GAME Act proposing repeal of federal prohibition on sports betting revealed

A congressional committee on Thursday unveiled a draft of comprehensive legislation that would repeal the federal prohibition on sports betting and allow states to legalize online gambling.

The Gaming Accountability and Modernization Enhancement Act or GAME Act, released Thursday morning by the House Energy and Commerce Committee, aims to remove federal barriers, give oversight authority to the Federal Trade Commission and outline consumer protections that states would need to have in place in order to offer legal sports betting, including fantasy sports.

Section 8 of the GAME Act would repeal the Professional and Amateur Sports Protection Act of 1992 (PASPA), the federal prohibition on state-sponsored sports betting.

Sports betting is legal in only a handful of states, with only Nevada allowed to offer a full wagering menu. Delaware, Nevada and New Jersey are the only states that allow online gambling. Legislation is advancing in Pennsylvania to legalize online gambling, as well.

The GAME Act defines a bet or wager as "the risking of something of value including virtual currency or virtual items, upon the outcome of a contest of others, a sporting event or a game of skill or a game of chance, on the expectation that the person will receive something of value in the event of a certain outcome." Participation in lotteries, sports bets, fantasy sports and "fantasy esports" is included in definition of a bet or wager, according to the legislation.

Rep. Frank Pallone, D-New Jersey, the ranking member on the Energy and Commerce Committee, is spearheading the legislation. After a yearlong review of federal gambling laws and the legal and illegal markets, Pallone said he found that illegal gambling is prevalent in the U.S. and believes the laws need to be updated to maintain relevance and keep up with modern gambling.

"Despite the federal gaming laws in place today, Americans are betting up to $400 billion a year on sporting events alone," Pallone said in a statement announcing the legislation. "It's time to recognize that the laws are outdated, and the GAME Act will modernize them by increasing transparency, integrity, and consumer protections."

Under the GAME Act, facilities that accept bets in more than one state would be required to submit to the FTC a description of how they comply with the required consumer protections. Mechanisms for age and location verification, safeguards for data security and means of recourse for consumers are among the protections addressed by the GAME Act.

Historically, gambling regulation in the U.S. has been left to states. However, a patchwork of federal law oversees sports betting. In addition to PASPA, the Wire Act of 1961, Unlawful Internet Gambling Enforcement Act of 2006 and Illegal Gambling Business Act of 1955 also are a part of the web of federal laws dealing with sports betting.

The GAME Act would give the Secretary of Health and Human Services the authority to implement programs for the prevention and treatment of gambling addiction.

The legislation is characterized as a "discussion draft" and the committee is actively soliciting feedback from stakeholders.

Other initiatives to lift the federal sports betting ban are also underway. The Supreme Court is currently deciding whether to review New Jersey's efforts to legalize sports betting. Michigan, New York, Pennsylvania, West Virginia are among other states to introduce sports betting legislation in 2017. At the federal level, the American Gaming Association, which represents the gambling industry, is building a coalition and plans to begin lobbying Congress to lift PASPA this year.

"President Trump will have sports betting legislation on his desk during his term," American Gaming Association president and CEO Geoff Freeman has said.