The SAFE Bet Act
Last month, U.S. Representative Paul Tonko (D-N.Y. 20th District) introduced the Supporting Affordability and Fairness with Every Bet Act (“SAFE Bet Act”). If passed, the SAFE Bet Act would establish a general nationwide prohibition on sports betting, with an exception for states that have been approved by the U.S. Attorney General to operate a sports betting program. State applicants seeking approval must include detailed attestations to show how the state has met the minimum federal standards in three categories: advertising, affordability, and artificial intelligence. Further, under the law, approved state sports betting regulatory programs must:
- Establish a regulatory entity for the purpose of regulating state operators and laws;
- Restrict in-person sports betting only to designated operators;
- Restrict betting to in-state individuals, or those covered by interstate compacts;
- Implement location verification requirements;
- Prohibit proposition bets on amateur or intercollegiate sports; and
- Provide other consumer protection measures.
In sum, under the SAFE Bet Act, states would still regulate and oversee sports betting within their borders, but can only do so if they meet the minimum federal standards and have been approved by the federal government.
The SAFE Bet Act follows in a long line of proposed or enacted federal legislation regulating sports betting, but it may suffer the same constitutional infirmities as at least one of its predecessors.
The Anti-Commandeering Doctrine
The Constitution’s Supremacy Clause provides that federal law can preempt state regulation of a particular activity in whole or in part when Congress is acting pursuant to its enumerated powers, and federal law can also permissibly condition a state’s ability to regulate an activity upon conformity with federal standards.
The Supreme Court, however, has recognized a limit on the federal government’s preemption power: under the “anti-commandeering” doctrine, Congress cannot directly compel states to perform regulatory functions on the federal government’s behalf. The Supreme Court has explained that although the Constitution grants Congress broad power “to pass laws requiring or prohibiting certain acts” by private actors, the federal government may not “directly . . . compel the States to require or prohibit those acts.”
The Anti-Commandeering Doctrine and Previous Federal Sports Wagering Legislation: Murphy v. NCAA
The Professional and Amateur Sports Protection Act of 1992 (“PASPA”) made it illegal for states to “authorize . . . a lottery, sweepstakes, or other betting, gambling, or wagering scheme based . . . on one or more competitive games in which amateur or professional athletes participate.” New Jersey challenged the constitutionality of that law in Murphy v. NCAA (“Murphy”). In 2018, the Supreme Court held in Murphy that PASPA was unconstitutional under the anti-commandeering doctrine.
The Murphy Court explained that laws regulating both state governments and private actors do not threaten state sovereignty because they involve only “evenhanded regulat[ion] of an activity in which both States and private actors engage” and not “States’ sovereign authority to regulate their own citizens.” Similarly, the Court concluded that “cooperative federalism” schemes do not threaten state sovereignty because they allow, but do not require states to implement a federal regulatory program. Rather, if a state does not seek to take an action prescribed by a “cooperative federalism” regime, the “full regulatory burden would be borne by the Federal Government.”
The Murphy Court held that because PASPA’s “anti-authorization” provision was not a regulation “of an activity in which both States and private actors engage” and instead required states to abide by its commands, this provision was unconstitutional. Specifically, PASPA’s anti-authorization provision impermissibly “dictate[d] what a state legislature may and may not do,” and accordingly placed state legislatures “under the direct control of Congress.”
Finally, the Murphy Court held that Congress may preempt state law only when it is legislating pursuant to an enumerated power. Because Congress’s enumerated powers do not include a power to compel states to adopt federal regulatory programs, the Court explained, PASPA’s “anti-authorization” provision did not represent a valid instance of federal preemption.
Conclusion
If passed, the SAFE Bet Act would mandate state participation in a federal approval program before a state could legalize and regulate sports betting within its borders. Applying the Supreme Court’s view of the anti-commandeering doctrine to the SAFE Bet Act becomes a question of whether the law sets minimum standards to facilitate “cooperative federalism” to regulate private conduct or whether it imposes “targeted, affirmative, coercive duties” on state regulators. Previous court decisions have called into question Congress’s ability to regulate sports wagering, and this new law is no exception. It remains to be seen whether this law will proceed, but if it does, it is very likely to face constitutional scrutiny.
