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What you need to know about the new federal sports betting bill

AP Photo/Pablo Martinez Monsivais

On Wednesday, U.S. Senators Orrin Hatch (R-Utah) and Chuck Schumer (D-New York) introduced the Sports Wagering Market Integrity Act (SWMIA) of 2018, a comprehensive bill that aims to provide federal oversight to the expanding American legal sports betting market.

The bill is viewed as a first step in what could be a lengthy process full of politics and debate between powerful stakeholders like the sports leagues and gaming industry.

Here are the key questions and takeaways:

Q: What does SWMIA aim to accomplish?

SWMIA would create federal framework designed to "maintain a distinct Federal interest in the integrity and character of professional and amateur sporting contests."

To be clear: The bill would not ban sports betting. In-person and online wagering on professional and NCAA sports would be allowed.

Q: Will this bill pass?

Not in this session of Congress, which has less than two weeks remaining.

"There is much work to be done," Hatch said in a statement announcing SWMIA, "but I hope this bill will serve as a placeholder for the next Congress, should they decided to continue working to address these issues."

Hatch is retiring at the end of the year, and another Republican to champion the issue has not yet been identified publicly.

The bill will have to be formally reintroduced after the new Congress begins its session in 2019. There is a long history of bills being taken up multiple times before eventually being enacted.

"I will strongly advocate for this bill to move forward and for Congress to vote to pass federal legislation very soon," Schumer said.

Q: What would be included in the federal framework?

States interested in passing sports betting laws would need to comply with federal standards and seek approval from the U.S. Attorney General. The federal standards would include:

• Establish an entity for the purposes of regulating sports betting.

• Restrict online wagers to individuals located in the state, with limited exceptions.

• Allow sports governing bodies to request that certain types of wagers be prohibited.

• Require sportsbook operators to use official league data to grade wagers.

Q: Do the leagues get a cut of the betting handle?

The bill -- which is 101 pages long -- does not address any such fees paid by sportsbook operators to leagues based on the amount wagered on respective games.

Q: What happens to the states that are already operating sports betting schemes?

Legal sportsbooks have opened in seven states -- Delaware, Mississippi, New Jersey, New Mexico, Pennsylvania, Rhode Island and West Virginia -- since the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act of 1992, the federal statute that had restricted state-authorized sports betting to primarily Nevada.

The Associated Press reported that states already actively regulating sports betting would be allowed to continue to operate while the U.S. Attorney General reviews their laws. The states, including Nevada, however, would not be exempt from complying with the federal standards.

Q: How would the bill attempt to protect the integrity of sports?

SWMIA would create a central "clearinghouse" for mandatory sharing of information about unusual wagers or line movement. The new bill would require the filing of a "suspicious transaction report" if anything is pinpointed.

The U.S. Attorney General is authorized to file a civil action against anyone allegedly in violation of the proposed law.

The bill also creates a mechanism to go after unlicensed operators that serve U.S. bettors, including the popular online sportsbooks located offshore.

Q: Is there any indication about how the Supreme Court would view this new bill?

In the Supreme Court ruling that invalidated the prior federal ban on single-game wagers outside of Nevada, Justice Samuel Alito -- who wrote the decision on behalf of the Supreme Court -- made clear that "Congress can regulate sports gambling directly." Justice Ruth Bader Ginsburg agreed with Justice Alito regarding the scope of Congressional authority. "[D]irect federal regulation of sports-gambling schemes nationwide ... falls within Congress' power to regulate activities having a substantial effect on interstate commerce," wrote Justice Ginsburg in a separate opinion.

Q: What do the sports leagues think about the proposed legislation?

The bill received overwhelming support from professional sports leagues and the NCAA.

In a two-page letter, the NFL expressed its "strong support" for the new bill, describing it as "common-sense legislation." The PGA Tour issued a statement in support of SWMIA too, saying that the tour believes national standards "are the best method of protecting the integrity of our competitions and our fans."

Major League Baseball's statement in support of SWMIA highlighted "the important role of the federal government in ensuring safe, fair and transparent sports betting."

The NCAA applauded the bipartisan effort, emphasizing that federal standards "are needed to promote a safe and fair environment for the nearly half a million students who play college sports."

Q: How does the gaming industry feel about the bill?

The American Gaming Association, which represents the casino industry, called SWMIA the "epitome of a solution in search of a problem" and a "non-starter for the gaming industry."

The AGA did, however, express support for the bill's recognition that the illegal sports betting market is the biggest impediment to the growth of the new legal market.

Q: Does SWMIA amend any other laws relevant to sports betting?

Yes. Both the Wire Act of 1961 and the Sports Bribery Act of 1964 would receive modern updates under the new bill.

The Wire Act -- which addresses sports betting that crosses state lines -- would be amended to accommodate interstate sports wagering compacts between two or more states that have legalized sports gambling.

The Sports Bribery Act, a criminal law, is expanded under SWMIA to include extortion and blackmail. A whistleblower protection clause also is added.