Former NBA Commissioner David Stern appeared at the Global Gaming Expo last week to state he now believes in legal sports betting. David Stern's speech reverses a decades-long position in which he championed the PASPA law and spoke out against New Jersey's attempts to legalize sports betting at the state level.
In his speech at the G2E, the former 30-year commissioner of the National Basketball Association emphasized the inevitability of legalized sports betting. Stern said his heart tells him sportsbooks will be legalized within 3 years, but his head figures it will be a 5 to 10 year window before a federal law is passed. Following that logic, the smartest thing for the NBA is to support a federal bill, thus getting in on the ground floor of the new industry formed in a sports betting bill's wake.
David Stern's Changing Position on Gambling
Stern has hinted for some time that his opinion on legal sports betting might be changing. He has expressed tacit support for the stance taken by his handpicked successor as NBA commissioner, Adam Silver, has called for a federal law legalizing and regulating sports betting. Adam Silver wrote an op-ed piece for the New York Times in December 2014, calling for the the legalization of sports betting.
Both Adam Silver and David Stern have not reversed the position of the NBA as much as they might seem to have. At face value, Stern's position has changed in the starkest fashion. In 2012, he said in court testimony that legal sports betting would "irreparably injure the NBA in a manner that cannot be adequately calculated in dollars".
New Jersey Sports Betting Initiative
That was in reference to New Jersey Gov. Chris Christie's attempt to legalize sports betting in New Jersey. At the time, the residents of New Jersey had approved legal and licensed sports betting in a 2011 referendum. The Christie Administration was moving ahead with plans to allow sportsbooks in the Atlantic City casinos, along with the racetrack Monmouth Park.
New Jersey was facing the economic fallout of the Global Recession and Hurricane Sandy, so the voters of New Jersey were looking at solutions. New Jersey's State Legislature had failed to legalize sportsbooks during a 1-year grace period after the Professional and Amateur Sports Protection Act was passed in 1992, so it was seeking to rectify that oversight.
Passage of the PASPA Law
Throughout 1991 and 1992, the PASPA had been championed by then-NBA Commissioner David Stern, along with NFL Commissioner Paul Tagliabue and MLB Commissioner Fay Vincent. The leagues called for a 50-state ban on sports betting, claiming sportsbooks undermined the integrity of the sport and clouded the public's image of sporting events.
Eventually, the sports associations had to settle for a 46-state ban, as 4 states were grandfathered into the legislation: Nevada, Delaware, Montana, and Oregon. Those four states lobbied for the right to keep sports betting, because they had previous laws on the books. Nevada was allowed unfettered sports betting, while the other three states retained the more limited sports lotteries they had legalized.
Other states were invited to legalize sports betting within a 1-year window, but none did so. New Jersey had a bill which likely would have succeeded, but several powerful figures, especially Assembly Speaker Garabed "Chuck" Haytaian and then-U.S. Senator Bill Bradley, fought against legalization.
Supporters of the 1993 Exemption
The bill had its influential supporters. Former U.S. Sen. Robert Torricelli championed a legal sportsbook bill in 1993. Torticelli said of the lost fight for a PASPA exemption, "It was a missed opportunity. It gave Atlantic City the chance to be more than a destination for daytrippers."
Donald Trump, who owned several Atlantic City casinos at the time, was in favor of legalization. Asked by reporters about the issue in 1993, Trump said, "It's vital to keeping your taxes low. It's vital to the senior citizens. And it's vital to putting the bookies out of business."
Parlimentiary Politics
Sen. Bill Bradley's role was pivotal. A former NBA player, Bradley stuck to the NBA's talking points at the time. He said, "I think of athletes as persons. I don't like them to be turned into roulette chips."
The NBA didn't have to worry. The bill never was brought to a vote. Instead, Assembly Speaker Garabed "Chuck" Haytaian placed the bill in the Assembly's Appropriations Committee, which was chaired by NJ Assemblyman Rodney Frelinghuysen. The committee chairman said at the time that the bill was "bad public policy", and he made sure the bill never got out of committee.
A Disaster for Atlantic City
At the time, no one took a lot of notice of that defeat. 23 years later, the vision of both the Democratic Bill Bradley and the Republican Chuck Haytaian and Rodney Frelinghuysen proved to be faulty. Without the money from sports betting, Atlantic City casinos have had a slow decline. In the past 10 years, as that decline built momentum, New Jersey lawmakers have tried to rectify the mistakes of the past.
State Sen. Raymond Lesniak, said of the 1993 decision, "It was a huge mistake."
Gov. Chris Christie championed legalization, which would have ended the PASPA law, through the court system. In two different lawsuits and 5 different decisions ranging from 2012 to 2016, the US court system found that New Jersey's legalization plan was a violation of federal law. Though New Jersey argued that the PASPA violates the Commerce Clause of the U.S. Constitution, the courts cited the ability New Jersey had to legalize sports betting. In short, New Jersey missed the bus.
Sports Gambling Industry
In the next few years, Atlantic City casinos might receive a new lease on life. If and when it happens, it's going to affect all the casinos and racetracks across the United States, which might water-down the effect for AC casinos.
For David Stern and Adam Silver, the concern is making sure the NBA is in a position to make sponsorship deals, so the NBA gets paid its share of the action. Like the daily fantasy sports industry, legal sports betting could be worth billions of dollars to the NBA and other sports leagues.
AGA's Sports Betting Statistics
The American Gaming Association says that Las Vegas sportsbooks generated $1.69 billion in revenues last year. The AGA also estimates that's about 2% of the revenues generated in that time by American sports betting. The remaining $90 billion went to illegal bookmakers (bookies) and offshore online sportsbooks.
The American sports betting industry is a potential windfall for casinos, state treasuries, and the sports leagues. David Stern and Adam Silver are awake to that fact, now. With changing attitudes of Americans towards gambling, it is inevitable that sportsbooks eventually will be legalized in America.
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