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.

Anticommandeering Doctrine Protects States’ Right to Gamble

“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 first article in a two-part discussion on sports betting. Click here to read Ohio’s response.

I. Introduction

On May 14, 2018, the Supreme Court reached a decision invalidating an Act that prevented states from opening the doors to sports betting within their jurisdictions.[1] Through this decision, the Court drew a visible line in the sand showing where they stand in the battle of federal and state powers in the war of federalism. The line was created through the stick of anticommandeering—a doctrine used to protect the states from the encroachment of the federal government on their powers. Part II discusses the case of Murphy v. NCAA, along with how it added another element to this protective doctrine. Part III will illustrate the reactions, and validity of those reactions to the case, as well as the possible congressional limitations that could be placed on this newfound state freedom. 

II. Background

In a reaction to a national push for the legalization of sports gambling in the late 20thcentury, Congress turned to legislation, and the Professional and Amateur Sports Protection Act (“PASPA”) was born.[2] Generally, this legislation made it unlawful for a State to “authorize” sports gambling.[3] When voicing support for the Act, legislators pointed to the need to protect the youth from gambling as well as the “integrity of sports.”[4] Despite barring the state authorization of gambling, Congress featured an exception in the Act that allowed active sports gambling, which took place in Nevada, Oregon, Montana, and Delaware, to continue.[5] These provisions were referred to as “grandfather” provisions.[6] Sports gambling was not made a federal crime in order to keep the Act consistent with the active gambling states, but the remedies of civil actions were available to prevent the spread to other states.[7] In support of New Jersey’s state congressional discussions, the Act also featured a provision that granted New Jersey the option of legalizing sports gambling in Atlantic City.[8] A deadline of one year from the Act’s effective date was placed on the option, which New Jersey failed to exercise.[9]

After missing the deadline to legalize gambling in Atlantic City, New Jersey voters decided that gambling was in the best interest of the State’s economy.[10] After New Jersey approved an amendment to the State Constitution allowing the legislature to legalize gambling, major professional sports leagues and the National Collegiate Athletic Association (“NCAA”) quickly reacted and brought an action in federal court against the agents of the State.[11] The provision at issue in PASPA made it “unlawful” to “authorize by law or compact . . . a lottery, sweepstakes, or other betting, gambling or wagering schemes based . . . on” sporting events.[12] After numerous years of hearings by the lower federal courts, the Supreme Court granted review of the case to rule on the constitutional issues.[13]

When assessing the facts of the case, the Justices of the Court questioned whether the anticommandeering doctrine was violated. The doctrine was created in the cases of New York v. United States[14] and Printz v. United States.[15] The anticommandeering doctrine “withhold[s] from Congress the power to issue orders directly to the State.”[16] The doctrine was derived from the principle that “both the Federal Government and the States wield sovereign powers” and work together cohesively as “dual sovereigns.”[17]

The Court reached the conclusion that the PASPA provision at issue violated the anticommandeering doctrine due to the provision “dictat[ing] what a state legislature may or may not do.”[18] This case presented a new anticommandeering issue because the Act in question was not directing the states to take certain actions, as found in New York and Printz, but rather directed the states to refrain from certain conduct.[19]

Those supporting PASPA argued that this should distinguish the case at bar and move it outside the reach of the anticommandeering doctrine.[20] The Court disagreed and ruled that the doctrine applies to affirmative actions commanded by Congress as well as imposed prohibitions.[21] The litigation culminated in the Court ruling that the provision concerning the state authorization of sports gambling was in violation of the anticommandeering doctrine, and therefore invalid.[22] The Court went on to invalidate the entirety of PASPA due to it being “evident that [Congress] would not have enacted those provisions which are within its power, independently of [those] which are not.”[23]

III. Analysis

What this Court ruling crafted was a key to the federal government’s shackles on the states, granting states the freedom to capitalize on the surge of betting revenue generated throughout the country. After the gavel struck the block, New Jersey and Delaware prepared to pass new legislation, and numerous other states commenced conversations concerning the issue.[24]

The reactions to this ruling varied. A large portion of states have jumped at the opportunity to raise revenue, while sports leagues have made moves to maintain control over their sport. In recent moves, certain sports leagues have adopted the old “if you can’t beat them…” mantra by attempting to secure a piece of the sports betting market for themselves. The National Basketball Association (“NBA”) has bid to secure a 1% cut, called an “integrity fee,” of every bet made on a game organized by the League.[25] The NBA supported their request by claiming that “as intellectual property creators, [their] games serve as the foundation for legalized sports betting, providing casinos the ability to earn revenue off [their] games, while [they] bear all of the risk that accompanies sports betting and will incur additional expenses to expand [their] existing compliance and enforcement programs.”[26] States have taken opposition to this stance, responding that they can coordinate better between each other, which will protect the amount of revenue flowing directly to the states, and not exploit states that do not have a professional sports team contributing to their economies.[27]

The National Football League (“NFL”) has also attempted to enter the market by “requesting that the states grant them exclusive control of game and player data, which state licensed sportsbooks would then be required to purchase from the leagues for its operations.”[28] Along with the request of the NBA, states have been quick to push back. 

Both sides of the argument have merit. The various professional leagues offer a product; therefore, it is not a far reach for those leagues to ask for a slice in the pie created by that product. Yet sports betting benefits these leagues in a way that might not show up on its own row in the financial statements. Attendance and viewership of sporting events have been consistently decreasing through the years.[29] An argument for the pro-sports betting camp follows the logic that when persons bet on a game, they will watch the game.[30] Therefore, when these states open up an arena for betting participation, the bottom line of the leagues are, in theory, positively affected.

Does this mean that states can occupy the sports betting space and do as they please? Absolutely not. The Murphy Court outlined the avenues that Congress has to limit the freedom of the states’ decision making. Looking into the future, Congress could enact federal regulations successfully by “(1) incentiviz[ing] states to adopt federal policies, or (2) prohibit[ing] certain conduct directly.”[31] Congress could also create a “baseline rule” and require the states to “either adopt that rule or another of their own choosing.”[32]

If Congress were to travel the avenue of regulating the private actors directly, a question arises of how the legislation would evade the grasp of the anticommandeering doctrine. It is a fact that multiple states have legalized sports gambling. Congress embedded in PASPA an exception for these states. If Congress were to push through an Act that was pointed towards private actors with the grandfather provisions for those states, would it successfully leave the anticommandeering doctrine undisturbed? One could argue that, in effect, it still forces states to prohibit sports gambling. Would the Court push the boundaries of the doctrine that far? To secure the sovereignty of the States, the doctrine should be extended when the federal government attempts to chain the States by influencing the people that operate within the State’s jurisdiction. When grey areas enter an argument regarding federalism, the Court should turn to the text of the Constitution and limit the Federal Government to the powers that are explicitly written. The Tenth Amendment has given the rest to the States, and that fact should guide our decisions. 

IV. Conclusion

Abiding by the Constitution of the United States, the Court came to the right decision. If the people of the states agree to take certain actions within their domain, the Federal Government should not be able to subdue their actions when it is not within their prescribed powers. In the future, the Court should also be vigilant of Congress and the lobbying professional leagues to ensure the federalist balance is not upset.  


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

[2]Id. at 1470.

[3]Id. at 1468-69.

[4]Id. at 1470-71.

[5]Id. at 1471.

[6]Id.

[7]Id.

[8]Id.

[9]Id.

[10]Id.

[11]Id.

[12]Professional and Amateur Sports Protection Act (PASPA) of 1992, Pub. L. No. 102-559, 28 U. S. C. §3702(1) (1992), invalidated by Murphy, 138 S. Ct. at 1461.

[13]Murphy, 138 S. Ct. at 1473.

[14]New York v. United States, 505 U.S. 144 (1992).

[15]Printz v. United States, 521 U.S. 898 (1997). 

[16]Murphy, 138 S. Ct. at 1475. 

[17]Id.

[18]Id. at 1477. 

[19]Id

[20]Id.

[21]Id.

[22]Id. at 1481.

[23]Id. at 1482.

[24]John Wolohan, The potential impact of the Murphy v. NCAA decision on sports betting in the United States, LawInSport (May 31, 2018), https://www.lawinsport.com/content/article/item/the-potential-impact-of-the-murphy-v-ncaa-decision-on-sports-betting-in-the-united-states.

[25]Id.

[26]Id.

[27]Id.

[28]Id.

[29]Id.

[30]Id.

[31]Cory Lapin, The Potentially Far-Reaching Implications of Murphy v. NCAA Outside of Sports Betting, Defense Litigation Insider (May 30, 2018), https://www.defenselitigationinsider.com/2018/05/30/the-potentially-far-reaching-implications-of-murphy-v-ncaa-outside-of-sports-betting/ (citing Murphy, 2018 U.S. 2805 at *31-34).

[32]Sam Kamin, Murphy v. NCAA: It’s about much more than gambling on sports, The Hill (May 15, 2018), https://www. Thehill.com/opinion/judiciary/387653-murphy-v-ncaa-its-about-much-more-than-gambilng-on-sports.