[House Report 106-903]
[From the U.S. Government Publishing Office]
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-903
======================================================================
STUDENT ATHLETE PROTECTION ACT
_______
September 27, 2000.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Hyde, from the Committee on the Judiciary, submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 3575]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 3575) to prohibit high school and college sports
gambling in all States including States where such gambling was
permitted prior to 1991, having considered the same, reports
favorably thereon without amendment and recommends that the
bill do pass.
TABLE OF CONTENTS
Page
Purpose and Summary........................................ 2
Background and Need for the Legislation.................... 2
Hearings................................................... 5
Committee Consideration.................................... 5
Vote of the Committee...................................... 5
Committee Oversight Findings............................... 6
Committee on Government Reform Findings.................... 6
New Budget Authority and Tax Expenditures.................. 6
Congressional Budget Office Cost Estimate.................. 6
Constitutional Authority Statement......................... 7
Section-by-Section Analysis and Discussion................. 7
Changes in Existing Law Made by the Bill, as Reported...... 8
Dissenting Views........................................... 9
Purpose and Summary
H.R. 3575 establishes a ban on gambling on Olympic,
college, and high school athletic events, or gambling on any
individual competing in a collegiate, high school, or Olympic
athletic event. This ban is a response to recommendation 3.7 of
the National Gambling Impact Study Commission's (NGISC) Final
Report, issued in June 1999. Recommendation 3.7 states ``that
the betting on collegiate and amateur athletic events be banned
althogether.'' \1\ Under current law, the Professional and
Amateur Sports Protection Act (PASPA), gambling on these events
is only permitted in Nevada. H.R. 3575 amends PASPA and closes
this loophole.
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\1\ ``Final Report,'' National Gambling Impact Study Commission, p.
3-18 (June, 1999). Hereinafter ``Final Report.''
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Background and Need for the Legislation
On October 28, 1992, President Bush signed into law the
Professional and Amateur Sports Protection Act (PASPA), which
prohibited any expansion of existing State-sanctioned,
authorized or licensed gambling on sports. Horse racing, dog
racing, and jai-alai were excluded from this prohibition. At
that time, a handful of legislatures had already authorized
sports wagering or were deliberating on legislation that would
authorize sports wagering. To accommodate those States, a
grandfather clause with a sunset provision was included in
PASPA. As a result, sanctioned sports gambling on amateur or
Olympic sporting events is limited to one State, Nevada.
In 1996, the National Gambling Impact Study Commission
(NGISC) was established by Public Law 104-169. The NGISC was
charged with conducting a comprehensive legal and factual study
of the social and economic impacts of gambling on (1) Federal,
State, local, and native American tribal governments and (2)
communities and social institutions including individuals,
families, and businesses which comprise them. The NGISC was a
nonpartisan commission, with members appointed by the Speaker,
the Majority Leader, and the President. After hearing testimony
from hundreds of experts and members of the public; making
several site visits; commissioning original research; and
conducting surveys of existing, wide-ranging literature, the
Commission issued a Final Report in June, 1999.
In this report, the NGISC found that ``[t]he popularity of
sports wagering in most States, both legal and illegal, makes
it a regulatory challenge.'' \2\ According to Cedric Dempsey,
Executive Director of the NCAA: ``[E]very campus has student
bookies. We are also seeing an increase in the involvement of
organized crime on sports wagering.'' \3\ According to the
NGISC Final Report, such illegal campus betting is not limited
to dormitory gambling by students, but extends to student
athletes as well. ``A University of Michigan study found that
more than 45 percent of male collegiate football and basketball
athletes admit to betting on sporting events, despite NCAA
regulations prohibiting such activities. More than five percent
of male student athletes provided inside information for
gambling purposes, bet on a game in which they participated, or
accepted money for performing poorly in a game.'' \4\
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\2\ Id. at 3-9.
\3\ Id. at p. 3-10.
\4\ Id.
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Although Nevada has implemented strict rules for sports
gambling, sports books in Nevada have been directly linked to
point shaving scandals, money laundering, and prohibited sports
gambling in other States. Two recent point shaving scandals,
one at Northwestern University \5\ in Chicago, and another at
Arizona State University,\6\ involved heavy betting among
participants in Nevada sports books. In the Northwestern case,
the Nevada sports book activity went completely undetected.
Steve DuCharme, of the Nevada State Gaming Control Board,
estimates that millions of dollars of illegal money is
laundered through Nevada sports books.\7\ While the publication
of point spreads is protected by the first amendment of the
Constitution, the NGISC found that point spreads facilitate
prohibited sports gambling throughout America.\8\
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\5\ Terry Larimer, The Point-Shaving Never Paid Off For Perndergast
Part of His Community Service Takes The Ex-Notre Dame Athlete to
Colleges, The Morning Call, May 15, 1999.
\6\ Don Yaeger, Confessions Of A Point Shaver; Former Arizona State
star Hadake Smith reveals how he and his accomplices fixed basketball
games, Sports Illustrated, Nov. 1998 Vol. 89 No. 19.
\7\ Alan Byrd, State Moves to Counter Money Laundering, Street and
Smith's Sports Business Journal, Feb. 1-7, 1999, at 33.
\8\ ``Final Report,'' at 3-10.
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During the Judiciary Committee's June 13th, 2000 hearing,
officials from Nevada's gaming industry argued there is no
nexus between illegal gambling activity and Nevada's sports
gambling books.\9\ Nevada however, maintains a rule that
prohibits placing bets on teams from Nevada. At this hearing,
Brian Sandoval, Chairman of the Nevada Gaming Commission
testified that this rule was created to ``combat a perception.
. . .'' \10\ In response, Representative Graham (SC) noted, ``.
. . the coaches are telling us, that we do not want to give the
impression that our sports programs are tainted. It is part
about perception, part about reality. Your [the Nevada Gaming
Industry] concern to guard the integrity of the betting process
is our concern to guard the integrity of the game.'' \11\
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\9\ The Student Athlete Protection Act, 2000: Hearings on H.R. 3575
Before the House Comm. on the Judiciary, 106th Cong., 2nd Sess. (June
13th, 2000) (statement of Mr. Frank J. Fahrenkopf, Jr., Pres. and CEO
of the American Gaming Association). Hereinafter ``Hearings on H.R.
3575.''
\10\ Id. (see testimony of Mr. Brian Sandoval, Chairman of the
Nevada Gaming Commission).
\11\ Id. (see hearing transcript).
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Prior to 1974, the volume of sports gambling in Nevada was
much lower than today. Due to a change in the tax code in 1974,
which made sports gambling a profitable business, and the
advent of sports media in the eighties, the popularity of
Nevada's sports books dramatically increased. Although there
are at least 142 sports books in Nevada,\12\ only three tenths
of 1 percent of all gambling revenues generated in Nevada are
attributed to amateur sports gambling. In 1999, Nevada casinos
retained $10.1 billion dollars in revenue, $99 million in
revenues were attributed to sports gambling, and approximately
33% of sports gambling revenues were attributed to amateur
sports gambling.\13\ The NGISC found the benefit of Nevada's
sports gambling books was heavily outweighed by its burden to
society. ``Because sports wagering is illegal in most States,
it does not provide many of the positive impacts of other forms
of gambling. In particular, sports wagering does not contribute
to local economies or produce many jobs. Unlike casinos or
other destination resorts, sports wagering does not create
other economic sectors. However, sports wagering does have
social costs. Sports wagering threatens the integrity of
sports, it puts student athletes in a vulnerable position, it
can serve as gateway behavior for adolescent gamblers, and it
can devastate individuals and careers.'' \14\
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\12\ ``Final Report,'' at 2-14.
\13\ S. Rep. No. 106-278, 106th Cong., 2nd Sess. (2000).
\14\ Id. at 3-10.
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The NGISC provided 22 recommendations on ``Gaming
Regulation'' in Chapter 3 of its Final Report. While these
recommendations concerned all aspects of regulated gaming, two
recommendations are relevant to gambling on collegiate and
amateur sports. The first is recommendation 3.1, which
recommends that State and local governments are best equipped
to regulate gambling within their borders, except for tribal
and internet gambling. The second is recommendation 3.7, which
recommends that betting on collegiate and amateur athletic
events be banned altogether.\15\ While the NGISC's Final Report
was unanimously adopted by all commissioners, recommendation
3.7 was approved by a divided majority--five commissioners were
in favor, three commissioners opposed, and one commissioner
abstained. There appears to be a tension between
recommendations 3.1 and 3.7 in that the former leaves the
regulation of gambling to State and local governments, while
the latter recommends that Federal law ban amateur sports
gambling. Kay C. James, Chairman of the National Gambling
Impact Commission, has submitted a letter clarifying the intent
of the Commission to recommend that all gambling on collegiate
and amateur sports be banned by Federal legislation.\16\
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\15\ Id. at 3-17, 3-18.
\16\ ``Hearings on H.R. 3575,'' (see letter submitted by Ms. Kay C.
James, Chairwoman of the National Gambling Impact Study Commission).
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Pursuant to PASPA, a sports organization whose competitive
game is alleged to be the basis of prohibited sports gambling
or the Attorney General of the United States, may file for an
injunction in a United States District Court to enjoin
prohibited sports gambling activity. While other anti-gambling
statutes found in title 18 of the United States Code may be
utilized to address criminal conduct, these statutes do not
address State sanctioned amateur sports gambling. This act
would end all State sanctioned gambling on amateur sports.\17\
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\17\ Id. (see testimony of Mr. Bobby Siller, Board Member of the
Nevada Gaming Control Board).
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This act is supported by professional sports leagues,
colleges and universities, various coaches associations,
educational associations, pro-family groups, consumer groups,
religious organizations, and is the number one priority of the
NCAA. It is opposed by the Nevada gaming industry and Nevada's
governmental officials. Critics of this act argue that closing
the loophole in PASPA, which allows Nevada to maintain sports
books on amateur athletic events, does nothing to remedy
widespread gambling throughout America. However, according the
NGISC, the reality of regulating gambling in America is a
difficult task.\18\ Rather than attempting to regulate, this
act shuts down a venue that fuels illegal amateur sports
gambling and sends a message that gambling on amateur athletics
is unlawful. In the words of Representative Graham (SC), this
bill ``. . . affects real people in a real way and that we can
ban the betting of a billion dollars on the outcome of games
where teenagers are involved.'' \19\
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\18\ ``Final Report,'' at 3-9.
\19\ ``Hearings on H.R. 3575,'' (hearing transcript).
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Hearings
The full Judiciary Committee held one day of hearings on
H.R. 3575 on June 13th, 2000. Testimony was received from 12
witnesses, representing colleges and universities, the National
Collegiate Athletic Association, collegiate athletic coaches,
the President and Chief Executive officer of the American
Gaming Association, Chairman of the Nevada Gaming Commission, a
board member of the Nevada Gaming Control Board, and members of
Congress. Additional material was submitted by a Nevada
Regeant, Professional Sports Organizations, an expert doctor,
and the committee is in receipt of the National Gambling Impact
Study Commission's Final Report.
Committee Consideration
On September 13th, 2000, the committee met in open session
and ordered favorably reported the bill H.R. 3575 without
amendment by a recorded vote of 19 ayes to 9 nays with 1 voting
present, a quorum being present.
Vote of the Committee
Motion by Mr. Hyde to report the bill favorably. Adopted 19
ayes to 9 nays and 1 voting present.
ROLLCALL NO. 1
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Ayes Nays Present
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Mr. Sensenbrenner............................................... .............. .............. ..............
Mr. McCollum.................................................... .............. .............. ..............
Mr. Gekas....................................................... X .............. ..............
Mr. Coble....................................................... X .............. ..............
Mr. Smith (TX).................................................. X .............. ..............
Mr. Gallegly.................................................... X .............. ..............
Mr. Canady...................................................... X .............. ..............
Mr. Goodlatte................................................... X .............. ..............
Mr. Chabot...................................................... X .............. ..............
Mr. Barr........................................................ X .............. ..............
Mr. Jenkins..................................................... X .............. ..............
Mr. Hutchinson.................................................. X .............. ..............
Mr. Pease....................................................... X .............. ..............
Mr. Cannon...................................................... .............. .............. ..............
Mr. Rogan....................................................... .............. .............. ..............
Mr. Graham...................................................... X .............. ..............
Ms. Bono........................................................ X .............. ..............
Mr. Bachus...................................................... X .............. ..............
Mr. Scarborough................................................. .............. .............. ..............
Mr. Vitter...................................................... X .............. ..............
Mr. Conyers..................................................... .............. X ..............
Mr. Frank....................................................... .............. .............. ..............
Mr. Berman...................................................... .............. X ..............
Mr. Boucher..................................................... .............. .............. ..............
Mr. Nadler...................................................... .............. X ..............
Mr. Scott....................................................... .............. X ..............
Mr. Watt........................................................ .............. X ..............
Ms. Lofgren..................................................... .............. .............. ..............
Ms. Jackson Lee................................................. .............. .............. X
Ms. Waters...................................................... X .............. ..............
Mr. Meehan...................................................... .............. X ..............
Mr. Delahunt.................................................... .............. X ..............
Mr. Wexler...................................................... .............. X ..............
Mr. Rothman..................................................... X .............. ..............
Ms. Baldwin..................................................... X .............. ..............
Mr. Weiner...................................................... .............. X ..............
Mr. Hyde, Chairman.............................................. X .............. ..............
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Total....................................................... 19 9 1
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Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the committee reports that the
findings and recommendations of the committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Committee on Government Reform Findings
No findings or recommendations of the Committee on
Government Reform were received as referred to in clause
3(c)(4) of rule XIII of the Rules of the House of
Representatives.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of House Rule XIII is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the committee sets forth, with
respect to the bill, H.R. 3575, the following estimate and
comparison prepared by the director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
September 21, 2000
H.R. 3575--Student Athlete Protection Act.
CBO estimates that implementing H.R. 3575 would have no
significant effect on the federal budget. The legislation would
not affect direct spending or receipts, so pay-as-you-go
procedures would not apply. H.R. 3575 contains both an
intergovernmental and a private-sector mandate as defined in
the Unfunded Mandates Reform Act (UMRA). CBO estimates that the
costs associated with complying with the mandates would not
exceed the thresholds established by the act ($55 million for
intergovernmental mandates and $109 million for private-sector
mandates in 2000, adjusted annually for inflation).
H.R. 3575 would prohibit government entities from operating
or authorizing gambling schemes based on competitive games or
performances by high school, college, or Olympic athletes.
(Currently, Nevada is the only state that allows betting on
amateur sports.) Violators of the bill's provisions could face
civil actions brought by the Department of Justice or by
certain sports organizations, but we expect very few such
cases. CBO estimates that any added costs to the department or
to the federal courts from pursuing such cases would not be
significant. Any such costs would be paid from appropriated
funds.
CBO estimates that the prohibition on wagering on amateur
sports would reduce revenues collected by the state of Nevada
by approximately $2 million per year. Based on information from
the Nevada Games Control Board, CBO estimates that because of
this prohibition the private sector would lose about $40
million annually in net income (measured as the amount wagered
less the amount paid out).
On May 1, 2000, CBO transmitted a cost estimate for S.
2340, the Amateur Sports Integrity Act, as ordered reported by
the Senate Committee on Commerce, Science, and Transportation
on April 13, 2000. That legislation also banned gambling on
amateur sports but contained many other provisions. The two
cost estimates reflect those differences.
The CBO staff contacts for this estimate are Mark Grabowicz
(for federal costs), Shelley Finlayson (for the state and local
impact), and Paige Piper/Bach (for the private-sector impact).
This estimate was approved by Robert A. Sunshine, Assistant
Director for Budget Analysis.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the committee finds the authority for
this legislation in article I, section 8, of the Constitution.
Section-by-Section Analysis and Discussion
Section 1. Short title
This section provides that this title may be cited as the
``Student Athlete Protection Act.''
Sec. 2. Prohibition on gambling on competitive games involving high
school and college athletes and the Olympics.
Amends Section 3704 of Title 28 U.S.C. Chapter 178, the
``Professional and Amateur Sports Protection Act'' (PASPA).
Section 3704 as amended does the following:
(1) It makes it unlawful for any governmental entity to
sponsor, operate, advertise, promote, license, or otherwise
authorize a lottery, contest, sweepstake, or other betting,
gambling or wagering scheme based, directly or indirectly, on a
competitive game or performance of one or more athletes in a
Summer or Winter Olympic competition, collegiate athletic
competition, or a high school athletic competition.
(2) It makes clear that the prohibition established under
this act applies notwithstanding any other provision of law.
(3) It provides for civil action to enjoin activities
prohibited under the act. The civil action may be brought in
the appropriate Federal district court by the United States
Attorney General, or a local education agency, college, or
sports organization whose competitive game is alleged to be the
basis of the violation.
(4) It defines the following terms used in the section:
``High School'' as having the same meaning as ``secondary
school'' in section 14101 of the Elementary and Secondary
Education Act of 1965 (U.S.C. Sec. 8801) or (ESEA).
``College'' as having the same meaning as institution of
higher education in the ESEA.
(5) While this act neither limits or expands the scope of
activities prohibited by PASPA, it terminates the grandfather
clause in title 28 U.S.C. section 3704 for Summer or Winter
Olympic athletic competitions, and collegiate and high school
athletic competitions. As a result, the use of ``no purchase
necessary'' sweepstakes and related contests for product and
brand-name promotion would not become unlawful or otherwise
prohibited by this act.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
SECTION 3704 OF TITLE 28, UNITED STATES CODE
Sec. 3704. Applicability
(a) [Section] Except as provided in subsection (c), section
3702 shall not apply to--
(1) * * *
* * * * * * *
(c)(1) Section 3702 shall apply to a lottery, sweepstakes
or other betting, gambling, or wagering scheme based, directly
or indirectly, on--
(A)(i) one or more competitive games in which high
school or college athletes participate; or
(ii) one or more performances of high school or
college athletes in competitive games; or
(B) one or more competitive games at the Summer or
Winter Olympics.
(2) In this section--
(A) the term ``high school'' has the meaning given
the term ``secondary school'' in section 14102 of the
Elementary and Secondary Education Act of 1965; and
(B) the term ``college'' has the meaning given the
term ``institution of higher education'' in section 101
of the Higher Education Act of 1965.
Dissenting Views
We do not dispute the Majority's conclusion that illegal
gambling can be seriously detrimental to individuals and to
society at large. In fact, we embrace this point of view. As
set forth below, illegal gambling on amateur sports, in
particular, is a widespread problem that needs to be addressed.
Where we differ from the Majority, however, is on the best way
for the Federal Government to attempt to reduce the problems
associated with illegal sports gambling. Contrary to supporters
of the bill, we see no nexus between legal gambling in Nevada
and illegal gambling nationwide. Thus, we do not believe
prohibiting legal gambling on amateur sports, as proposed by
H.R. 3575, is the solution to the pervasive problem of illegal
gambling. The only real ramification of the bill is to
eliminate the legal sports gambling business in Nevada and the
commensurate benefits to the State's economy.
Instead, we support the approach taken by H.R. 4284, which
Rep. John Conyers, Jr. offered as a substitute at the Judiciary
Committee mark-up. H.R. 4284, sponsored by Rep. Shelley Berkley
of Nevada: (1) seeks to identify the key reasons for illegal
gambling on sports and its impact on children by requiring a
National Institute for Justice study on illegal sports gambling
among minors; (2) creates a Justice Department Amateur Sports
Illegal Gambling Task Force which would be responsible for
enforcing existing Federal laws that prohibit gambling related
to amateur sporting events and contests;\1\ (3) increases
penalties for illegal sports gambling; and (4) expresses the
sense of Congress that, among other things, illegal sports
gambling poses a significant threat to youth on college
campuses and in society in general. Such an approach considers
methods for attacking illegal gambling at its core without
causing tremendous economic harm to the people of Nevada.
Unfortunately, the substitute failed on, predominantly, a
partyline vote. Therefore, for the reasons outlined below, we
dissent.
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\1\ The Task Force would have to report annually to Congress
describing prosecutions commenced and convictions obtained.
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I. Illegal Gambling on Sports is a Pervasive Problem in the United
States.
Gambling on sports, including college sports, certainly is
widespread. We only need to look at the revenue that wagering
on sports generates to recognize its national impact. Last
year, Nevada's sports gambling industry took in $2.3 billion in
legal wagers.\2\ Even more troubling are estimates on illegal
gambling on sporting events, which range from $80 billion to
$380 billion per year.\3\
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\2\ Final Report, National Gambling Impact Study Commission, pp. 2-
14 (June 6, 1999). Casinos retained approximately 77.4 million dollars
in revenue from sports gambling, and 33 percent of this total was based
on collegiate sports gambling. Id. Though Nevada casinos retained 10.1
billion dollars in revenues in 1999, only three-tenths of 1 percent of
this amount is attributed to collegiate sports gambling. Impact of
Gaming-Nevada, Nevada Gaming control Board.
\3\ Final Report, National Gambling Impact Study Commission, pp. 2-
14 (June 6, 1999).
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There is no doubt that the problem of illegal gambling on
amateur sports needs to be addressed. Recent studies have
concluded the following: (a) a Gallup poll found that twice as
many teenagers bet on college sports than do adults and that
most teenagers start betting by the age of ten; (b) research
conducted by the American Academy of Pediatrics concluded that
over one million teenagers in the U.S. are addicted to gambling
and called gambling the ``addiction of the nineties''; and (c)
the Harvard School of Medicine estimates that 6 percent of
teenagers have serious gambling problems.\4\ We recognized the
dangers of gambling on sports back in 1992 when Congress
enacted the Professional and Amateur Sports Protection Act
(``PASPA''),\5\ which prohibited gambling on sports throughout
the United States, except for certain grandfathered States.\6\
For practical purposes, Nevada is the only State that currently
permits legal sports gambling. Nevada was specifically exempted
because of its special reliance on legal gambling.
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\4\ See Hearing on H.R. 3575 Before the House Comm. on the
Judiciary, 106th Cong. (2000) (statement of Dr. Graham Spanier,
President, Pennsylvania State University (June 13, 2000).
\5\ Professional and Amateur Sports Protection Act, P.L. 102-559
(1992).
\6\ The grandfathered States were Delaware, Montana, Oregon and
Nevada; however, Oregon and Nevada are the only States that offer
sports gambling. Sports gambling in Oregon is limited to a game called
``Sports Action'' that allows wagering on the outcome of professional
football games. Nevada, on the other hand, has 142 licensed sports
books for gambling on professional, collegiate, Olympic, and other
amateur sports. Nevada prohibits gambling on teams in-State.
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We agree that illegal gambling on sports, particularly
among college students, is a very serious national problem.
But, while we are adamantly in favor of a strong, effective
bill to combat illegal sports betting, we are unconvinced that
H.R. 3575, which eliminates legal sports gambling on amateur
sports in the State of Nevada, is the appropriate legislation
to achieve this goal. H.R. 3575 would not have a material
impact on the pervasive problem of illegal sports betting; it
would needlessly penalize Nevada's legal sports books and their
employees; and finally, it would impinge on State prerogatives
to regulate gaming. We believe the solution is not a matter of
enacting more laws to prohibit illegal gambling or banning the
small amount of regulated wagering that takes place in Nevada.
Rather, we need to properly enforce existing laws and ensure
that penalties are adequate to deter violations.
II. Federally banning legal gambling will not have a material impact on
illegal gambling, will damage Nevada's economy and will impinge
on States' rights.
A. H.R. 3575 would not materially impact illegal gambling.
Thus far, we have not seen evidence demonstrating that H.R.
3575 would have any material impact on the problem of illegal
sports gambling. Proponents of the legislation argue that point
spreads on college games that originate in Nevada, and are
published nationwide, facilitate illegal gambling; however, it
is unclear that the elimination of Nevada's sports books would
prevent newspapers from publishing such point spreads. This is
a matter that individual newspapers, themselves, control. John
F. Strum, President and CEO of the Newspaper Association of
America (``NAA''), emphasized this point in a recent letter to
the House Judiciary Committee: ``If Congress prohibits gambling
on college sports, NAA believes newspapers will continue to
have an interest in publishing point spreads on college games,
since point spreads appear to be useful, if not valuable, to
newspaper readers who have no intention of betting on games.''
\7\
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\7\ See Letter from John F. Strum, President and CEO, Newspaper
Association of America, to Reps. Henry Hyde and John Conyers, Jr. (June
7, 2000) (on file with the Minority Staff of the House Judiciary
Committee).
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Furthermore, point spreads originate from inside and
outside of Nevada. According to a letter from Frank Fahrenkopf,
Jr., President of the American Gaming Association, ``Nevada's
casino sports books are typically not the initial sources of
betting lines used in Nevada, much less elsewhere, and are
certainly not the only sources of this information. There are
numerous betting lines published in newspapers and over the
Internet that would continue to be available if our sports
books did not exist.'' \8\ Thus, because point spreads also
originate outside of Nevada, prohibiting legal sports betting
in Nevada is unlikely to prevent illegal sports betting
nationwide.
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\8\ See Letter from Frank J. Fahrenkopf, Jr., President and CEO,
American Gaming Association, to Cedric Dempsey, President, NCAA
(October 22, 1999) (on file with the Minority Staff of the House
Judiciary Committee).
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B. H.R. 3575 would needlessly inflict negative economic
effects on Nevada's economy.
While sports books revenue is a small percentage of total
gaming revenue in Nevada, the importance of legal sports
wagering to Nevada's tourism industry and the jobs that are
dependent must not be understated. Demonstrating the impact
that legal sports betting has on Nevada's economy, at the June
13, 2000 hearing on this legislation, Frank J. Fahrenkopf, Jr.
testified:
[T]his past January an estimated 250,000 visitors came
to Las Vegas for Super Bowl Weekend when the hotel
occupancy rate was essentially 100 percent. The Las
Vegas Convention & Visitors Authority estimated that
the non-gaming economic impact of these visitors was
$80 million over that single weekend. A similar
positive economic impact occurs during the NCAA men's
basketball tournament and during football season. The
jobs generated are not only those in the sports books,
but extend throughout each of the hotel-casino-resort
complexes to maids, valet parking attendants, food and
beverage servers, and casino floor personnel. This job
creation also includes those employed by the airlines,
rental car agencies and taxi services that transport
visitors. These jobs, as well as Federal, State, and
local tax levies, help generate billions of dollars in
government revenues.\9\
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\9\ See Hearing on H.R. 3575 Before the House Comm. on the
Judiciary, 106th Cong. (2000) (statement of Frank J. Fahrenkopf, Jr.,
President and CEO, American Gaming Association).
Nevada Governor Kenny C. Guinn echoed these concerns in a
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letter to the Judiciary Committee:
Nevada's publicly-regulated sports books generate
annual State revenues of $6.5 million at a time when,
unlike other States, the tremendous population growth
in Nevada has resulted in a challenging fiscal future
for our State. The economic impact is greater than the
direct numbers indicate because publicly-regulated
sports wagering is one of the activities that draws
visitors to Nevada, particularly at key times of the
year. The negative economic impact on the State's
private sector will be even greater than the impact on
State government because of the investments Nevada
companies have made in state-of-the-art sports book
facilities.\10\
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\10\ See Letter from Kenny C. Guinn, Governor of Nevada, to
Chairman Henry Hyde (June 1, 2000) (on file with the Minority Staff of
the House Judiciary Committee).
In order to justify the apparently significant impact that
H.R. 3575 would have on Nevada's economy, Congress should
carefully examine whether eliminating legal sports betting in
Nevada will address the pervasive problem of illegal gambling
nationwide. At this time, it does not appear that the burden
has been met. As evidenced by information given to the
committee by interested parties, located within the State of
Nevada, there are far too many livelihoods at stake for
Congress to pass legislation as a ``symbolic act'' rather than
as a true solution to the serious problem of illegal gambling.
C. H.R. 3575 raises significant federalism concerns.
Finally, Congress recognized the importance of sports
wagering to the State of Nevada and its economy when PASPA was
enacted in 1992. To this end, Congress included a grandfather
clause to exempt all States, including Nevada, with pre-
existing statutes in order to protect legitimate economic
interests and State authority over gambling. The preservation
of previously enacted State statutes is consistent with the
fact that States, not the Federal Government, have determined
what gambling, if any, should be permitted within their
borders.
We are further concerned that H.R. 3575 may run afoul of
the constitutional requirement under the Commerce Clause,\11\
which limits congressional authority to the regulation of
interstate commerce and under the 10th amendment, which
reserves all of the unenumerated powers to the States.\12\ This
is a particular concern in light of the recent Supreme Court
decisions such as United States v. Morrison (declaring
unconstitutional the Federal civil legal remedy for gender-
motivated crimes of violence, enacted as part of the Violence
Against Women Act of 1994),\13\ Lopez v. United States
(striking down a Federal gun-free school zone law which had no
interstate commerce requirement),\14\ and New York v. United
States \15\ and Printz v. United States \16\ in which the Court
showed extreme scepticism regarding Congress' ability to
dictate State legal policies.
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\11\ Article I, section 8 of the Constitution provides, inter alia,
``Congress shall have Power . . . To regulate Commerce with foreign
Nations and among the several States. . . .'' U.S. Const. art I,
Sec. 8, cl. 3.
\12\ The 10th amendment provides ``[t]he powers not delegated to
the United States by the Constitution, nor prohibited by it to the
States, are reserved to the States respectively, or to the people.''
U.S. Const. amend X.
\13\ 529 U.S.____(2000).
\14\ 514 U.S. 549 (1995). In Lopez, one of the problems with the
school gun ban was that it contained ``no express jurisdictional
element which might limit its reach to a discrete set of firearms
possessions that additionally have an explicit connection with or
effect on interstate commerce.'' When Congress acted in 1996 to remedy
the constitutional infirmity in the school gun ban invalidated by
Lopez, it limited the law to firearms that have ``moved in or that
otherwise [affect] interstate or foreign commerce.'' 18 U.S.C.A.
Sec. 922(q)(2)(A) (1994) (amended 1996). See also, Employers Liability
Cases, 207 U.S. 463 (1907) (striking down Federal tort law concerning
common carriers which preempted State tort law on interstate commerce
grounds); T.R. Goldman, Lopez Gives Tort Reform a New Weapon, Legal
Times, May 8, 1995, Tort Reform Notebook, at 2 (quoting Harvard Law
School Professor Laurence Tribe for the proposition that ``Lopez is a
reminder that the commerce clause is not a blank check. As such, it
will operate to at least raise significant questions about some of the
elements of proposed tort reforms pending in Congress'').
\15\ 505 U.S. 144 (1992) (invalidating a Federal law requiring
States to assume ownership of radioactive waste or accept legal
liability for damages caused by the waste because it was found to
``commandeer the legislative processes of the States'').
\16\ 521 U.S. 898; 117 S.Ct. 2365; 138 L.Ed. 2d 914; 65 U.S.L.W.
4731 (U.S. June 27, 1997) (invalidating portions of the Brady Act
requiring local law enforcement officials to conduct background checks
on prospective gun purchasers).
John Conyers, Jr.
Howard L. Berman.
Robert C. Scott.
Melvin L. Watt.
Sheila Jackson Lee.
William D. Delahunt.
Anthony D. Weiner.