COVID-19’s Legal Ramifications Part 9: Stimulated Sports Betting

This series is a discussion of the legal issues in the sports world amid the novel coronavirus. This is a first for our forum, where each of our contributors will be authoring at least one post, discussing either the sports world now, or what will likely happen in the future, during this unprecedented time. One post will be published each day, focusing on a new topic. Please check in each day for updates and feel free to comment with your questions or comments. Together, we will navigate this new landscape. #ubsportslaw #ublawsportsforum

Simulating Sports Betting

There are numerous legal ramifications to the sports industry as a result of COVID-19. The last 8 parts of our series have discussed refunds for sports events, NCAA recruiting restrictions, extended eligibility for athletes who have had their seasons canceled, Title IX implications of schools cutting teams, future liability once the sports world reopens, the virtual NFL draft, travel related to athletes from other countries, and the courts’ pause on certain pending cases. Now, in our last post of the series we discuss something much lighter: what do we all do while we are waiting for the stay-at-home orders to be lifted and sports to reopen? One solution is simulated sports and betting on such. 

For those of you who enjoy a comfortable day on the couch watching your favorite sports, life since March has been quite different. We have missed out on March Madness, the NBA Championships, the NFL Draft, Opening Day of MLB, and many, many more of our favorite events. So, what do we do to fill the void? Well, we could watch people play simulated versions of these sports (video games) and if that is not enough, we can even bet on the outcome of the video game! 

For example, the 2020 NBA2k League has been thriving since the shut downs related to COVID-19 were enacted. Some argue that having the computer simulate each game provides a similar feeling to watching a real-life athletic contest. Fans claim that it is amazing how quickly you can forget that you are watching a video game and become invested in watching the match-up play out on the “court.” 

Even Madden has entered the gambling world where fans can put real money on Madden 20 sims. The games happen 3-5 times per day and offer team match-ups where fans can bet not only on spreads, moneylines, and totals, but also first touchdown scorer, first team to score, and odds on whether the virtual contest will go into overtime. 

This concept and the practice of betting on simulated sports is not nearly as novel as people think, and it definitely did not begin as a result of COVID-19. Rather, it is only growing at this point. For many years, sportsbooks have offered simulated events, such as virtual horse racing and billiards eventsSimulated soccer events have been viewed by fans for years, especially in Europe. 

But what is the legal implication of all of this betting on simulated sports, especially in the midst of COVID-19? Casinos are not allowed to conduct business in a work from home setting and clearly accountants are not able to close out and audit the books every night. This is where mobile gaming and betting regulations come into play. In 2018, the Supreme Court struck down PASPA, the federal law banning single-game wagering. Now, each state can set its own rules for online sports betting. 

States that allow online sports betting include: New Jersey, Pennsylvania, Indiana, Nevada, Iowa, West Virginia, Rhode Island, Mississippi, Oregon, New Hampshire, Illinois, Michigan, and Tennessee. Delaware sports betting started in 2018, but state legislators have not added online sports betting yet. Discussions are ongoing. Most importantly for many of us in Buffalo reading up on this, New York failed to allow fantasy sports betting and the New York Penal Code defines gambling as “an event when a player risks, stakes, or bets something of value on the outcome of a contest, game, or chance, or future event that is not under the player’s control or influence.” 

Many people who try to work around the system have considered downloading an app that is legal in one state, but not in the state which they reside. However, smartphone apps are able to verify location and will do so before allowing you to wager. These apps will reject a participant from betting if they are detected outside of legal borders. Coupled with stay-at-home orders, those wishing to place online bets by visiting a state other than their state of residence is mostly out of the question. 

There is a legal question that remains (as all lawyers like to live in the gray area) which is whether betting on a video game would be considered “sports betting.” Unfortunately for many, the answer to this seems like a clear “yes.” As noted in a previously published article about March Madness brackets, under three tests that the courts use to analyze betting (the Predominant Purpose Test, the Any Chance Test, and the Gambling Instinct Test) it is very likely that gambling on simulated sports would constitute games of “chance.” Further, the Interstate Wire Act of 1961 may come into play here where this act prohibits individuals from “engaging in the business of betting or wagering [through] a wire communication for the transmission in interstate or foreign commerce.” The definition of “wire communication” includes not only communications that take place over the telephone, but also those that occur via the Internet.  

It has been more than 40 days since we became confined to our homes and our favorite forms of entertainment were put on hold. Therefore, the name of the game is: Whatever it takes. So far, it seems like simulated sports and betting on outcomes from these virtual games are what gives many people a sense of normalcy during this pandemic. The human spirit is resilient and if it means tuning into computer simulated sports matchups then that is just what us sports fanatics will do until we can watch our favorite players play live once again. Just make sure if you are going to bet on these simulated events, your jurisdiction allows this type of sports betting. 

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