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.

License to Tour? Charleston Tour Guides Challenge City’s Licensing Requirement

Author: Chris Gant, Contributing Member, University of Cincinnati Law Review

It is not uncommon for laws to require an occupational license in order to work in a respective field. For example, jobs in medicine or law require passing examinations and certifications. Occupational licenses, however, become more controversial when they interfere with what may be a violation of First Amendment rights.  Litigation has arisen in a few historic American cities where the cities have promulgated a license requirement for giving tours. These ordinances generally require the tour guide to pass a series of tests, be drug free, and have no recent felonies. [1]

The most recent of these lawsuits has recently come out of Charleston, South Carolina. The Plaintiffs are citizens wishing to be tour guides, but lack a license and are therefore subject to fines and possibly jail time for giving unlicensed tours. The complaint alleges that the licensing requirements violate the First Amendment because it bars speakers from telling stories and from talking for a living.[2] There is a split among the circuit courts regarding this issue. The Fifth Circuit has ruled that these licensing requirements do not violate the First Amendment because the ordinances are “content neutral” and therefore have no effect on what tour guides say. Conversely, the Circuit Court for the District of Columbia has ruled that the ordinances are a violation of the First Amendment.  The D.C. Circuit Court gives a vastly more persuasive argument. The Fifth Circuit gives a half-hearted, incomplete, and ultimately unpersuasive opinion. As the D.C. Court explains, these ordinances cannot pass intermediate scrutiny, the District Court of South Carolina should rule in line with the D.C. Circuit Court.

The First Amendment and Intermediate Scrutiny

The First Amendment, with a few exceptions, prevents the government from restricting the freedom of speech of American citizens.[3] Laws that restrict speech but are content neutral are reviewed under intermediate scrutiny.[4] As the name implies, intermediate scrutiny is more rigorous than rational basis review, but less rigorous than strict scrutiny.

The Supreme Court applies a five-factor test when the government seeks to restrict content-neutral speech. This test inquires into whether the ordinance: (1) is within the constitutional power of the Government; (2) furthers an important or substantial governmental interest; (3) the governmental interest is unrelated to the suppression of free expression; (4) the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest; and (5) the regulation leaves open ample alternative channels for communication.[5] The failure for the government to satisfy any one of the five factors invalidates the regulation.[6]

Kagan v. City of New Orleans

Kagan v. City of New Orleans was a similar challenge to the New Orleans code that required a license for a person to charge for tours of “the city’s points of interest and/or historic buildings, parks, or sites, for the purpose of explaining, describing or generally relating the facts of importance thereto.”

The Fifth Circuit court found the ordinance to be content neutral because the requirements for a license “[have] no effect whatsoever on the content of what tour guides say,” thus the ordinance had no reference to content.[9] The court then applied an incomplete intermediate scrutiny test, stating that the ordinance satisfied the “requirement of narrow tailoring ‘so long as the … regulation promotes a substantial interest that would be achieved less effectively absent the regulation.’”[10] Therefore, because New Orleans, “effectively promoted the government interests, and without those protections for the city and its visitors, the government interest would be unserved.”[11]

Edwards v. District of Columbia

In Edwards v. District of Columbia, the D.C. Circuit Court of Appeals struck down a very similar statute. Under the D.C. ordinance, in order to guide or escort any person through the city for compensation, a guide must: 1) be at least eighteen years old; 2) be proficient in English; 3) not have committed certain felonies; 4) sign a sworn statement that the application is true; and 5) scored at least 70/100 on an examination. [12] The government’s asserted interest was to prevent unscrupulous business practices and “weed[] out guides too … unserious to be willing to study for a single exam.”[13]

The court stated that even if the regulations are content-neutral, they do not pass intermediate scrutiny.[14] In applying the appropriate five-prong test, the court found that prongs two and four are not satisfied.[15] In regards to the requirement that the regulation furthers an important government interest, the court explained that there must be a “direct causal link between the restriction imposed and the injury to be prevented.”[16] The government offered eleven injuries that the ordinance seeks to prevent,[17] however the court found that the government failed to demonstrate that these injuries were actually a problem for D.C.’s tourism industry.[18]

Further, in regards to prong number four, the court found that the regulation was under-inclusive and overbroad.[19] To meet the fourth prong, the regulation must be no greater than essential to further the government’s interest.[20] The court ruled that the regulation failed to meet this prong because there were already incentives in place for a tour guide to provide a quality tour.[21] Additionally, unlicensed tour guides could find ways around the regulation. For example, an unlicensed tour guide could stand in front of the White House and charge a fee for information, or could walk around with an audio recording.[22]

Charleston’s Licensing Requirements Violate the 1st Amendment

Americans sometimes need to sacrifice certain rights in order to balance legitimate government interests. This give and take approach is exemplified in the First Amendment tests by requiring the government to prove that it is protecting its legitimate interest in a narrowly tailored way. The licensing regulations are an example of government overreach. The regulations are a form of controlling who speaks in the respective city, and the government’s proposed interest does not justify the intrusion on certain citizens’ rights since they lack necessity.

Assuming intermediate scrutiny applies, it is clear that a statute requiring a license to be paid for tours cannot pass constitutional muster.  The Fifth Circuit gave a one-sentence justification for why the ordinance passes intermediate scrutiny. The court only stated that the regulation is no greater than what is essential to further the government’s interest, that the regulation effectively promotes the government interest, and that without the regulation this interest would be unserved. It never addressed any counter arguments or why these arguments fail.

In contrast, the D.C. Circuit correctly argued that these governmental interests can be served without restrictive regulations. Word of mouth and business reviews can protect the government’s asserted interest without violating the First Amendment. For example, if the tour guides were drug addicts and knew nothing about the city, the business would never last because it would receive terrible reviews and go out of business. A restaurant does not need to pass a test showing they know a certain amount about food or drinks before they serve food. If the food and service is unsatisfactory, the restaurant will not last. A tour guide business can be regulated in the same way.  Alternatively, a government can always offer certifications that add legitimacy to a tour guide but do not go so far as to exclude the speech of others. Accordingly, the government does not need to be in the business of suppressing people’s speech.

Conclusion

The district court in Charleston, South Carolina should follow the D.C. Circuit court. The tour guide restrictions violate the First Amendment because they are greater than essential to promote the already questionable governmental interest. These interests can be served without government intervention. The violation is not justified by the purpose of the regulation. Thus, the district court should rule against the licensing requirement, and eventually the Supreme Court should overrule the Fifth Circuit.

[1] E.g., New Orleans Mun. Code Part II, Chap. 30, Art. XXI, § 30-1551; D.C. Code § 47-2836.

[2] Santos, Suzelle, Jacobs, Harve, “Lawsuit: Charleston Tour Guide Licenses Shouldn’t be Required” http://www.cbs46.com/story/31081039/lawsuit-charleston-tour-guide-licenses-shouldnt-be-required CHECK CITE.

[3] Examples of exceptions include defamation, obscenity, and incitement of imminent lawless action. See Miller v. California, 413 U.S. 15 (1973); Brandenburg v. Ohio, 395 U.S. 444 (1969).

[4] Ward v. Rock Against Racism, 491 U.S. 781 (1989).

[5] United States v. O’Brien, 391 U.S. 367, 377 (1968), Clark v. Cmty. For Creative Non-Violence, 468 U.S. 288, 293 (1984).

[6] Cmty. for Creative Non-Violence v. Turner, 893 F.2d 1387, 1392 (D.C. Cir. 1990).

[7] Kagan, 753 F.3d at 561.

[8] Id.

[9] Id. at 562 citing Ward, 491 U.S. at 799.

[10] Id. citing Ward, 491 U.S. at 799.

[11][11] Id.

[12] D.C. Code §47-2836

[13] Edwards, 755 F.3d at 1001-1002.

[14] Id.

[15] Id. at 1003.

[16] Id. citing Edenfield v. Fane, 507 U.S. 761, 770-771 (1993).

[17] 1) Unscrupulous businesses, (2) tourists whose welfare is jeopardized by tour guides lacking a minimal level of competence and knowledge, id.; (3) tour guides lacking “minimal knowledge about what and where they are guiding or directing people to,” (4) consumers unprotected from unknowledgeable, untrustworthy, unqualified tour guides, (5) tour guides lacking “at least a minimal grasp of the history and geography of Washington, D.C.,”; (6) visitors vulnerable to “unethical, or uninformed guides,” (7) tourists treated unfairly or unsafely, (8) tourists who are “swindled or harassed by charlatans,”; (9) degradation of the “quality of the consumer’s experience,” (10) “tour guides . . . too unserious to be willing to study for a single exam,” and (11) tour guides “abandon[ing tourists] in some far-flung spot, or charg[ing] them additional amounts to take them back.” Edwards v. District of Columbia, 943 F. Supp. 2d 109, 122 (D.D.C., 2013).

[18] Edwards, 755 F.3d at 1003.

[19] Id. at 1007-1009.

[20] See O’Brien, supra.

[21] E.g., consumer reviews on the Internet and a general business license. Edwards at 1007.

[22] Id. at 1008.

When is it legal for an employer to discriminate in their hiring practices based on a Bona Fide Occupation Qualification?

Author: Stephanie Scott, Associate Member, University of Cincinnati Law Review

Although it is illegal for an employer to discriminate against an employee based on the individual’s sex, Title VII of the Civil Rights Act of 1964 allows employers an exception when employment discrimination is based on a “bona fide occupational qualification” (BFOQ). Courts have upheld discrimination on the basis of sex for some BFOQ that impact employee safety, but even then exceptions apply. Continue reading “When is it legal for an employer to discriminate in their hiring practices based on a Bona Fide Occupation Qualification?”

Daily Fantasy Sports: Game Of Skill Or Game of Chance?

Author: Gabriel Fletcher, Associate Member, University of Cincinnati Law Review

Draftkings and FanDuel are online daily fantasy sports businesses (DFS).[1] In November of 2015, New York Attorney General (AG), Eric Schneiderman, declared that DFS is gambling, and thus unlawful.[2] The AG’s determination has reignited the discussion over DFS being a game of chance as opposed to a game of skill, which is a determining factor in whether or not DFS constitutes gambling. Continue reading “Daily Fantasy Sports: Game Of Skill Or Game of Chance?”