How to Start Your Own Sports Betting Facility
Wait for the states to pass legislation, then call a lawyer
on September 6, 2018
Updated on February 8, 2021
A United States Supreme Court case decided in May 2018 held that prohibiting sports betting at the federal level was unconstitutional based on the “anticommandeering” rule of the Constitution. This means any power not given to the federal government belongs to the states. Since the case in question regarded a federal law that banned commercial sports betting, this means there is no longer a federal prohibition on sports betting.
That does not, however, mean sports books will be opening at every gas station and street corner any time soon. Gaming attorney Stephen Warren Solomon says that sports gaming is, “in a never-never land right now. Lots of large economic speculation dollars are being moved around, but the legislatures have not acted yet, especially in California.”
Until the state legislatures make moves on legalizing, regulating and controlling sports betting, it will remain in the shadows and in Vegas.
In California, there are tremendous competing interests between the brick-and-mortar operations and the internet operations. “The one area that has seemed to allow off-site betting is horse racing,” Solomon says, adding that you can bet online in 37 states. “Each track makes deals with internet providers and the state, and there is even a television station that allows betting on horses as well.”
But whether you can bet on peak games like the Super Bowl or World Series remains up to the state. “And there aren’t any gaming laws coming out of California,” Solomon says. “The integrity of all the games is in question. Who is going to regulate it, how are they going to regulate it, who is putting up the odds, how much tax is going to be required to be allowed under state law?”
And, consequently: Where are those taxes going to be allocated? Most states and local cities will use the money to fund their local governments and to further infrastructure. “Some will go to regulation, but most of it will go to filling potholes and making sure their bridges and buildings don’t fall down,” says Solomon. Gaming taxes are a huge lift to any state or local government that allows it in their jurisdiction.
In California, American Indian tribes hold the exclusive rights to slot machines, by constitutional amendment. “These 60-plus casinos in California pay for the tribal members and benefits, but also boosts the economy through jobs and the economic inflow involved in gaming,” Solomon says. “Conversely, in states like Massachusetts, they have been attempting to get Indian gaming going for decades and are crawling along with little-to-no movement toward approval and they are really missing out on the income that comes with it.”
If a certain type of gambling is illegal in a state and you are placing bets from a state where it’s legal, that’s an illegal bet. You are just as guilty if you’re placing the bet or taking the bet. Consumers should worry in an unregulated area if a bet will actually be paid out, and who is setting the odds, and what guarantees they have that it’s not tampered with. If you have any question on the bet, it’s probably best not to make it.
If you are itching to open your own sports betting facility with this new law or to cater to the groundswell of fantasy fans out there by taking a bet or two, Solomon warns, “There are federal laws that prohibit a lot and state laws that prohibit a lot, so it’s a massive web of difficult regulations to pass through in order to run a gaming business of any kind.” You definitely want to speak with an experienced and reputable gaming attorney before you start your venture.
For more information on this area, see our business organizations overview.