A Primer on the Prohibition on Sports Betting under Nebraska Law and Recent Developments in Other States’ Laws.

Introduction 

            In 2018, the United States Supreme Court decided Murphy v. NCAA.[1]  In its decision, the Supreme Court held that the federal prohibition on sports betting contained in the Professional and Amateur Sports Protection Act (PASPA) was unconstitutional.[2]  The Supreme Court’s decision essentially now makes each state responsible for regulating sports betting at the state level.  In this article, we will summarize the current Nebraska laws prohibiting sports betting, the legislative steps required to change these laws, and initiatives taken by other states to legalize sports betting.

Nebraska Law  

            As the court in Murphy notes, “Americans have never been of one mind about gambling, and attitudes have swung back and forth.  By the end of the 19th century, gambling was largely banned throughout the country, but beginning in the 1920s and 1930s, laws prohibiting gambling were gradually loosened.”[3]  In the 1930s and 1940s, many states amended their laws to permit pari-mutuel betting on horse racing due to public popularity of racing.[4]  Various amendments and court decisions to allow bingo games followed in the 1950s.[5]  Finally, in the 1970s, state lotteries began to emerge and increased in popularity throughout the 1990s.[6]     

            Nebraska’s legislative history follows these general trends.  The original language of the Nebraska Constitution in 1875 provided that the legislature “shall not authorize any games of chance, lottery, or gift enterprise, under any pretense, or for any purpose whatever.”[7]  Today, Article III, Section 24 of the Nebraska Constitution still prevents gambling not expressly authorized by amendments to the constitution.  Typically, once exceptions to the broad prohibition are made by constitutional amendment, the Nebraska legislature then enacts law allowing and regulating the authorized types of gambling.        

Constitutional Amendments 

            In 1934 the Nebraska Constitution was amended to permit the legislature to enact laws for the licensing and regulation of pari-mutuel wagering on horse races.[8]   The 1934 amendment was passed after the Nebraska Supreme Court decided, State v. Ak-Sar-Ben Exposition Co., in 1929 holding that “pari-mutuel betting on horse races contained the elements of prize, consideration, and chance, and therefore, constituted a lottery” and was prohibited by the Constitution.[9]  The Court’s broad definition of “lottery” encompassed virtually all gambling.  After the decision, the Knights of AK-SAR-BEN, who had been hosting races since 1921 to raise money for charitable purposes, campaigned to amend the Nebraska Constitution after the ruling and voters approved a constitutional change that would allow legislators to permit and regulate horse racing.[10]  

            In 1958, the Constitution was amended again to allow the legislature to enact laws for the licensing and regulation of bingo games conducted by non-profit associations.  Just ten years later, in 1968, another Constitutional amendment was passed, enabling legislation to authorize and regulate lotteries, raffles, and other gift enterprises used for promotional or charitable purposes.”[11]  This led to lawful pickle cards and keno gaming.[12]  The Constitution was again amended in 1988 to allow interstate simulcasting of horse races at licensed race track facilities and in 1992 to allow Nebraska to operate a state lottery.[13] 

            Despite the general prohibition on gambling included in Nebraska’s Constitution, exceptions created by constitutional amendment now allow Nebraska to now run a state lottery, permit charitable gaming (mainly bingo, pickle cards, and keno) and permit wagering on horse racing.[14]  However, most forms of gambling (such as sports betting and casino gambling) are still constitutionally prohibited in Nebraska.[15]    

            Looking at past changes to legislation, it is clear that the Nebraska Supreme Court’s broad definition of “lottery” has required constitutional amendments in order to make changes to gaming laws in Nebraska.  Accordingly, any change in law to legalize sports betting will likely require a further amendment to the Nebraska Constitution.  The Nebraska Constitution can be amended in three different ways: (1) by legislative proposal; (2) by a convention; or (3) directly by citizens.[16]  Constitutional amendments are difficult to pass, but have been more successful since the 1950s.[17]  Of 363 proposed amendments that have made it to the point of submission, 235 have passed.[18] 

Initiatives in Other States 

            The Murphy decision affected all states except Nevada, which was already statutorily exempted from PASPA and has had a variety of legal sports betting for decades.[19]  Since the Murphy decision, Delaware, New Jersey, Mississippi, West Virginia, New Mexico, Pennsylvania, and Rhode Island have passed some form of legalized sports betting.[20]  Arkansas has also recently amended its constitution to allow sports betting.  Sports betting is expected to become available in the state by the end of 2019.[21]     

            Some of Nebraska’s neighboring states have also started the legislative process to legalize sports betting.  Iowa has introduced legislation to legalize sports betting including provisions that would provide an “integrity fee” to certain professional sports leagues.[22]  An integrity fee is a fee payable to sports leagues to cover the administrative costs of making sure that their games are free from scandal and manipulation.[23]  In Missouri, a number of new sports betting bills have been introduced in 2019 after a 2018 sports betting bill introduced before Murphy, failed to advance beyond committee.[24] Legislation proposed in Missouri also includes provisions that would provide an “integrity fee” to certain professional sports leagues.[25]  Kansas has two pending bills that could potentially legalize sports betting.  A proposed “sports gambling” law introduced first in January, 2018 and again in late January, 2019, would expand the Kansas Lottery Act, to include sports betting involving sports wagering in-person, over the internet, or through an interactive sports wagering platform.[26]  A similar, if not identical, bill was introduced in mid-January, 2019 in the Kansas Senate.[27]  This proposed legislation also contains an “integrity fee.”[28]   Meanwhile, South Dakota lawmakers have filed a joint resolution to amend the state constitution to allow “for wagering on sports events.”[29]  If enacted, the issue of a constitutional amendment could be on the ballot as soon as 2020.  Of Nebraska’s surrounding states, currently only Colorado and Wyoming have not proposed any legislation to legalize sports betting.

Conclusion 

            The laws for sports betting are generally in flux across the United States.  Nebraska is not currently putting forward any amendments to allow for sports betting and may not do so for some time. However, as this industry begins to become legalized in this country, those that want to participate in sports betting should make sure that they are aware of all applicable state laws and licensing requirements. 

If you have any questions or would like more information on this Article please contact Alexandra Hubbard or Mark O’Siochain. 

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This article has been prepared for general information purposes and (1) does not create or constitute an attorney-client relationship, (2) is not intended as a solicitation, (3) is not intended to convey or constitute legal advice, and (4) is not a substitute for obtaining legal advice from a qualified attorney. Always seek professional counsel prior to taking action.

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 [1] Murphy v. NCAA, 138 S.Ct. 1461 (2018). 

[2] 28 U.S.C. § 3701 et seq.

[3] Murphy, 138 S.Ct. at 1468. 

[4] Roland Santoni, Article: An Introduction to Nebraska Gaming Law, 29 Creighton L. Rev. 1123, 1127 (1996). 

[5] Id. at 1130. 

[6] Id. at 1134; Murphy, 138 S.Ct. at 1469. 

[7] Kate Gaul, Legislative Research Office of the Nebraska Legislature, The Nebraska Constitution: 1866-2016, 38 (Research Report 2017-1, 2017), https://nebraskalegislature.gov/pdf/reports/research/constitution2017.pdf (emphasis added).      

[8] Santoni, supra note 4, at 1127. 

[9] Id. at 1127; State v. Ak-Sar-Ben Exposition Co., 118 Neb. 851 (1929).   

[10] Santoni, supra note 4, at 1129-30. 

[11] Neb. Const., Art. III, § 24. 

[12] Santoni, supra note 4, at, 1133. 

[13] Id. at 1133-1134. 

[14] Id. at 1125. 

[15] Neb. Const., Art. III, § 24. 

[16] Gaul, supra note 7, at 7.    

[17] Id. 

[18] Id. 

[19] Ryan Rodenberg, State-by-State Sports Betting Bill Tracker, ESPN (March 12, 2019),  http://www.espn.com/chalk/story/_/id/19740480/gambling-sports-betting-bill-tracker-all-50-states

[20] Id.  

[21] US Sports Betting News, Legal Sports Report (March 26, 2019), https://www.legalsportsreport.com/sports-betting/

[22] Wayne Perry, U.S. Sports Leagues Split on How to Monetize Sports Betting, The Daily Record, Feb. 7, 2019, at 1.    

[23] Id. at 3.    

[24] Rodenberg, supra note 22. 

[25] Perry, supra note 24, at 3.    

[26] H.B. 2068, 2019-2020 Leg. Sess. (Ks. 2019). 

[27] S.B. 23, 2019-2020 Leg. Sess. (Ks. 2019).   

[28] Perry, supra note 24, at 3. 

[29] Rodenberg, supra note 22.