25 Years Of PASPA — The History Of Sports Betting In America

Betting has played a significant albeit overlooked role in American history, and an upcoming ruling by the U.S. Supreme Court could signal a new era of influence for an industry eager to expand its footprint.

Americans are a “people of chance,” according to John Findlay, a history professor at the University of Washington.

“From the seventeenth century through the twentieth, both gambling and [the westward movement] thrived on high expectations, risk taking, opportunism, and movement, and both activities helped to shape a distinctive culture,” Findlay wrote in his 1986 book, "People of Chance: Gambling in American Society from Jamestown to Las Vegas."

In the few decades since Findlay published his book, the regulation of casinos has spread beyond Nevada and New Jersey to more than two-dozen states and several hundred Native American reservations, while all but a handful of states have authorized state-run lotteries.

But betting on sports has been constrained by a federal law, the Professional and Amateur Sports Protection Act (PASPA), which was enacted almost exactly a quarter-century ago on October 28, 1992.

Findlay does not expect American attitudes to betting to change dramatically if the Supreme Court overturns PASPA when it reviews the law later this year.

The Supreme Court is scheduled to hear oral arguments on New Jersey’s appeal to legalize and regulate sports betting within its borders on December 4.

There is a possibility that PASPA could be repealed in full, although some legal analysts do not expect the court to go that far.

Criticism of sports-betting expansion “is like suggesting that legalizing marijuana would increase consumption,” Findlay told GamblingCompliance. “No, it would legalize an activity that already is pretty widespread.

“The main difference is that states play a larger role in organizing and operating the activity, and in taxing it.”

Borrowing From Britain

To better understand the history of sports betting in America, consider a quote by Otto von Bismarck, the prominent Prussian statesman who dominated German and European affairs in the late 1800s.

Asked to name the greatest political fact of his time, Bismarck replied: “The inherited and permanent fact that North America speaks English.”

Given Great Britain’s status as America’s mother country, it should come as no surprise that the United Kingdom — today home to probably the world’s most advanced sports-betting market — provided the template for betting in the colonies.

“In general the English colonists, with the notable exception of the Puritans, attempted to replicate the life they had known in Merry England,” wrote University of Nevada at Reno instructors Richard O. Davies and Richard G. Abram in their 2001 book, “Betting The Line.”

Working class people in England were encouraged to play physically demanding games such as hurling to take their minds off their often dreary lives.

Betting on the games became almost a custom for the players and spectators alike.

When many of these people immigrated to America, they brought their recreational and sports wagering habits with them.

The Puritan ethic did not extend far beyond New England, and betting on horse races flourished, particularly in Virginia, as far back as the late 1600s.

A century later, new oval tracks in Virginia, Maryland and the Carolinas replaced the country roads that had served as the sites of quarter-mile dashes by thoroughbreds.

Horseracing probably would not have survived without betting, and by the late 1800s, bookmakers began posting odds at tracks. In a model familiar today, state governments encouraged trackside betting to raise more tax revenue.

To accommodate members of the working class who could not afford the time or money to go to the track, illegal off-track betting halls known as poolrooms also began to proliferate.

The Point Spread & The Minneapolis Line

The sad state of horseracing today, with its ever dwindling revenue, makes it difficult to comprehend that tracks continued to dominate the betting landscape in America well into the mid-1900s.

It was only a matter of time before the increasing popularity of baseball, basketball and football threatened horseracing as the sport of choice for bettors.

The popularity of sports betting in America endured baseball’s infamous Chicago Black Sox scandal that even today is evoked by opponents of wagering who claim the availability of betting undermines the integrity of sporting competitions.

The dawning of a new age for sports betting arrived in the 1940s with the invention of the point spread, dubbed by one bookie as “the greatest invention since the zipper.”

The point spread was created by Charles K. McNeil, a mathematics teacher in Connecticut whose students included future U.S. President John F. Kennedy.

McNeil eventually moved to Chicago to become a bookmaker, and the point spread became the dominant wagering format for basketball and football.

It was a godsend for bookies who used the point spread to make even an apparently lopsided contest attractive to bettors by giving the underdog a large number of points.

Surprisingly, the hub for sports betting information from the mid-1930s up to the early 1960s was in Minneapolis, not Las Vegas.

Bookmakers across the country depended on Leo Hirschfield, the president of Athletic Publications, to set the “Minneapolis line” every week.

The three-decade reign of the “Minneapolis line” came to a screeching halt in 1961 when Congress passed the Wire Act at the behest of U.S. Attorney General Robert F. Kennedy. 

The Wire Act, which prohibits the transmission of bets across state lines, could continue to haunt sports wagering even if the Supreme Court ruling allows expansion. 

Nevada’s Monopoly

The void left by Hirschfield and the “Minneapolis line” was filled in the late 1960s by a succession of high-profile handicappers in Las Vegas, including Jimmy “The Greek” Snyder, Bob Martin and Michael “Roxy” Roxborough

Nevada’s new status as the Mecca of sports betting got a huge boost on October 15, 1974 when Congress passed legislation by Democratic Senator Howard Cannon to lower the federal excise tax on sports bets from 10 percent to just 2 percent. The rate applied to state-licensed bookmakers in Nevada was later reduced further to 0.25 percent.

You may have guessed already that Cannon represented Nevada.

A Cannon successor — Richard Bryan — and Harry Reid, both Nevada Democrats, were only too happy to vote for PASPA when it sailed through Congress on an 88-5 vote on June 2, 1992.

Democratic Senator Dennis DeConcini of Arizona, the author of PASPA, agreed to exempt Nevada from the betting ban to pass the bill. The carve-out ensured the de facto sports-betting monopoly for Nevada, which continues 25 years later.

“My research led me to conclude that legalized sports betting, as conducted in Nevada, was the correct path,” Davies, the co-author of “Betting the Line” told GamblingCompliance.

“It has been carefully regulated and supervised for more than a half-century, and no serious crime or scandal has ever been associated with the Nevada regulated system of sports wagering,” Davies said. “In fact, it is widely believed and I am convinced, that legal sports wagering in Nevada has been a major defense against fixed games.”

Davies said he does not wager on games, but he hopes the Supreme Court rules in favor of New Jersey’s appeal to permit sports betting in spite of the federal ban.

“The reasons are simple,” he said. “Each state should be permitted to determine whether or not to offer legal sports wagering. But more important, legalized sports wagering in New Jersey — and other states if they are so inclined — will produce a major new source of tax revenue and destroy the illegal sports betting syndicates associated with organized crime.”

Editor’s Note: The History of Sports Betting in America interview is the first part of a series of articles commemorating the 25th anniversary of the Professional and Amateur Sports Protection Act, which was enacted on October 28, 1992.

Americas Premium subscribers can also click here to access GamblingCompliance’s special report, “U.S. Sports Betting: A Sector On The Cusp Of Major Change.”