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  • InsideTrack
  • February 02, 2022

    Tribal Compact Amendments Bring Sports Betting to Wisconsin

    The amendments begin a new chapter in the history of legalized gambling in the Badger State.

    Jeff M. Brown

    football money

    Feb. 2, 2022 – Before the Cincinnati Bengals and the Los Angeles Rams face off in Super Bowl LVI on Feb. 13, betters will wager about $160 million on the game. For the first time in Super Bowl history, some of the bets will be legally placed from inside Wisconsin.

    Sports betting is or will soon be allowed at casinos operated by the Oneida Nation in Green Bay and the St. Croix Chippewa Indians of Wisconsin in Turtle Lake.

    The change came when Governor Tony Evers and tribal officials signed amendments to gaming compacts executed between the state and the tribes.

    Compacts Part of Federal Regime

    Under the Indian Gaming Regulatory Act of 1988 (IGRA), tribes may offer games like slot machines, craps, poker, and blackjack only if they enter in a compact with the state in which they seek to offer the games.

    Jeff M. Brown Jeff M. Brown is a legal writer for the State Bar of Wisconsin, Madison. He can be reached by email or by phone at (608) 250-6126.

    States may not levy taxes on the revenues that tribes realize from gaming. However, under the compacts the tribes must agree to send some of the revenue to the state. The compacts must be approved by the U.S. Secretary of the Interior.

    Under U.S. Supreme Court decisions, a tribe may not offer games that are prohibited under state law (but may offer games that are not prohibited, regardless of other limits on gambling), and may not force a state to enter into a compact.

    The state of Wisconsin has long had compacts with each of the 11 federally-recognized tribes, which operate 22 casinos across the state. 

    Evers and Oneida officials signed a compact amendment in July 2021. The tribe’s sports book opened four months later.

    Evers and St. Croix Chippewa officials signed a compact amendment on December 20, 2021. The amendment is subject to a 45-day review by the federal Bureau of Indian Affairs, a division of the Department of the Interior. According to media reports, the tribe has begun work on adding a sports book to its casino in Turtle Lake.

    Dominic Ortiz, CEO/General Manager of the Potawatomi Hotel and Casino in Milwaukee, told WTM 620 earlier this month that the casino was “running 110%” toward offering sports betting too.

    Under the terms of the compacts, the tribes may offer betting on professional sporting events (including games and drafts) and other events, such as national televised award shows. Bets on college sports, elections, and any event featuring persons 18 years or younger are not allowed.

    With the signing of the compacts, Wisconsin joins Washington, D.C. and 31 states that have legalized sports betting in the last four years. In 18 of those states, online betting is legal. Under the terms of the compacts, however, sports betting in Wisconsin is limited to on-site or “retail” betting.

    Congress Bans Sports Betting

    The stampede by states to legalize sports betting was sparked by the U.S. Supreme Court’s 2018 decision Murphy v. NCAA. In that case, the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA).

    Enacted in 1992, PASPA outlawed gambling on sports.

    The act was inspired by then-U.S. Senator Bill Bradley, a former NBA player who believed that gambling on sports both set a bad example for young athletes and gave bookies an opening to influence games. PASPA became law with the support of all four major sports leagues.

    Four states were exempt from the act’s ban – Delaware, Montana, Nevada, and Oregon. State lotteries in Delaware, Montana, and Oregon each allowed gambling on sports prior to 1992, and Nevada had long before legalized gambling on sports.

    Additionally, PASPA provided an exception for any state that legalized sports betting within one year of Jan. 1, 1993, the act’s effective date (the act also exempted jai alai and pari-mutuel dog and horse racing).

    The one-year exemption was created to give New Jersey, home to Atlantic City’s casinos, a chance to legalize sports betting. But the Garden State failed to do so.

    Legalizing sports betting required an amendment to the New Jersey constitution. A bill to send a constitutional amendment to voters passed the state Senate but died in an Assembly committee whose chairman opposed sports betting.

    SCOTUS Throws Out Ban

    New Jersey’s failure to take advantage of PASPA’s one-year exemption sowed the seeds of the law’s demise.

    Unable to set themselves apart by offering sports betting, Atlantic City casinos lost millions as casinos opened in neighboring states. New Jersey legalized sports betting in 2011 but the professional sports leagues and the NCAA sued the state and won in federal court.

    The state tweaked the law in 2014, and the leagues and the NCAA sued again. This time, the state won.

    In Murphy v. NCAA, the Supreme Court held by a 6-3 vote that PASPA violated the Tenth Amendment because it commandeered from the states the power to regulate their gambling industries.

    In an opinion written by Justice Samuel Alito, the Court held that the fact Congress took action instead of requiring states to take action was a false distinction – the commandeering doctrine prohibits Congress from giving direct orders to state legislatures, whether the orders are affirmative or negative.

    The Supremacy Clause couldn’t save the act, Alito reasoned, because the U.S. Constitution authorizes Congress to regulate individuals, not states.

    And They’re Off!

    West Virginia legalized sports betting in 2018, even before the Murphy v. NCAA decision was handed down (the bill became law after the governor declined to sign it and said he would call the legislature into special session depending on the Supreme Court’s decision).

    Delaware was the first state to offer single-game wagers (as opposed to multi-game parlay wagers) other than Nevada, beginning in June 2018.

    New Jersey and Rhode Island followed suit later in June 2018, and the race was on. Closer to home, Iowa, Illinois, and Indiana legalized sports betting in 2019. Michigan joined the club in 2020.

    According to research conducted by Morning Consult, the number of Americans over the age of 21 who bet on sports at least once a month jumped 80% between January and December 2021.

    Advocates claim that increased tax revenues are one reason states should legalize sports betting.

    According to the National Conference of State Legislatures (NCSL), “sports betting is a relatively low-margin venture compared to other types of gaming.” For instance, in New Jersey, the state with the largest sports betting market, the revenue raised from the lottery was more than 20 times greater than the revenue raised by taxing sports betting.

    The biggest increases in state revenue from taxes on sport betting have come in the states that allow mobile betting, the NCSL said.

    In New Jersey, which in 2020 raised $49.4 million in tax revenue on sports betting, 95% of sports bets were mobile bets. In Pennsylvania, which raised $38.7 million in tax revenue on sports betting in 2020, about 75% of sports bets were mobile bets.

    History of Gambling in Wisconsin

    A tour of the history of sports betting in Wisconsin involves a trip through a tangle of constitutional amendments and state and federal court decisions.

    That history begins in 1848 with the adoption of Article IV, section 24 of the Wisconsin Constitution, which prohibited the state from authorizing “any lottery.”

    Over the decades, Wisconsin attorneys general interpreted the provision as prohibiting any form of gambling with elements of chance, prize, or consideration.

    Voters amended the provision over the years, to authorize the legislature to allow certain promotional contests (1965) and to allow charitable bingo (1973) and charitable raffles (1977).

    In 1987, voters amended the provision to allow for the creation of a state-run lottery. That amendment, plus the enactment of IGRA in 1988, paved the way for gaming at American Indian facilities across Wisconsin.

    In 1991, Governor Tommy Thompson refused to negotiate with tribes over casino-type games. But in a decision issued later that year, a federal district court judge ruled that because Wisconsin law didn’t prohibit all forms of gambling, gambling was allowed on American Indian lands.

    Governor Thompson signed gaming compacts with all 11 Wisconsin tribes in 1992. Those compacts allowed the tribes to offer casino-style games, including slot machines and blackjack.

    Voters amended Article IV, section 24 again in 1993, to prohibit casino-type games – including “any game in which winners are selected based on the results of a race or a sporting event.”

    In 2003, Governor Jim Doyle agreed to compact amendments with several tribes. The amendments expanded the number of casino-style games the tribes could offer.

    The owners of a greyhound racetrack sued the governor, claiming that the 1993 constitutional amendment barred the state from allowing tribes to offer casino-style games.

    The Wisconsin Supreme Court disagreed. In a 2006 decision, the supreme court held that the contracts clauses of both the federal and state constitutions insulated the 1992 state-tribal compacts from the ban enacted in the 1993 constitutional amendment.

    Rise in Revenues

    In 2020, revenue from sports betting jumped 69% to $1.5 billion, according to the American Gaming Association. At the end of the first quarter of 2021, revenue from sports betting was up 270% from the year before.

    According to a study released by the National Council on Problem Gambling (NCPG) in September 2021, the number of sports bettors in America grew by 30% in an 18-month period.

    The NCPG says that nonprofits that help problem gamblers continue to struggle for funds. And some states that legalized sports betting have allocated no additional money to treat gambling addiction.

    That includes Delaware, which according to the NCPG in 2016 led the nation in gambling addiction funding per capita at $1.46. Wisconsin was ranked 30th​ out of the 40 states with budget line items for problem gambling services.

    In 2019, the Wisconsin Lottery committed to spending $3.4 million on education about responsible gambling.

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