In a decision that was largely anticipated by the horse racing industry—as well as other gaming experts—the U.S. Supreme Court May 14 found federal law that had kept sports gambling in check—largely to Nevada—to be unconstitutional.
The decision will open the door to allow states to determine if they want to allow sports gambling.
The case was brought by New Jersey, which already has approved added sports gambling at tracks and casinos in the state. With the Supreme Court decision in place, Monmouth Park is expected to soon open an on-site sports book.
"We started this fight back in 2012 and are grateful that the Supreme Court has recognized that we've been right all along," said Dennis Drazin, chairman and CEO of Monmouth operator Darby Development. "We can now shift our focus on commencing sports betting, which will be off and running at Monmouth Park as soon as possible."
As far as the Supreme Court's decision (Murphy, Governor of New Jersey, et. al. vs. National Collegiate Athletic Association, et. al.) writing for the majority, Justice Samuel Alito said the federal law (the Professional and Amateur Sports Protection Act of 1992) oversteps.
"The PASPA provision at issue here—prohibiting state authorization of sports gambling—violates the anticommandeering rule. That provision unequivocally dictates what a state legislature may and may not do. And this is true under either our interpretation or that advocated by respondents and the United States. In either event, state legislatures are put under the direct control of Congress," Alito wrote. "It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine."
On Monday the National Thoroughbred Racing Association said horse racing needs to be prepared for both new opportunities and new competition.
"Until today pari-mutuel wagering on horse racing has been the only legal form of sports wagering available throughout most of the United States at both physical locations and online," said NTRA president and CEO Alex Waldrop. "Now that the U.S. Supreme Court has ruled the (PASPA) unconstitutional, and states are free to regulate sports betting as they see fit, our multi-billion-dollar industry must rise to the challenges and seize the opportunities presented by this expansion of sports betting."
The horse racing industry was largely expecting Monday's decision and the impact of expanded legal sports gambling has been a topic at industry meetings this year, like the National Horsemen's Benevolent and Protective Association convention and the Association of Racing Commissioners International convention.
Experts believe sports wagering could be a good fit for tracks and online advance-deposit wagering outlets, as it's more complementary to pari-mutuel wagering than slot machines. On the other hand, it's a similar game to betting horses and typically features a lower takeout than pari-mutuel wagering.
At the National HBPA meeting, tote company executive Michele Fischer said horse racing needs to make sure sports bettors place their wagers on site at tracks or through ADW outlets.
"Having sports wagering at our tracks and on our ADWs is very important," said Fischer, the vice president of sales and business development at Sportech Racing and Digital. "If they're not in your building, they're somewhere else."
At that meeting Waldrop encouraged horsemen and tracks to reach out to companies that have expertise in sports wagering, then pursue that common interest together. That model already is in play at Monmouth, where William Hill has spent $1 million to build a sports book facility.
"The No. 1 thing you should do is to get on the phone with a William Hill, or someone else in this business, because this is not our business," Waldrop said. "We don't understand this. It's vastly more complicated and risky than pari-mutuel wagering. You need to get experts that are out there who can advise you. You should not go down this road thinking this is just another case where you can divvy up purse money. It is much more complicated.
"If you're not prepared (and) well advised, you'll be left behind for any number of reasons."
In January the New York Racing Association expressed interest in offering sports gambling at its tracks. In written testimony prepared for a state Senate committee hearing Jan. 24 in Albany, NYRA president and CEO Chris Kay argued that NYRA is already heavily regulated by the state and is well positioned to offer sports wagering if the gambling is legalized in New York.
"To preclude racetracks like ours from being able to offer sports wagering would disrupt long-standing relationships developed over many years and decrease consumer choice,'' Kay said in his written testimony. "We do not see why this service should be limited simply to casinos, which were only recently created and regulated. Some of these casinos have only been open for business for a year or two. By contrast, this year we will celebrate our 150th running of the Belmont Stakes (G1) on June 9."
The American Gaming Association applauded the court decision, noting that sports wagering is conducted illegally throughout the country. The New York Times reports Americans illegally wager about $150 billion on sports each year.
"Today's decision is a victory for the millions of Americans who seek to bet on sports in a safe and regulated manner. According to a Washington Post survey, a solid 55% of Americans believe it's time to end the federal ban on sports betting," said American Gaming Association president and CEO Geoff Freeman. "Today's ruling makes it possible for states and sovereign tribal nations to give Americans what they want: an open, transparent, and responsible market for sports betting. Through smart, efficient regulation this new market will protect consumers, preserve the integrity of the games we love, empower law enforcement to fight illegal gambling, and generate new revenue for states, sporting bodies, broadcasters and many others. The AGA stands ready to work with all stakeholders—states, tribes, sports leagues, and law enforcement—to create a new regulatory environment that capitalizes on this opportunity to engage fans and boost local economies."