it doesn’t seem like 1992 was that long ago, almost no one, least of all the incompetent lawmakers who created PASPA, could have envisioned the meteoric rise of the Internet just a few years later (with the exception of Al Gore, natch). In the early ‘90s, most Americans didn’t even have a computer at home, but for the last decade or so, there’s not been an American without a smartphone in their hands all day long. The intervening years between PASPA’s passage and now fully revealed the law’s creeping obsolescence – an obsolescence that made PASPA not only ineffectual but actively detrimental to the American Economy. This is because most US sports betting action simply moved overseas to offshore sportsbooks that operate outside of US legal jurisdiction altogether.

As neither PASPA nor the Wire Act made it unlawful for individuals to place bets, US residents were free to use these offshore books. And use them they did! By most credible analyses, Nevada was only attracting about 1-3% of the total US sports betting handle, with the vast majority of players simply using offshore books to place their wagers. The drain this represents on the US economy over the last quarter century is reckoned to be in the trillions of dollars. (Yes, that’s trillions, with a “T”). Indeed, what is PASPA if not the biggest financial boondoggle in US history? To fix this problem, of course, politicians do what they do best: Instead of repealing PASPA, they established the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006, penalizing financial institutions like banks and credit companies for “knowingly” processing monies related to Internet gambling. Of course, aside from disrupting the burgeoning online poker craze for about 15 minutes, the UIGEA did nothing to stop the flow of US dollars to offshore sites.

Given the ascendancy of the Internet, PASPA’s original intent of limiting the expansion of gambling on sports has long been rendered a moot point. Offshore sportsbooks like Bovada, BetOnline, SportsBetting, MyBookie, and others had obviated the law just a few years after it went into effect, and this perhaps played a key part in the Supreme Court’s decision to overturn PASPA (though it was patently unconstitutional to begin with, violating the 10th Amendment in addition to the longstanding Equal Sovereignty Doctrine).