Business & Tech

What happens in Vegas can happen anywhere: Court strikes down ban on sports betting

Shortly after the ruling was announced, Boston-based fantasy sports startup DraftKings said it is readying plans to offer sports betting, probably starting with New Jersey, the state that sparked the Supreme Court challenge to the federal law.
Stephan Savoia/Associated Press
Shortly after the ruling was announced, Boston-based fantasy sports startup DraftKings said it is readying plans to offer sports betting, probably starting with New Jersey, the state that sparked the Supreme Court challenge to the federal law.

The US Supreme Court on Monday overturned a federal ban on sports betting, setting the stage for a potentially dramatic expansion of gambling in Massachusetts and across the country that could generate hundreds of millions of dollars a year in new revenue.

The court overturned a 1992 federal law under which betting on baseball, basketball, football, and other sports was legal only in Nevada. By a vote of 6-3, the justices ruled that the federal government had overreached by prohibiting states from making laws to allow such bets.

Some Massachusetts lawmakers said it would be possible to craft a sports betting law this year. But they pledged to move cautiously, and action on Beacon Hill can be slow — as evidenced by the Legislature’s yearslong effort to approve casinos.

Advertisement

“Right off the bat you have the question of integrity of the sport,” said House Speaker Robert A. DeLeo. “I know this is going to be an issue that’s going to be raised and reraised a number of times.”

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

Senate President Harriette Chandler agreed the issue should be considered ‘‘thoughtfully and carefully.’

Governor Charlie Baker did not indicate whether he favors legalizing gambling on sporting events, saying it’s “something we’ll be talking to our colleagues in the Legislature about, probably starting today.”

Other states, however, are far along in the process to write and approve regulations, notably New Jersey, where a push to allow sports betting spurred the case that went before the Supreme Court. Officials there — as well as in Delaware and Mississippi — say sports wagering could start within weeks. Rhode Island and Connecticut also are in advanced discussions.

The American Gaming Association, which supported the repeal of the federal ban, estimates that Americans illegally bet $150 billion on sports each year.

Advertisement

The Massachusetts Gaming Commission said in a February report that the companies licensed to operate the three approved casinos in the state are all interested in offering sports betting. The commission estimated such wagering could generate between $9 million and $61 million in state tax revenue a year.

S&P Global Ratings on Monday said that Monday’s ruling could “result in 2018 being the single largest year for gaming expansion” as states seek to offset weak growth in revenue.

The owners of MGM Springfield, set to open in August, and Encore Boston Harbor, which has a target opening of next June, said they expect to discuss sports gambling with lawmakers soon. Penn National Gaming, which runs the Plainridge Park slots parlor — the only gambling venue now operating in Massachusetts — said sports betting would “help generate additional visitation to the property.”

Shares in casino operators and equipment makers surged after the Supreme Court ruling. MGM Resorts stock rose 1.6 percent to $32.32, while Penn National climbed 4.7 percent to $33.75. Wynn Resorts, which is involved in a proxy fight, fell 2 percent to $191.63.

The Massachusetts Legislature is still discussing whether to permanently legalize daily fantasy sports — online games in which participants can win money based on the real-life performance of the athletes they select. DraftKings, the Boston-based industry leader in that business, said Monday that it wants to start offering sports wagers.

Advertisement

The company has already begun laying the groundwork for such a platform in New Jersey.

“This is really our bread and butter. We have been for six years now creating games online and on mobile for people to play fantasy sports to win money,” said chief executive Jason Robins. “We have a brand that they know well and trust and are used to transacting with online.”

A bill filed earlier this year in Massachusetts included instructions that a special commission be created within 30 days of the Supreme Court overturning the Professional and Amateur Sports Protection Act of 1992 — as it did on Monday — and that the panel conduct a ‘‘comprehensive study’’ of regulating online sports betting in Massachusetts. That bill, however, is still in a legislative committee.

The same bill sought to make permanent a temporary law that allows online fantasy sports contests, such as those offered by DraftKings, to be played in the state.

There are several models Massachusetts could follow if it decides to legalize the betting.

A. Jeff Ifrah, a Washington, D.C., attorney who represents online gambling businesses, said some states confine sports betting to casinos. Others allow third parties to partner with casinos on mobile offerings. Ifrah said the future of sports gambling will focus on interactive games in which users can wager on events online in real time.

“If you look at what’s being offered in the UK or even what’s being done illegally now in the US, it’s all being done on mobile and desktop” he said. “The opportunities and the offerings are much more expansive than what’s offered in a casino.”

The federal ban had for years blocked state efforts to expand gambling into sports, until New Jersey made an initial effort to do so in 2012. Two appellate courts had blocked the effort, saying it was illegal, but New Jersey pressed on as supporters argued that states were better suited to craft gambling laws.

The ban on legalized sports books “had the perverse effect of pushing an enormous market underground by way of federal decree while stamping out state and local efforts to adapt their own laws pursuant to their own citizens’ wishes,” the American Gaming Association wrote in a brief to the court.

But others remain opposed to an expansion of legal gambling in any form.

“Strong, visionary leaders from both political parties will ultimately phase out state-sanctioned gambling because it’s failed. It’s inevitable,” the group Stop Predatory Gambling said in a statement following the ruling. “It’s not a question of if, but when.”

Colleges and professional sports leagues are divided on the issue.

The New Jersey case developed as the NCAA and the four major sports leagues challenged that state’s move to expand gambling, though the commissioners of the National Basketball Association and Major League Baseball now say they’re open to legal gambling.

The National Football League, meanwhile, suggested it might be better for Congress — instead of individual states — to pass legislation to regulate gambling on sporting events.

“Congress has long-recognized the potential harms posed by sports betting to the integrity of sporting contests and the public confidence in these events,’’ the NFL said in a statement. ‘‘Given that history, we intend to call on Congress again, this time to enact a core regulatory framework for legalized sports betting.’’

Globe correspondent Matt Stout contributed to this report, which also includes material from the Associated Press. Andy Rosen can be reached at andrew.rosen@globe.com.