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106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     106-903

======================================================================



 
                     STUDENT ATHLETE PROTECTION ACT

                                _______
                                

 September 27, 2000.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Hyde, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 3575]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 3575) to prohibit high school and college sports 
gambling in all States including States where such gambling was 
permitted prior to 1991, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                           TABLE OF CONTENTS

                                                                  

                                                                 Page
Purpose and Summary........................................           2
Background and Need for the Legislation....................           2
Hearings...................................................           5
Committee Consideration....................................           5
Vote of the Committee......................................           5
Committee Oversight Findings...............................           6
Committee on Government Reform Findings....................           6
New Budget Authority and Tax Expenditures..................           6
Congressional Budget Office Cost Estimate..................           6
Constitutional Authority Statement.........................           7
Section-by-Section Analysis and Discussion.................           7
Changes in Existing Law Made by the Bill, as Reported......           8
Dissenting Views...........................................           9

                          Purpose and Summary

    H.R. 3575 establishes a ban on gambling on Olympic, 
college, and high school athletic events, or gambling on any 
individual competing in a collegiate, high school, or Olympic 
athletic event. This ban is a response to recommendation 3.7 of 
the National Gambling Impact Study Commission's (NGISC) Final 
Report, issued in June 1999. Recommendation 3.7 states ``that 
the betting on collegiate and amateur athletic events be banned 
althogether.'' \1\ Under current law, the Professional and 
Amateur Sports Protection Act (PASPA), gambling on these events 
is only permitted in Nevada. H.R. 3575 amends PASPA and closes 
this loophole.
---------------------------------------------------------------------------
    \1\ ``Final Report,'' National Gambling Impact Study Commission, p. 
3-18 (June, 1999). Hereinafter ``Final Report.''
---------------------------------------------------------------------------

                Background and Need for the Legislation

    On October 28, 1992, President Bush signed into law the 
Professional and Amateur Sports Protection Act (PASPA), which 
prohibited any expansion of existing State-sanctioned, 
authorized or licensed gambling on sports. Horse racing, dog 
racing, and jai-alai were excluded from this prohibition. At 
that time, a handful of legislatures had already authorized 
sports wagering or were deliberating on legislation that would 
authorize sports wagering. To accommodate those States, a 
grandfather clause with a sunset provision was included in 
PASPA. As a result, sanctioned sports gambling on amateur or 
Olympic sporting events is limited to one State, Nevada.
    In 1996, the National Gambling Impact Study Commission 
(NGISC) was established by Public Law 104-169. The NGISC was 
charged with conducting a comprehensive legal and factual study 
of the social and economic impacts of gambling on (1) Federal, 
State, local, and native American tribal governments and (2) 
communities and social institutions including individuals, 
families, and businesses which comprise them. The NGISC was a 
nonpartisan commission, with members appointed by the Speaker, 
the Majority Leader, and the President. After hearing testimony 
from hundreds of experts and members of the public; making 
several site visits; commissioning original research; and 
conducting surveys of existing, wide-ranging literature, the 
Commission issued a Final Report in June, 1999.
    In this report, the NGISC found that ``[t]he popularity of 
sports wagering in most States, both legal and illegal, makes 
it a regulatory challenge.'' \2\ According to Cedric Dempsey, 
Executive Director of the NCAA: ``[E]very campus has student 
bookies. We are also seeing an increase in the involvement of 
organized crime on sports wagering.'' \3\ According to the 
NGISC Final Report, such illegal campus betting is not limited 
to dormitory gambling by students, but extends to student 
athletes as well. ``A University of Michigan study found that 
more than 45 percent of male collegiate football and basketball 
athletes admit to betting on sporting events, despite NCAA 
regulations prohibiting such activities. More than five percent 
of male student athletes provided inside information for 
gambling purposes, bet on a game in which they participated, or 
accepted money for performing poorly in a game.'' \4\
---------------------------------------------------------------------------
    \2\ Id. at 3-9.
    \3\ Id. at p. 3-10.
    \4\ Id.
---------------------------------------------------------------------------
    Although Nevada has implemented strict rules for sports 
gambling, sports books in Nevada have been directly linked to 
point shaving scandals, money laundering, and prohibited sports 
gambling in other States. Two recent point shaving scandals, 
one at Northwestern University \5\ in Chicago, and another at 
Arizona State University,\6\ involved heavy betting among 
participants in Nevada sports books. In the Northwestern case, 
the Nevada sports book activity went completely undetected. 
Steve DuCharme, of the Nevada State Gaming Control Board, 
estimates that millions of dollars of illegal money is 
laundered through Nevada sports books.\7\ While the publication 
of point spreads is protected by the first amendment of the 
Constitution, the NGISC found that point spreads facilitate 
prohibited sports gambling throughout America.\8\
---------------------------------------------------------------------------
    \5\ Terry Larimer, The Point-Shaving Never Paid Off For Perndergast 
Part of His Community Service Takes The Ex-Notre Dame Athlete to 
Colleges, The Morning Call, May 15, 1999.
    \6\ Don Yaeger, Confessions Of A Point Shaver; Former Arizona State 
star Hadake Smith reveals how he and his accomplices fixed basketball 
games, Sports Illustrated, Nov. 1998 Vol. 89 No. 19.
    \7\ Alan Byrd, State Moves to Counter Money Laundering, Street and 
Smith's Sports Business Journal, Feb. 1-7, 1999, at 33.
    \8\ ``Final Report,'' at 3-10.
---------------------------------------------------------------------------
    During the Judiciary Committee's June 13th, 2000 hearing, 
officials from Nevada's gaming industry argued there is no 
nexus between illegal gambling activity and Nevada's sports 
gambling books.\9\ Nevada however, maintains a rule that 
prohibits placing bets on teams from Nevada. At this hearing, 
Brian Sandoval, Chairman of the Nevada Gaming Commission 
testified that this rule was created to ``combat a perception. 
. . .'' \10\ In response, Representative Graham (SC) noted, ``. 
. . the coaches are telling us, that we do not want to give the 
impression that our sports programs are tainted. It is part 
about perception, part about reality. Your [the Nevada Gaming 
Industry] concern to guard the integrity of the betting process 
is our concern to guard the integrity of the game.'' \11\
---------------------------------------------------------------------------
    \9\ The Student Athlete Protection Act, 2000: Hearings on H.R. 3575 
Before the House Comm. on the Judiciary, 106th Cong., 2nd Sess. (June 
13th, 2000) (statement of Mr. Frank J. Fahrenkopf, Jr., Pres. and CEO 
of the American Gaming Association). Hereinafter ``Hearings on H.R. 
3575.''
    \10\ Id. (see testimony of Mr. Brian Sandoval, Chairman of the 
Nevada Gaming Commission).
    \11\ Id. (see hearing transcript).
---------------------------------------------------------------------------
    Prior to 1974, the volume of sports gambling in Nevada was 
much lower than today. Due to a change in the tax code in 1974, 
which made sports gambling a profitable business, and the 
advent of sports media in the eighties, the popularity of 
Nevada's sports books dramatically increased. Although there 
are at least 142 sports books in Nevada,\12\ only three tenths 
of 1 percent of all gambling revenues generated in Nevada are 
attributed to amateur sports gambling. In 1999, Nevada casinos 
retained $10.1 billion dollars in revenue, $99 million in 
revenues were attributed to sports gambling, and approximately 
33% of sports gambling revenues were attributed to amateur 
sports gambling.\13\ The NGISC found the benefit of Nevada's 
sports gambling books was heavily outweighed by its burden to 
society. ``Because sports wagering is illegal in most States, 
it does not provide many of the positive impacts of other forms 
of gambling. In particular, sports wagering does not contribute 
to local economies or produce many jobs. Unlike casinos or 
other destination resorts, sports wagering does not create 
other economic sectors. However, sports wagering does have 
social costs. Sports wagering threatens the integrity of 
sports, it puts student athletes in a vulnerable position, it 
can serve as gateway behavior for adolescent gamblers, and it 
can devastate individuals and careers.'' \14\
---------------------------------------------------------------------------
    \12\ ``Final Report,'' at 2-14.
    \13\ S. Rep. No. 106-278, 106th Cong., 2nd Sess. (2000).
    \14\ Id. at 3-10.
---------------------------------------------------------------------------
    The NGISC provided 22 recommendations on ``Gaming 
Regulation'' in Chapter 3 of its Final Report. While these 
recommendations concerned all aspects of regulated gaming, two 
recommendations are relevant to gambling on collegiate and 
amateur sports. The first is recommendation 3.1, which 
recommends that State and local governments are best equipped 
to regulate gambling within their borders, except for tribal 
and internet gambling. The second is recommendation 3.7, which 
recommends that betting on collegiate and amateur athletic 
events be banned altogether.\15\ While the NGISC's Final Report 
was unanimously adopted by all commissioners, recommendation 
3.7 was approved by a divided majority--five commissioners were 
in favor, three commissioners opposed, and one commissioner 
abstained. There appears to be a tension between 
recommendations 3.1 and 3.7 in that the former leaves the 
regulation of gambling to State and local governments, while 
the latter recommends that Federal law ban amateur sports 
gambling. Kay C. James, Chairman of the National Gambling 
Impact Commission, has submitted a letter clarifying the intent 
of the Commission to recommend that all gambling on collegiate 
and amateur sports be banned by Federal legislation.\16\
---------------------------------------------------------------------------
    \15\ Id. at 3-17, 3-18.
    \16\ ``Hearings on H.R. 3575,'' (see letter submitted by Ms. Kay C. 
James, Chairwoman of the National Gambling Impact Study Commission).
---------------------------------------------------------------------------
    Pursuant to PASPA, a sports organization whose competitive 
game is alleged to be the basis of prohibited sports gambling 
or the Attorney General of the United States, may file for an 
injunction in a United States District Court to enjoin 
prohibited sports gambling activity. While other anti-gambling 
statutes found in title 18 of the United States Code may be 
utilized to address criminal conduct, these statutes do not 
address State sanctioned amateur sports gambling. This act 
would end all State sanctioned gambling on amateur sports.\17\
---------------------------------------------------------------------------
    \17\ Id. (see testimony of Mr. Bobby Siller, Board Member of the 
Nevada Gaming Control Board).
---------------------------------------------------------------------------
    This act is supported by professional sports leagues, 
colleges and universities, various coaches associations, 
educational associations, pro-family groups, consumer groups, 
religious organizations, and is the number one priority of the 
NCAA. It is opposed by the Nevada gaming industry and Nevada's 
governmental officials. Critics of this act argue that closing 
the loophole in PASPA, which allows Nevada to maintain sports 
books on amateur athletic events, does nothing to remedy 
widespread gambling throughout America. However, according the 
NGISC, the reality of regulating gambling in America is a 
difficult task.\18\ Rather than attempting to regulate, this 
act shuts down a venue that fuels illegal amateur sports 
gambling and sends a message that gambling on amateur athletics 
is unlawful. In the words of Representative Graham (SC), this 
bill ``. . . affects real people in a real way and that we can 
ban the betting of a billion dollars on the outcome of games 
where teenagers are involved.'' \19\
---------------------------------------------------------------------------
    \18\ ``Final Report,'' at 3-9.
    \19\ ``Hearings on H.R. 3575,'' (hearing transcript).
---------------------------------------------------------------------------

                                Hearings

    The full Judiciary Committee held one day of hearings on 
H.R. 3575 on June 13th, 2000. Testimony was received from 12 
witnesses, representing colleges and universities, the National 
Collegiate Athletic Association, collegiate athletic coaches, 
the President and Chief Executive officer of the American 
Gaming Association, Chairman of the Nevada Gaming Commission, a 
board member of the Nevada Gaming Control Board, and members of 
Congress. Additional material was submitted by a Nevada 
Regeant, Professional Sports Organizations, an expert doctor, 
and the committee is in receipt of the National Gambling Impact 
Study Commission's Final Report.

                        Committee Consideration

    On September 13th, 2000, the committee met in open session 
and ordered favorably reported the bill H.R. 3575 without 
amendment by a recorded vote of 19 ayes to 9 nays with 1 voting 
present, a quorum being present.

                         Vote of the Committee

    Motion by Mr. Hyde to report the bill favorably. Adopted 19 
ayes to 9 nays and 1 voting present.

                                                   ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............  ..............  ..............
Mr. McCollum....................................................  ..............  ..............  ..............
Mr. Gekas.......................................................              X   ..............  ..............
Mr. Coble.......................................................              X   ..............  ..............
Mr. Smith (TX)..................................................              X   ..............  ..............
Mr. Gallegly....................................................              X   ..............  ..............
Mr. Canady......................................................              X   ..............  ..............
Mr. Goodlatte...................................................              X   ..............  ..............
Mr. Chabot......................................................              X   ..............  ..............
Mr. Barr........................................................              X   ..............  ..............
Mr. Jenkins.....................................................              X   ..............  ..............
Mr. Hutchinson..................................................              X   ..............  ..............
Mr. Pease.......................................................              X   ..............  ..............
Mr. Cannon......................................................  ..............  ..............  ..............
Mr. Rogan.......................................................  ..............  ..............  ..............
Mr. Graham......................................................              X   ..............  ..............
Ms. Bono........................................................              X   ..............  ..............
Mr. Bachus......................................................              X   ..............  ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................              X   ..............  ..............
Mr. Conyers.....................................................  ..............              X   ..............
Mr. Frank.......................................................  ..............  ..............  ..............
Mr. Berman......................................................  ..............              X   ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................  ..............              X   ..............
Mr. Scott.......................................................  ..............              X   ..............
Mr. Watt........................................................  ..............              X   ..............
Ms. Lofgren.....................................................  ..............  ..............  ..............
Ms. Jackson Lee.................................................  ..............  ..............              X
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................  ..............              X   ..............
Mr. Delahunt....................................................  ..............              X   ..............
Mr. Wexler......................................................  ..............              X   ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................              X   ..............  ..............
Mr. Weiner......................................................  ..............              X   ..............
Mr. Hyde, Chairman..............................................              X   ..............  ..............
                                                                 -----------------------------------------------
    Total.......................................................             19               9               1
----------------------------------------------------------------------------------------------------------------

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the committee reports that the 
findings and recommendations of the committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                Committee on Government Reform Findings

    No findings or recommendations of the Committee on 
Government Reform were received as referred to in clause 
3(c)(4) of rule XIII of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the committee sets forth, with 
respect to the bill, H.R. 3575, the following estimate and 
comparison prepared by the director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                                 September 21, 2000
H.R. 3575--Student Athlete Protection Act.
    CBO estimates that implementing H.R. 3575 would have no 
significant effect on the federal budget. The legislation would 
not affect direct spending or receipts, so pay-as-you-go 
procedures would not apply. H.R. 3575 contains both an 
intergovernmental and a private-sector mandate as defined in 
the Unfunded Mandates Reform Act (UMRA). CBO estimates that the 
costs associated with complying with the mandates would not 
exceed the thresholds established by the act ($55 million for 
intergovernmental mandates and $109 million for private-sector 
mandates in 2000, adjusted annually for inflation).
    H.R. 3575 would prohibit government entities from operating 
or authorizing gambling schemes based on competitive games or 
performances by high school, college, or Olympic athletes. 
(Currently, Nevada is the only state that allows betting on 
amateur sports.) Violators of the bill's provisions could face 
civil actions brought by the Department of Justice or by 
certain sports organizations, but we expect very few such 
cases. CBO estimates that any added costs to the department or 
to the federal courts from pursuing such cases would not be 
significant. Any such costs would be paid from appropriated 
funds.
    CBO estimates that the prohibition on wagering on amateur 
sports would reduce revenues collected by the state of Nevada 
by approximately $2 million per year. Based on information from 
the Nevada Games Control Board, CBO estimates that because of 
this prohibition the private sector would lose about $40 
million annually in net income (measured as the amount wagered 
less the amount paid out).
    On May 1, 2000, CBO transmitted a cost estimate for S. 
2340, the Amateur Sports Integrity Act, as ordered reported by 
the Senate Committee on Commerce, Science, and Transportation 
on April 13, 2000. That legislation also banned gambling on 
amateur sports but contained many other provisions. The two 
cost estimates reflect those differences.
    The CBO staff contacts for this estimate are Mark Grabowicz 
(for federal costs), Shelley Finlayson (for the state and local 
impact), and Paige Piper/Bach (for the private-sector impact). 
This estimate was approved by Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the committee finds the authority for 
this legislation in article I, section 8, of the Constitution.

               Section-by-Section Analysis and Discussion

Section 1. Short title
    This section provides that this title may be cited as the 
``Student Athlete Protection Act.''
Sec. 2. Prohibition on gambling on competitive games involving high 
        school and college athletes and the Olympics.
    Amends Section 3704 of Title 28 U.S.C. Chapter 178, the 
``Professional and Amateur Sports Protection Act'' (PASPA). 
Section 3704 as amended does the following:
    (1) It makes it unlawful for any governmental entity to 
sponsor, operate, advertise, promote, license, or otherwise 
authorize a lottery, contest, sweepstake, or other betting, 
gambling or wagering scheme based, directly or indirectly, on a 
competitive game or performance of one or more athletes in a 
Summer or Winter Olympic competition, collegiate athletic 
competition, or a high school athletic competition.
    (2) It makes clear that the prohibition established under 
this act applies notwithstanding any other provision of law.
    (3) It provides for civil action to enjoin activities 
prohibited under the act. The civil action may be brought in 
the appropriate Federal district court by the United States 
Attorney General, or a local education agency, college, or 
sports organization whose competitive game is alleged to be the 
basis of the violation.
    (4) It defines the following terms used in the section:
    ``High School'' as having the same meaning as ``secondary 
school'' in section 14101 of the Elementary and Secondary 
Education Act of 1965 (U.S.C. Sec. 8801) or (ESEA).
    ``College'' as having the same meaning as institution of 
higher education in the ESEA.
    (5) While this act neither limits or expands the scope of 
activities prohibited by PASPA, it terminates the grandfather 
clause in title 28 U.S.C. section 3704 for Summer or Winter 
Olympic athletic competitions, and collegiate and high school 
athletic competitions. As a result, the use of ``no purchase 
necessary'' sweepstakes and related contests for product and 
brand-name promotion would not become unlawful or otherwise 
prohibited by this act.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

              SECTION 3704 OF TITLE 28, UNITED STATES CODE

Sec. 3704. Applicability

    (a) [Section] Except as provided in subsection (c), section 
3702 shall not apply to--
            (1)  * * *

           *       *       *       *       *       *       *

    (c)(1) Section 3702 shall apply to a lottery, sweepstakes 
or other betting, gambling, or wagering scheme based, directly 
or indirectly, on--
            (A)(i) one or more competitive games in which high 
        school or college athletes participate; or
            (ii) one or more performances of high school or 
        college athletes in competitive games; or
            (B) one or more competitive games at the Summer or 
        Winter Olympics.
    (2) In this section--
            (A) the term ``high school'' has the meaning given 
        the term ``secondary school'' in section 14102 of the 
        Elementary and Secondary Education Act of 1965; and
            (B) the term ``college'' has the meaning given the 
        term ``institution of higher education'' in section 101 
        of the Higher Education Act of 1965.
                            Dissenting Views

    We do not dispute the Majority's conclusion that illegal 
gambling can be seriously detrimental to individuals and to 
society at large. In fact, we embrace this point of view. As 
set forth below, illegal gambling on amateur sports, in 
particular, is a widespread problem that needs to be addressed. 
Where we differ from the Majority, however, is on the best way 
for the Federal Government to attempt to reduce the problems 
associated with illegal sports gambling. Contrary to supporters 
of the bill, we see no nexus between legal gambling in Nevada 
and illegal gambling nationwide. Thus, we do not believe 
prohibiting legal gambling on amateur sports, as proposed by 
H.R. 3575, is the solution to the pervasive problem of illegal 
gambling. The only real ramification of the bill is to 
eliminate the legal sports gambling business in Nevada and the 
commensurate benefits to the State's economy.
    Instead, we support the approach taken by H.R. 4284, which 
Rep. John Conyers, Jr. offered as a substitute at the Judiciary 
Committee mark-up. H.R. 4284, sponsored by Rep. Shelley Berkley 
of Nevada: (1) seeks to identify the key reasons for illegal 
gambling on sports and its impact on children by requiring a 
National Institute for Justice study on illegal sports gambling 
among minors; (2) creates a Justice Department Amateur Sports 
Illegal Gambling Task Force which would be responsible for 
enforcing existing Federal laws that prohibit gambling related 
to amateur sporting events and contests;\1\ (3) increases 
penalties for illegal sports gambling; and (4) expresses the 
sense of Congress that, among other things, illegal sports 
gambling poses a significant threat to youth on college 
campuses and in society in general. Such an approach considers 
methods for attacking illegal gambling at its core without 
causing tremendous economic harm to the people of Nevada. 
Unfortunately, the substitute failed on, predominantly, a 
partyline vote. Therefore, for the reasons outlined below, we 
dissent.
---------------------------------------------------------------------------
    \1\ The Task Force would have to report annually to Congress 
describing prosecutions commenced and convictions obtained.
---------------------------------------------------------------------------
I. Illegal Gambling on Sports is a Pervasive Problem in the United 
        States.
    Gambling on sports, including college sports, certainly is 
widespread. We only need to look at the revenue that wagering 
on sports generates to recognize its national impact. Last 
year, Nevada's sports gambling industry took in $2.3 billion in 
legal wagers.\2\ Even more troubling are estimates on illegal 
gambling on sporting events, which range from $80 billion to 
$380 billion per year.\3\
---------------------------------------------------------------------------
    \2\ Final Report, National Gambling Impact Study Commission, pp. 2-
14 (June 6, 1999). Casinos retained approximately 77.4 million dollars 
in revenue from sports gambling, and 33 percent of this total was based 
on collegiate sports gambling. Id. Though Nevada casinos retained 10.1 
billion dollars in revenues in 1999, only three-tenths of 1 percent of 
this amount is attributed to collegiate sports gambling. Impact of 
Gaming-Nevada, Nevada Gaming control Board.
    \3\ Final Report, National Gambling Impact Study Commission, pp. 2-
14 (June 6, 1999).
---------------------------------------------------------------------------
    There is no doubt that the problem of illegal gambling on 
amateur sports needs to be addressed. Recent studies have 
concluded the following: (a) a Gallup poll found that twice as 
many teenagers bet on college sports than do adults and that 
most teenagers start betting by the age of ten; (b) research 
conducted by the American Academy of Pediatrics concluded that 
over one million teenagers in the U.S. are addicted to gambling 
and called gambling the ``addiction of the nineties''; and (c) 
the Harvard School of Medicine estimates that 6 percent of 
teenagers have serious gambling problems.\4\ We recognized the 
dangers of gambling on sports back in 1992 when Congress 
enacted the Professional and Amateur Sports Protection Act 
(``PASPA''),\5\ which prohibited gambling on sports throughout 
the United States, except for certain grandfathered States.\6\ 
For practical purposes, Nevada is the only State that currently 
permits legal sports gambling. Nevada was specifically exempted 
because of its special reliance on legal gambling.
---------------------------------------------------------------------------
    \4\ See Hearing on H.R. 3575 Before the House Comm. on the 
Judiciary, 106th Cong. (2000) (statement of Dr. Graham Spanier, 
President, Pennsylvania State University (June 13, 2000).
    \5\ Professional and Amateur Sports Protection Act, P.L. 102-559 
(1992).
    \6\ The grandfathered States were Delaware, Montana, Oregon and 
Nevada; however, Oregon and Nevada are the only States that offer 
sports gambling. Sports gambling in Oregon is limited to a game called 
``Sports Action'' that allows wagering on the outcome of professional 
football games. Nevada, on the other hand, has 142 licensed sports 
books for gambling on professional, collegiate, Olympic, and other 
amateur sports. Nevada prohibits gambling on teams in-State.
---------------------------------------------------------------------------
    We agree that illegal gambling on sports, particularly 
among college students, is a very serious national problem. 
But, while we are adamantly in favor of a strong, effective 
bill to combat illegal sports betting, we are unconvinced that 
H.R. 3575, which eliminates legal sports gambling on amateur 
sports in the State of Nevada, is the appropriate legislation 
to achieve this goal. H.R. 3575 would not have a material 
impact on the pervasive problem of illegal sports betting; it 
would needlessly penalize Nevada's legal sports books and their 
employees; and finally, it would impinge on State prerogatives 
to regulate gaming. We believe the solution is not a matter of 
enacting more laws to prohibit illegal gambling or banning the 
small amount of regulated wagering that takes place in Nevada. 
Rather, we need to properly enforce existing laws and ensure 
that penalties are adequate to deter violations.
II. Federally banning legal gambling will not have a material impact on 
        illegal gambling, will damage Nevada's economy and will impinge 
        on States' rights.
            A. H.R. 3575 would not materially impact illegal gambling.
    Thus far, we have not seen evidence demonstrating that H.R. 
3575 would have any material impact on the problem of illegal 
sports gambling. Proponents of the legislation argue that point 
spreads on college games that originate in Nevada, and are 
published nationwide, facilitate illegal gambling; however, it 
is unclear that the elimination of Nevada's sports books would 
prevent newspapers from publishing such point spreads. This is 
a matter that individual newspapers, themselves, control. John 
F. Strum, President and CEO of the Newspaper Association of 
America (``NAA''), emphasized this point in a recent letter to 
the House Judiciary Committee: ``If Congress prohibits gambling 
on college sports, NAA believes newspapers will continue to 
have an interest in publishing point spreads on college games, 
since point spreads appear to be useful, if not valuable, to 
newspaper readers who have no intention of betting on games.'' 
\7\
---------------------------------------------------------------------------
    \7\ See Letter from John F. Strum, President and CEO, Newspaper 
Association of America, to Reps. Henry Hyde and John Conyers, Jr. (June 
7, 2000) (on file with the Minority Staff of the House Judiciary 
Committee).
---------------------------------------------------------------------------
    Furthermore, point spreads originate from inside and 
outside of Nevada. According to a letter from Frank Fahrenkopf, 
Jr., President of the American Gaming Association, ``Nevada's 
casino sports books are typically not the initial sources of 
betting lines used in Nevada, much less elsewhere, and are 
certainly not the only sources of this information. There are 
numerous betting lines published in newspapers and over the 
Internet that would continue to be available if our sports 
books did not exist.'' \8\ Thus, because point spreads also 
originate outside of Nevada, prohibiting legal sports betting 
in Nevada is unlikely to prevent illegal sports betting 
nationwide.
---------------------------------------------------------------------------
    \8\ See Letter from Frank J. Fahrenkopf, Jr., President and CEO, 
American Gaming Association, to Cedric Dempsey, President, NCAA 
(October 22, 1999) (on file with the Minority Staff of the House 
Judiciary Committee).
---------------------------------------------------------------------------
            B. H.R. 3575 would needlessly inflict negative economic 
                    effects on Nevada's economy.
    While sports books revenue is a small percentage of total 
gaming revenue in Nevada, the importance of legal sports 
wagering to Nevada's tourism industry and the jobs that are 
dependent must not be understated. Demonstrating the impact 
that legal sports betting has on Nevada's economy, at the June 
13, 2000 hearing on this legislation, Frank J. Fahrenkopf, Jr. 
testified:

        [T]his past January an estimated 250,000 visitors came 
        to Las Vegas for Super Bowl Weekend when the hotel 
        occupancy rate was essentially 100 percent. The Las 
        Vegas Convention & Visitors Authority estimated that 
        the non-gaming economic impact of these visitors was 
        $80 million over that single weekend. A similar 
        positive economic impact occurs during the NCAA men's 
        basketball tournament and during football season. The 
        jobs generated are not only those in the sports books, 
        but extend throughout each of the hotel-casino-resort 
        complexes to maids, valet parking attendants, food and 
        beverage servers, and casino floor personnel. This job 
        creation also includes those employed by the airlines, 
        rental car agencies and taxi services that transport 
        visitors. These jobs, as well as Federal, State, and 
        local tax levies, help generate billions of dollars in 
        government revenues.\9\
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    \9\ See Hearing on H.R. 3575 Before the House Comm. on the 
Judiciary, 106th Cong. (2000) (statement of Frank J. Fahrenkopf, Jr., 
President and CEO, American Gaming Association).

    Nevada Governor Kenny C. Guinn echoed these concerns in a 
---------------------------------------------------------------------------
letter to the Judiciary Committee:

        Nevada's publicly-regulated sports books generate 
        annual State revenues of $6.5 million at a time when, 
        unlike other States, the tremendous population growth 
        in Nevada has resulted in a challenging fiscal future 
        for our State. The economic impact is greater than the 
        direct numbers indicate because publicly-regulated 
        sports wagering is one of the activities that draws 
        visitors to Nevada, particularly at key times of the 
        year. The negative economic impact on the State's 
        private sector will be even greater than the impact on 
        State government because of the investments Nevada 
        companies have made in state-of-the-art sports book 
        facilities.\10\
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    \10\ See Letter from Kenny C. Guinn, Governor of Nevada, to 
Chairman Henry Hyde (June 1, 2000) (on file with the Minority Staff of 
the House Judiciary Committee).

    In order to justify the apparently significant impact that 
H.R. 3575 would have on Nevada's economy, Congress should 
carefully examine whether eliminating legal sports betting in 
Nevada will address the pervasive problem of illegal gambling 
nationwide. At this time, it does not appear that the burden 
has been met. As evidenced by information given to the 
committee by interested parties, located within the State of 
Nevada, there are far too many livelihoods at stake for 
Congress to pass legislation as a ``symbolic act'' rather than 
as a true solution to the serious problem of illegal gambling.
            C. H.R. 3575 raises significant federalism concerns.
    Finally, Congress recognized the importance of sports 
wagering to the State of Nevada and its economy when PASPA was 
enacted in 1992. To this end, Congress included a grandfather 
clause to exempt all States, including Nevada, with pre-
existing statutes in order to protect legitimate economic 
interests and State authority over gambling. The preservation 
of previously enacted State statutes is consistent with the 
fact that States, not the Federal Government, have determined 
what gambling, if any, should be permitted within their 
borders.
    We are further concerned that H.R. 3575 may run afoul of 
the constitutional requirement under the Commerce Clause,\11\ 
which limits congressional authority to the regulation of 
interstate commerce and under the 10th amendment, which 
reserves all of the unenumerated powers to the States.\12\ This 
is a particular concern in light of the recent Supreme Court 
decisions such as United States v. Morrison (declaring 
unconstitutional the Federal civil legal remedy for gender-
motivated crimes of violence, enacted as part of the Violence 
Against Women Act of 1994),\13\ Lopez v. United States 
(striking down a Federal gun-free school zone law which had no 
interstate commerce requirement),\14\ and New York v. United 
States \15\ and Printz v. United States \16\ in which the Court 
showed extreme scepticism regarding Congress' ability to 
dictate State legal policies.
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    \11\ Article I, section 8 of the Constitution provides, inter alia, 
``Congress shall have Power . . . To regulate Commerce with foreign 
Nations and among the several States. . . .'' U.S. Const. art I, 
Sec. 8, cl. 3.
    \12\ The 10th amendment provides ``[t]he powers not delegated to 
the United States by the Constitution, nor prohibited by it to the 
States, are reserved to the States respectively, or to the people.'' 
U.S. Const. amend X.
    \13\ 529 U.S.____(2000).
    \14\ 514 U.S. 549 (1995). In Lopez, one of the problems with the 
school gun ban was that it contained ``no express jurisdictional 
element which might limit its reach to a discrete set of firearms 
possessions that additionally have an explicit connection with or 
effect on interstate commerce.'' When Congress acted in 1996 to remedy 
the constitutional infirmity in the school gun ban invalidated by 
Lopez, it limited the law to firearms that have ``moved in or that 
otherwise [affect] interstate or foreign commerce.'' 18 U.S.C.A. 
Sec. 922(q)(2)(A) (1994) (amended 1996). See also, Employers Liability 
Cases, 207 U.S. 463 (1907) (striking down Federal tort law concerning 
common carriers which preempted State tort law on interstate commerce 
grounds); T.R. Goldman, Lopez Gives Tort Reform a New Weapon, Legal 
Times, May 8, 1995, Tort Reform Notebook, at 2 (quoting Harvard Law 
School Professor Laurence Tribe for the proposition that ``Lopez is a 
reminder that the commerce clause is not a blank check. As such, it 
will operate to at least raise significant questions about some of the 
elements of proposed tort reforms pending in Congress'').
    \15\ 505 U.S. 144 (1992) (invalidating a Federal law requiring 
States to assume ownership of radioactive waste or accept legal 
liability for damages caused by the waste because it was found to 
``commandeer the legislative processes of the States'').
    \16\ 521 U.S. 898; 117 S.Ct. 2365; 138 L.Ed. 2d 914; 65 U.S.L.W. 
4731 (U.S. June 27, 1997) (invalidating portions of the Brady Act 
requiring local law enforcement officials to conduct background checks 
on prospective gun purchasers).

                                   John Conyers, Jr.
                                   Howard L. Berman.
                                   Robert C. Scott.
                                   Melvin L. Watt.
                                   Sheila Jackson Lee.
                                   William D. Delahunt.
                                   Anthony D. Weiner.