Smarkets CEO Jason Trost Invests $5 Million in US Sports Betting
Jason Trost, the CEO of British online bookmaker, Smarkets Ltd., said he is investing $5 million in an online sportsbook which could launch in the United States. Bloomberg News characterized Trost’s investment as a “bet” on the possible legalization of sports betting in the United States.
In a phone interview with Bloomberg from his home in Los Angeles, Jason Trost said the website he’s building is designed for US online sports bettors. Trost said, “The main reason we’re building this is to go into the U.S.”
Trost says the US online sports betting market could be worth $10 billion to $20 billion a year, if full liberalization of sports betting happened.
Mr. Trost said, “There’s a huge opportunity in terms of people wanting the best prices, but not wanting to go to the exchanges.”
PASPA Court Review
Gaming fans are aware by now that the U.S. Supreme Court currently is reviewing the Professional and Amateur Sports Protection Act of 1992 (PAPSA) at the moment. The sports betting is called Christie v. NCAA by the SCOTUS, which heard oral arguments on December 4, 2017. A decision is expected sometime in the first half of 2018.
If the Supreme Court rules in New Jersey’s (Christie’s) favor, then it would strike down a ban on sports betting in 46 US states. That would end Nevada’s 25-year monopoly on land-based sportsbooks in the United States. While three states — Delaware, Montana, and Oregon — have sports lotteries, only 1 US state has legal sportsbooks. Of course, the other US states think that’s unfair — and the original reasoning behind a 49-state ban no longer makes sense.
Smartphone Sports Betting
Those arguments centered on the American public’s concerns about the integrity of sporting events’ outcomes. In an age when smartphones let anyone wager on sports, a ban on land-based bookmaker bets no longer seems to have force.
Some argue the purity of the games require fans to avoid sports betting. In a time when fantasy sports, daily fantasy sports, and live/in-play betting on smartphones is rampant, arguing for the purity of the game no longer seems feasible, either.
Illegal Online Bookmaker Sites
There is one huge hole in Jason Trost‘s reasoning, though. Even if the Supreme Court overturns PASPA and legalizes brick-and-mortar sportsbooks at the federal level, that does not legalize online sports betting. Two laws, the 1961 Wire Act and the 2006 UIGEA, still ban sports gambling over the Internet.
The 1961 Wire Act made it illegal to place sports betting over telephone lines, at least when they are made across state lines. The 2006 UIGEA makes any form of gambling illegal over the Internet, if the same form of gambling was illegal under the Wire Act. People can argue whether online casinos and poker sites are illegal under UIGEA (and they have), but everyone agrees that sports betting is illegal under the Wire Act and UIGEA.
US Online Sports Betting
Thus, if PASPA was struck down tomorrow, online and mobile sports betting would remain illegal in all 50 states in the United States. The UIGEA would have to be repealed, or at least the policy which makes sports betting illegal.
US Attorney General Jeff Sessions is not going to set a new policy on sports betting. Sessions said at his Senate nomination hearings he was “shocked” to hear Eric Holder’s Department of Justice’s opinion that online casinos and card rooms were legal under the UIGEA. It is far more likely that Sessions would reverse the 2011 DOJ opinion on Internet casinos and poker sites. The legal justification for ruling different on sports betting is nonexistent, anyway.
In the best scenario, a repeal of UIGEA is years away. Jason Trost’s $5 million bet on legal US online sportsbooks is not likely to pay off. Hopefully, the Smarkets CEO’s website can be focused on international online bookmaking.