When everyone else was backing virtual teams, pop-financer Mark Cuban was pouring money into Unikrn, a blockchain-powered esports betting platform. Yet another genius investment? Looks that way. According to experts, esports gambling action is careening towards the $10 billion mark.
So, let’s review the current state of esports betting law in the United States. What statutes govern the space? Is there an appetite for change? Let’s dive in.
Esports Betting Law: Are People Currently Placing Bets On Matches?
According to analytics firm Narus and researchers Eilers & Krejcik, “global wagering on esports” is expected to reach $6.7 billion in 2018. And expected, folks are busily crafting ways to profit.
Esports Betting Law: Industry Obstacles To Legalizing Esports Betting?
The road to legal gambling, however, is riddled with hurdles. For starters, only four states allow sports betting, but restrictions apply. Even Nevada has yet to categorize professional video gaming as a “sport” for betting purposes. Instead, it falls under the “other” category, as do professional drafts and award outcomes (like Heisman and Oscar winners).
Policymakers and advocacy groups are also concerned about the average age of esports enthusiasts. Though pro-gaming is increasingly attracting an older audience, many esports fans are still minors. As such, authorities must take tremendous care when considering the impact of esports betting.
Another hurdle? Match-fixing. Several big scandals have already rocked the arena, and the threat remains. Granted, this is a negligible issue that’s not unique to esports (we’re looking at you, Pete Rose!). Yet, it’s still a concern.
Esports Betting Law: Federal and State Sports Gambling Laws
Currently, three federal statutes outlaw most sports betting — and likely esports betting — in the United States.
Professional and Amateur Sports Protection Act (a.k.a., the Bradley Act)
In 1992, lawmakers passed the Professional and Amateur Sports Protection Act (PASPA), which effectively outlawed sports betting in every state, save for Nevada, Oregon, Montana, and Delaware.
Notably, the Supreme Court of the United States is currently reviewing a suit (Murphy v. National Collegiate Athletic Association) that could render PASPA null and void. Ultimately a “states’ rights” case, justices are considering whether or not the federal government can dictate state gambling laws. If the bench rules in favor of Murphy, PASPA would die, states could embrace sports wagering, and budget coffers across the country would balloon.
Unlawful Internet Gambling Enforcement Act
Codified in Title VIII to the SAFE Port Act, the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) addresses online betting. The statute “prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.”
Federal Wire Act
Ratified in 1961, and codified in Title 18 of the Criminal Code, the Interstate Wire Act (a.k.a., the Federal Wire Act) asserts:
Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.
State Sports Gambling Laws
Nevada, Oregon, Delaware, and Montana are the only four states that allow sports betting. And even in those states, not all wagers are created equal. As Seth Schorr, CEO of Las Vegas’s Downtown Grand Hotel and Casino, explained: “You can’t bet on football; you can bet on the NFL.” But encouragingly for esports betting investors, he also added that “Nevada [is] looking at specific esports leagues and offerings.”
Esports Betting Law: The Future
Esports investors are analyzing demographic shifts and positioning themselves for the future. As Rahul Sood, Unikrn’s founder, explained:
“If you look at the slot machine area [in any Las Vegas casino], there are probably more wheelchairs and walkers per square foot than anywhere else in the casino. Young people go straight to the nightclub and don’t spend time there.”
Moreover, and perhaps most importantly, there seems to be a growing appetite for less restrictive gambling laws on Capitol Hill.
Connect With An Esports Lawyer
The Gordon Law Group works with esports athletes, teams, leagues, and businesses on everything from contract negotiations to esports betting legalities. For three consecutive years, SuperLawyers has chosen our firm as a “rising star” and we’ve earned a reputation for crafting compliant, unqiue overseas business models. If you’re interested in exploring the legalities of esports betting business, let’s talk.