As we’ve highlighted here, the legalization of sports wagering is happening state by state. So far, it is all intrastate wagering. Bettors must physically be in the legalized state to place a wager. However, how long until we’re able to wager across state lines between consenting states? It may be coming, but probably not as soon as you’d like.
The Wire Act of 1961
The biggest hurdle to interstate betting is The Wire Act. It was passed during the Kennedy administration in 1961. The law sought to crack down on organized crime by prohibiting the transfer of illegal gambling information across state lines via any form of modern communication. This includes the Internet despite the law predating the commercial Internet by several decades.
However, the law includes a “safe harbor” provision. This allows for the communication of wagering information across state lines if it’s sent and received by states which have legal gaming jurisdictions. As an example, William Hill has provided risk management for Delaware’s sports betting for the past nine years. They maintain a staff in Nevada which approves or declines bets placed at Delaware sports books. Since Delaware and Nevada both have legal sports wagering, it’s perfectly legal. There is some debate among gaming legal experts as to if that Wire Act safe harbor provision permits only the transmission of information related to a bet or the bet itself.
The Applications of Interstate Wagering
Currently, as states begin to regulate sports wagering there has been little mention of permitting interstate wagering. Most legalized states allow for liquidity sharing between consenting states if individual compacts can be reached. For instance, Nevada, Delaware, and New Jersey currently share liquidity pools for online poker. Players from those three states sit at the same virtual table.
This concept has an interesting application to sports wagering, though. Namely, in the form of handicapping contests. Over the years, football handicapping contests have become very popular around Las Vegas. They’re a great way for casinos to encourage weekly visits. They also appeal to both recreational and professional sports bettors. Professional sports bettors love these contests because they can often apply tournament strategies as they face off with the public. Recreational bettors love them because they get a lot of play for a fixed entry price.
Supersized SuperContest?
The biggest and most well-known handicapping contest in Las Vegas is the SuperContest at Westgate’s world famous SuperBook. Prognosticators of all skill levels pony up $1,500 for a chance to finish in the money. The tournament now boasts a top prize of over $1 million. This year they’re expecting between 3,500 and 4,000 entrants.
Plans are underway to expand the SuperBook brand across state lines as legalization spreads. It’s very possible that the size of the SuperContest grows exponentially from here. It’s very possible that a SuperContest consisting of four or five states next year could create a prize pool big enough to rival the World Series of Poker’s Main Event. A $10 million first prize is certainly within the realm of possibility. Something like that will get a lot of broad media attention. Other sports-related contests could benefit greatly from larger liquidity pools. Survivor contests, College Bowl contests, or even March Madness brackets.
When Will This Happen?
As I mentioned, handicapping contests are a good way for a casino to generate repeat traffic. Currently, generating traffic hasn’t been a concern of any of the new sports books that have opened. New Jersey sports books are averaging $1 million in handle per day collectively during the slowest sports month of the year. Mississippi books are reporting lines of bettors anxious to bet on college football. Casinos don’t need to explore handicapping contests this year. Next year, expect to see the first multi-state football handicapping contest. In fact, I’ll be disappointed if the end of the 2019 season doesn’t produce a multi-millionaire via a handicapping contest. It could be the “Moneymaker Effect” that everyone has been looking for when it comes to the potential explosion of sports wagering popularity.
Never miss another post