Esports Law: The Dawn of Legal Esports Betting?

May 23, 2018

esports betting law We’ve said it before, and we’ll repeat it: esports — and related profits — are on the rise. Worldwide event revenues surpassed $1 billion and show no signs of stopping. According to research firm Eilers & Krejcik, esports betting action will likely reach $6.7 billion in 2018; $13 billion by 2020.

And to make matters more…lucrative, the nation’s Supreme Court recently cleared a legal obstacle that could usher in a new era of esports betting in the United States.

The Legality of esports Betting

Today, eight countries allow esports betting: the United Kingdom, Spain, Australia, New Zealand, Japan, Taiwan, Korea, and Macau.  Noticeably absent from that list is the United States.

Though it’s legal in a few jurisdictions (Nevada, Montana, Delaware and Oregon), for the majority of the country, sports and esports gambling is off limits on account of federal laws like the Unlawful Internet Gambling Enforcement Act (UIGEA) and the Professional and Amateur Sports Protection Act (PAPSA).

That said, despite federal statutes, a handful of states have managed to legalize certain “wagering games” in their respective jurisdictions. Additionally, gambling enthusiasts crafted a loophole: use in-game tokens, which can then be sold for real-world currency on platforms like the Steam Community Market.

NJ Battles PASPA

In 2012, New Jersey residents voted to legalize sports gambling; ever since, legislators have struggled to pass sustainable legislation.  Take, for example, when Chris Christie signed the bill into law; in a matter of weeks, professional sports leagues had sued the state for infringing on federal statutes — and they won.

In 2014, New Jersey legislators passed another gambling legalization bill. And once again, the court shut it down, as did a 2016 appeal’s bench. Ultimately, the case ascended to the Supreme Court under the banner of Murphy v. NCAA.

Supreme Court Weighs in On Esports Betting

Murphy centered on the constitutionality of PAPSA. If the justices found it to be in violation, then states could, theoretically, legalize esports betting without fear of federal interference.

So, what did the highest court in the land decide?, In a 6-3 vote, SCOTUS declared PAPSA unconstitutional on the grounds that it violated the 10th Amendment — a.k.a., the anti-commandeering doctrine — which grants states legislative leeway and blocks the federal government from breaching U.S. constitutional bounds.

Is It Fine To Launch An Esports Betting Site Now?

Are you looking to become the Paddy Power of esports betting? Fair Warning: Just because SCOTUS ruled in favor of Murphy doesn’t mean anybody can launch an esports betting website or company. Depending on your jurisdiction, other laws may still stand in the way. Plus, statutes that allow for gambling are very specific.

If you’re interested in starting an esports or other type of online betting platform, consult with an attorney first to find out if it’s feasible.

Connect With An Esports Lawyer

The Gordon Law Group consults with esports players, businesses, and sponsors. Our team can assist with contract drafts and negotiations, consultations, and mediations. Have questions about esports betting legalities? We’ll lend a guiding hand with that, too. Get in touch today. Let’s discuss how we can support you.



Contact Gordon Law Group

Submit your information to schedule a confidential consultation

Recommended Reading: