Supreme Court strikes down ban on sports betting – what about esports?

Earlier this month, the Supreme Court ruled to overturn the Professional and Amateur Sports Protection Act (PASPA) which has effectively banned sports betting for the last 25 years.

PASPA did not ban sports betting directly. Instead, it prohibited the 49 states with bans or limitations from modifying or repealing them. This distinction was PASPA’s downfall. The Supreme Court decided that PASPA violated the Tenth Amendment by “commandeering” the states’ lawmaking authority. Congress can regulate sports betting directly, even ban it, but it cannot tell states how to regulate.

With PASPA overturned, many states are expected to legalize sports betting in the next year or two. Illegal sports betting is a potential $150 billion market, and legalization lets states take a cut with taxes.

Esports are not immune to the betting obsession. An estimated $5 billion was illegally wagered on Counter-Strike: Global Offensive (CSGO) matches in 2016 through skin betting. With the explosive growth and popularity of competitive multiplayer games like Fortnite, League of Legends, and PlayerUnkown’s Battlegrounds, and the recent formation of esports leagues, esports betting could be a multi-billion dollar industry—and a tool to drive fan engagement.

Esports are also not immune to betting’s problems, primarily the threat to competitive integrity. In 2015, 21 players were caught participating in match-fixing in CSGO. Earlier this year, a professional StarCraft player was even arrested for throwing a match for nearly $5 million. Some traditional sports have considered a 1% “integrity fee” on bets to fund combatting this type of behavior.

Another hurdle exists for sports betting—The Wire Act. Generally, the Wire Act prohibits anyone in the betting or wagering business from using a wire communication, like the internet, to transmit those bets or wagers across state lines. Most online sports betting operations would meet this definition. Further, some question if pending legislation to legalize sports betting would include esports without more intentional language.

Though the Supreme Court’s answer raises many more questions, the big question of legal sports and esports betting seems to have shifted from “if” to “when?”