The Impact Of Federal Laws On The Legality Of New York Sports Betting

As previously mentioned, there are three main federal sports betting laws affecting the pastime in New York. Originally intended and designed for the noble purpose of keeping criminals and dishonest people from profiting by fixing or influencing the outcome of sporting events, but the net result has been across-the-board bans on sports betting generally. Though there have been and are to this day various attempts to repeal or rewrite these laws in such a way that gambling on sports is more broadly available via legal means, the laws we’re going to take a look at are still the law of the land for now.

The main federal laws impacting the legality of sports betting in New York include:

The Wire Act

The Federal Wire Act, or simply the Wire Act, is in many ways the foundation upon which all later federal anti-gambling legislation passed in the last half century was built, and it is certainly one of the federal sports betting laws with the most impact on the legality of the pastime. Approved by Congress and signed into law by President John F. Kennedy in 1961, the bill that eventually become the Wire Act was born out of a veritable crusade against organized crime initiated by the president’s younger brother, Robert F. Kennedy, who took over as attorney general in 1956. AG Kennedy designed the Wire Act to target what he perceived was organized crime’s most valuable single revenue stream at the time: racketeering, meaning in this case to fix sporting events outright or to feed information about the winners to bettors ahead of the news media of the day.

In essence, the Wire Act forbids the interstate transmission of sports wagers or information that could be used for betting on sports. This prohibition exists because crime syndicates were making extensive use of the nation’s rapidly modernizing and increasingly sophisticated coast-to-coast telecommunications networks to report the outcome of a sporting event to conspiring bettors and bookies who would collude to offer unfair odds to unwitting casual betting fans. The Wire Act was largely understood to apply strictly toward the denial of a lucrative revenue stream of criminal organizations for most of the 20th century, but things began to change late in the first decade of the 21st century after the ascendency of the internet as one of the primary means of betting on sports.

A landmark case spanning 2009 – 2011 and involving the Department of Justice and the state lottery divisions of New York and Illinois eventually resulted in the consensus that the Wire Act applies only to sports betting and not online gambling generally. However, there have been moves in recent years by some misguided politicians reinterpret the law so as to make it have jurisdiction over all forms of gambling taking place online. This proposed legislation is known as the “Restore America’s Wire Act,” and though it doesn’t appear likely to pass, if action was taken to make it a federal law, the negative impact of federal laws on the legality of New York sports betting online would be catastrophic.

PASPA

The Professional and Amateur Sports Protection Act of 1992, known more commonly by the acronym PASPA, is one of the most significant pieces of federal sports betting legislation. PASPA is colloquially referred to as the Bradly Act after one of its biggest proponents, the Democratic New Jersey senator and former NBA player Bill Bradley, who argued that betting on sports was a significant enough risk to the integrity of sports that it posed a “national problem.” The law prohibits sanctioned wagering on sports nationwide with a few exceptions, effectively preventing states except Nevada, Delaware, Montana and Oregon from offering a regulated market, which, as we have already established, is key aspect of the impact of federal laws on the legality of New York sports betting.

PASPA took effect in January of 1993, basically banning most forms of sports betting from being approved by state legislatures around the country, but there were some caveats. For instance, PASPA made provisions that states with a history of licensed gambling going back at least a decade would be excluded from the prohibition on sports betting if an application was submitted within one year of the law taking effect. New York sports betting fans wouldn’t have been grandfathered in by that provision, though nearby New Jersey would have – and indeed could have legalized wagering on sports had the state’s politicians coalesced around that goal.

The rise of the internet in the mid-‘90s brought with it many changes in the way that PASPA was interpreted, as the original language of the law contained no restrictions on online gambling, leading some US-based online sportsbooks to skirt by for the better part of 10 years. The loophole regarding online gambling inadvertently left in PASPA made enforcing the letter of the law impractical and in many cases impossible, though it continued to be major source of negative federal impact on sports betting in that it forced many casual bettors onto unauthorized black market wagering platforms. That trend would not last, however, as the passage of another law ultimately shut the door on any US-based online sportsbooks.

But this too could change if a case to repeal PASPA which is being brought before the Supreme Court by the state of New Jersey is successful, a move that could curtail the impact of federal sports betting laws on the activity’s legality in New York.

The UIGEA

The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), was the solution to many of the problems with enforcement left over as a result of the Wire Act and PASPA, which though they had a significant impact on the practice ultimately proved ineffectual on their own at stopping illegal betting. With those prior two laws, if a sports bettor was not a member of an organized crime syndicate (or otherwise assisted in facilitating the illegal placement of bets on sports) or did their betting online (which was ruled to be outside the jurisdiction of either the Wire Act and was never a part of PASPA), then it could be reasonably be assumed he or she was safe from the long arm of the law. The UIGEA settled, for better or worse, the matter of practically enforcing a ban on domestic sports betting by directly prohibiting US financial institutions from processing all gambling related transactions taking place on the internet.

This law is largely reviled, and not just among sports wagering enthusiasts, because it was yet another proof of the misguided efforts to impose federal sports betting laws on New York and other states. The UIGEA was only passed because it was tacked as an 11th-hour addition to the must-pass anti-terrorism SAFE Ports Act, and most of the Congressional lawmakers that approved the bill never read the final version of what would become the UIGEA in the first place. The federal impact of this law was that many legal US-based online gambling platforms were pulled down immediately and those that remained faced a long legal battle that almost uniformly ended in criminal charges and arrests.

Nevertheless, a legal option that avoids the impact of federal laws on the legality of New York sports betting remains in the form of online New York sportsbooks based in foreign countries. These sites, like Bovada, BetOnline, SportsBetting and 5Dimes, are 100 percent legal, being regulated by the gaming authorities in their home countries and are simultaneously not subject to the federal sports betting laws we’ve discussed. Accordingly, US players are free to sign up and participate in sports betting at these legal offshore sportsbooks, and many of them even have their own internal processors so US credit cards are only occasionally rejected.