Which Ohio Commission Should Regulate Gambling Within the State?

“Roulette table gambling”by Best Free Bets is licensed under CC BY 2.0

Theron Anderson, Associate Member, University of Cincinnati Law Review

This is the second article in a two-part analysis on sports betting. Click here to read an in-depth discussion of Murphy v. NCAA.

Introduction

After being granted the discretion to authorize sports betting within its jurisdiction, Ohio has undertaken the burden to exercise that discretion. After one orbit around the Sun, Ohio seemed to be in agreement that sports betting was the rational move for the state. But the decision to delve deeper into the matter developed an impasse that has not ceased to let up. The issue has become whether sports betting legislation could fit within the current statutory framework without amendments and which existing state commission is best fit to regulate the activity. 

First, this article will present a background of the landmark Murphy v. NCAA case which brought Ohio to this point.[1] Second, it will consider whether the current statutory framework of the state prohibits sports betting, therefore requiring an amendment. Next, this article will outline the bills currently on the state legislature’s to-do list, and the hurdles it faces in accomplishing its legislative goals. Finally, this post interprets the sports betting statutes and analyzes the validity of each argument supporting a particular commission.

Background

In the year following the landmark case of Murphy v. NCAA[2], states reacted to capitalize on their new discretionary authority to legalize sports betting, leading to the legalization of sports betting in eight states.[3] In Murphy, the Supreme Court ruled that the prohibitions imposed by the Professional and Amateur Sports Protection Act (“PASPA”), preventing States from authorizing sports gambling within their respective jurisdictions, violated the constitutional law doctrine of anticommandeering.[4] This doctrine protects the states from the encroachment of the Federal Government on their powers. The Court believed that the issue of gambling fell within the province of the states due to the issue of sports gambling being a controversial subject concerning citizens within their jurisdictions.[5] Therefore, Congress should not be able to exercise power regarding that issue.[6]

Legality of Sports Betting in Ohio

Similar to states throughout the country, Ohio identified Murphy as an opportunity to capitalize on potential revenue for the State.[7] The question of whether states can authorize sports betting was answered affirmatively in Murphy, but that presented a subsequent question of whether sports betting is prohibited by the current laws of the state. Those leading the push in the Ohio legislature have proceeded on the assumption that sports betting legislation can operate within the existing laws.[8]

Three arguments can be made as to why sports gambling is not prohibited under the current laws of the state. First, one could argue that sports betting falls within the definition of “casino gaming” found within the 2009 amendment to the Ohio Constitution.[9] One could also argue that sports betting falls within the lottery language as a “game of chance.”[10] Finally, sports betting can be analogized to horse racing.[11] In the early 20th century, horse betting was permitted even though it was not specifically authorized by the Constitution.[12] Legislatures argue that they possess the power to “simply set laws to regulate sports gambling as it wishes, as it did with horse racing.”[13]

With the creation of legislation regarding the legalization of sports betting, the proponents of legalized sports betting should be able to pass it through without statutory hurdles. If the legislature were to meet civil opposition after the legislation’s passing, the Ohio courts should have many avenues at their disposal to rule in favor of the legislation’s validity.[14]

Pending Legislation Halts over Regulators

Currently, two sports betting bills are working their way through the Ohio legislature.[15] These bills were introduced in March and April of this year.[16] One of the bills is House Bill 194 (“HB194”).[17] HB194 is led by Representatives Dave Greenspan and Brigid Kelly.[18] This bill is the “more robust of the two bills.”[19] The purpose of the bill is to “legalize, regulate and tax sports wagering businesses.”[20] The betting would be regulated by the Ohio Lottery Commission (“OLC”) and permitted at “neighborhood veterans and fraternal organization halls licensed by the lottery” as well as casinos.[21]

The other is Senate Bill 111 (“SB111”).[22] This bill is led by Senators John Eklund and Sean O’Brien.[23] Because SB111 assigns the regulation of sports betting to the Ohio Casino Control Commission (“CCC”), sports betting would only be permitted in the casinos and racinos of Ohio.[24]

The two major differences with the bills are the commission tasked with regulating the betting and where the betting will be allowed.

A stalemate has formed in the legislature due to disagreement over which commission is more fit to regulate sports betting within the State. Those in favor of the House’s bill raise the argument that the CCC cannot legally regulate sports betting.[25] Rep. Greenspan went as far as to say that the House proposal with the OLC in charge is “the only legal option.”[26] The argument against the CCC leans on two points. First, opponents of CCC regulation believe that “the CCC would not have the authority to oversee OH sports betting unless it were considered a casino game.”[27] Second, CCC authority is limited to Ohio casinos; therefore, sports betting would be limited to those casinos.[28]

Sen. Eklund, in support of CCC regulation, rebutted by pointing to the Ohio Constitution omittance of a clear prohibition of the CCC from regulating sports gambling.[29] Sen. Eklund also countered that there is no stipulation that the OLC should regulate sports betting either.[30] If one was to label sports betting as a game of skill rather than a game of chance, it would support the argument of Sen. Eklund that sports betting falls outside of the OLC’s purview.[31]

Sen. William Coley, President of the National Council of Legislators for Gaming States, continued the suspicion of CCC’s aptitude to regulate sports betting by questioning its availability of funds.[32] Sen. Coley supported his suspicion by highlighting the constitutional limitations placed on the CCC for raising funds.[33] Sen. Eklund’s response to this scrutiny was less than persuasive. He stated that “he spoke with the leadership of the CCC and they have every confidence that they have the resources to regulate Ohio sports betting.”

It may seem like this drama should be titled “Eklund vs. the World,” but in the early summer, his bill received encouragement from a major player. Governor Mike DeWine publicly expressed his support for the bill crowning the CCC as the regulator over Ohio sports betting.[34] The support of the governor displays a favorable signal to proponents of a general sports bill, but for those in support of an OLC regulator will have some convincing to do in the near future.[35]

Recently, the HB194 has picked up more traction than the Senate bill. Even though the House bill was delayed due to an unrelated budget discussion this past June, the bill has undergone three hearings in the Finance Committee, with the House expecting to resume discussion after its recess which was scheduled to end in early September.[36] Even considering the current stalemate, proponents of the both bills are expecting a passed bill in the summer of 2020.[37]

What Does the Law Say?

The CCC acquires its authority from Article XV, Section 6 of the Ohio Constitution.[38] The CCC “shall license and regulate casino operators . . . and all gaming authorized by section 6(C).”[39] Section 6(C) states “[c]asino gaming shall be authorized at four casino facilities.”[40] Casino gaming is defined as “any type of slot machine or table game wagering . . . authorized in any of the states of Indiana, Michigan, Pennsylvania, and West Virginia.”[41] Casino gaming is defined as games involving skill or chance.[42]

The OLC acquires its authority from Section 6 of the Ohio Constitution as well as Title 37, Section 3770.03 of the Ohio Revised Code.[43] Within Section 6, the legislature is given the discretionary authority to allow “an agency of the state to conduct lotteries . . . and to award prizes by chance to participants.”[44] The OLC is created by the legislature and given the authority to “promulgate rules under which a statewide lottery may be conducted.”[45]

So…Who Should Regulate?

Sports betting does not adequately fit within the purview of the CCC nor the OLC. For the CCC to be granted the expressed authority to regulate, sports betting must be a casino game. Casino games are defined as slot machines or table games. At first blush, one might attempt to place it within the category of table games, but the category is defined as “any game played with cards, dice, or any mechanical, electromechanical, or electronic device or machine.”[46] A creative argument could be made to fit sports games within that, but it is not convincing considering the fact that some sports betting does not require any “mechanical, electromechanical, or electronic device.”[47] Therefore, the CCC would not be the appropriate commission to regulate sports betting. 

OLC becoming the regulator would depend on one question: does sports gambling fall within the category of a lottery? From the language “promulgate rules under which a statewide lottery may be conducted,” lottery is narrower than Rep. Greenspan and his proponents are willing to admit.[48] The provision does not give much latitude allowing the OLC to dabble in other ventures, such as sports gambling, because it focuses on a single statewide lottery.

The elimination of the two commissions would lead to the sound alternative voiced by Matthew Kredell of the Legal Sports Report.[49] He considered “creating a third regulatory body to handle sports betting.”[50] This design would mirror the response of the Ohio legislature to the similar issue of horse race betting in the early 20thcentury.[51] In that situation, the legislature created the Ohio Racing Commission to regulate the bets on horses.[52]

The practicality of this alternative could be lacking due to how much activity the House’s bill is collecting and the potential issues with funds, but it remains a healthy alternative that should be considered if the legislative stalemate refuses to subside. 

Conclusion

Because this issue of who should regulate presents a moderate amount of ambiguity, the split within the legislature is not a surprise. The House bill has received the most attention, while the Senate bill has received support from the gatekeeper of bills, creating a mystery of what the future holds for sports betting in Ohio. The fierce stalemate should turn the government’s attention to a blueprint of the past, making a specialized commission for sports betting the legitimate course of action. 


[1]Murphy v. NCAA, 138 S. Ct. 1461 (2018).

[2]Id.

[3]Rich Exner, Ohio heads towards legalizing sports gambling: Q&A of how, when and issues in play, cleveland.com (May 9, 2019), https://expo.cleveland.com/news/g66l-2019/05/213161ac655032/ohio-heads-toward-legalizing-sports-gambling-qa-of-how-when-and-issues-in-play.html.

[4]Murphy, 138 S. Ct. 1461 at 1468, 1481.

[5]Id.at 1484.

[6]Id.

[7]Exner, supra note 3.

[8]Matthew Kredell, Argument Bubbles Over Who Should Regulate Ohio Sports Betting, Legal Sports Report (July 25, 2019), https://www.legalsportsreport.com/34594/ohio-sports-betting-casino-commission/.

[9]Exner, supra note 3.

[10]Id.

[11]Id. 

[12]Id.

[13]Id.

[14]Id.

[15]The Lines, Ohio Sports Betting, Ohio Sports Betting News and Information, https://www.thelines.com/ohio/.

[16]Id.

[17]Id.

[18]Exner, supra note 3.

[19]The Lines, supra note 15. 

[20]Id.

[21]Exner, supra note 3.

[22]The Lines, supra note 15. 

[23]Exner, supra note 3.

[24]The Lines, supra note 15. 

[25]Matthew Kredell, Opinion On Overseeing Ohio Sports Betting Offers Obstinate Obstacle, Legal Sports Report (July 5, 2019), https://www.legalsportsreport.com/34202/ohio-sports-betting-regulator-opinion/.

[26]Id.

[27]Id.

[28]Id.

[29]Kredell, supra note 7.

[30]Id.

[31]Kredell, supra note 24.

[32]Kredell, supra note 7.

[33]Id.

[34]Id.

[35]Id.

[36]Id.

[37]The Lines, supra note 15.

[38]Ohio Const. art. XV, § 6.

[39]Id. art. XV, § 6(C)(4).

[40]Id. art. XV, § 6(C)(1).

[41]Id. art. XV, § 6(C)(4).

[42]Id. art. XV, § 6(C)(9).

[43]Ohio Const. art. XV, § 6, Ohio Rev. Code Ann. §3770.03 (LexisNexis 2017).

[44]Ohio Const. art. XV, § 6.

[45]Ohio Rev. Code Ann. §3770.03(A) (LexisNexis 2017).

[46]Id. art. XV, § 6(C)(9).

[47]Id.

[48]Ohio Rev. Code Ann. §3770.03(A) (LexisNexis 2017).

[49]Kredell, supra note 24.

[50]Id.

[51]Exner, supra note 3.

[52]Id.

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