Since the U.S. Supreme Court’s 2018 decision to strike down PASPA (Professional and Amateur Sports Protection Act), the growth of sports betting has exploded. However, instead of a single, unified federal framework, the Supreme Court’s ruling effectively handed regulatory control over to individual states. Six years on, it’s clear that the state-by-state approach has brought both challenges and benefits, but many in the industry—including the American Gaming Association (AGA)—are staunchly opposed to any form of federal oversight.
Why State-by-State Regulation Works
- Tailored Regulation for Local Markets
One of the biggest advantages of state-by-state regulation is that it allows individual states to craft laws that suit their unique economic, cultural, and political climates. States like New Jersey and Nevada have successfully implemented sports betting frameworks that reflect their strong gambling traditions and infrastructures. In contrast, more conservative states like Utah and Hawaii maintain a prohibition on gambling. The flexibility to customise regulations means that each state can adapt sports betting laws to meet local needs, driving regional economic growth while respecting local values. A federal model would not allow for this nuance. In fact, it could impose one-size-fits-all regulations that may be too restrictive for some states and too lenient for others. By keeping regulation in state hands, the system supports both states eager to embrace sports betting and those who prefer to take a cautious approach. - Economic Benefits and State Revenue
State-level regulation allows states to decide how to tax and spend the revenue generated from sports betting. For instance, Pennsylvania has one of the highest tax rates on sports betting operators, funnelling millions into state coffers for public programmes, while Nevada takes a more relaxed approach, focusing on tourism growth. States have the freedom to balance taxation and regulation in a way that optimises economic benefits for local communities. A federal regulatory framework could syphon off much-needed revenue from states, diluting the impact sports betting has on local economies and a central authority in Washington may be less responsive to regional economic needs, leading to slower decision-making and fewer opportunities for innovation. - Encourages Healthy Competition Among States
A lesser-discussed benefit of the state-by-state model is the competition it fosters among states to provide the best regulatory environment for operators. States like New Jersey, which have rapidly embraced sports betting, have attracted major operators like FanDuel and DraftKings, turning the state into a sports betting hub. This competition spurs innovation, pushes states to streamline their regulatory processes, and creates incentives for operators to offer better odds, more engaging products, and improved customer experiences. Federal oversight, by contrast, would likely stifle this competition. A uniform regulatory structure could standardise offerings across states, reducing incentives for operators to innovate and making it harder for individual states to differentiate themselves as attractive sports betting markets. - The AGA’s Stance: Federal Oversight Would Be a Disaster
The American Gaming Association (AGA) has been clear in its stance: federal regulation would be a step backward for the sports betting industry. According to the AGA, a centralised regulatory approach would add unnecessary bureaucracy and slow the industry’s growth. States have proven they are capable of regulating sports betting responsibly, and the AGA believes federal interference would add unnecessary layers of compliance and legal ambiguity. The AGA argues that a federal model could potentially lead to more restrictive regulations on advertising, data usage, and customer verification. This could harm operators’ ability to connect with customers and stifle innovation. The AGA’s president and CEO, Bill Miller, has openly criticised federal oversight as a threat to the progress made since the repeal of PASPA, pointing to the billions of dollars in tax revenue and thousands of jobs that the state-regulated market has created. - States’ Rights and the Political Landscape
Lastly, there is the issue of states’ rights. Gambling has long been a contentious issue in the United States, with some states traditionally opposing it on moral or religious grounds. The ability for each state to regulate—or prohibit—gambling as they see fit respects the constitutional principle of states’ rights. A federal framework would override this autonomy, creating political friction and legal challenges. Moreover, given the current political climate, any attempt to introduce federal gambling regulations would likely face significant opposition from states that are highly protective of their rights to self-governance.
The success of sports betting in the U.S. post-PASPA is proof that state-by-state regulation works. It respects the diverse economic and cultural landscapes of individual states, allows for innovation and healthy competition, and keeps much-needed tax revenue in local communities. Federal oversight would risk homogenising a vibrant and growing industry, stripping states of the flexibility they need to create tailored regulatory environments and stifling the innovative spirit that has fueled the expansion of sports betting.
The AGA is right to oppose federal regulation. While it may seem more efficient in theory, in practice, it would slow the industry’s momentum, hurt state economies, and impose a bureaucratic structure that gambling operators simply do not need. The current state-based system, while imperfect, allows for evolution and growth. Any future regulatory changes should continue to prioritise state sovereignty over centralised federal control.
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FAQ
- Why is there a push for federal regulation of sports betting in the U.S.?
Federal regulation could simplify the current state-by-state model, bringing consistency and clarity for both operators and consumers. However, it would also give the federal government control of a state’s tax revenues.
