This week’s long-awaited U.S. Supreme Court oral arguments on Christie v. the NCAA, which could influence whether sports wagering will be legalized nationwide, could also play a role in another issue at the forefront of the gaming industry: the presence of marijuana in casino resorts.
Gaming industry legal scholar I. Nelson Rose, a professor at Southern California’s Whittier Law School and an internationally known gaming legal expert, calls Christie v. the NCAA “the most important case of this century.”
But not because it deals with gambling.
“It is important to understand that the Supreme Court does not care about gambling at all, let alone sports betting,” Rose said in a recent blog post on his “Gambling and the Law” website.
“But it cares very much about our system of government and the relationship between the power of the federal government and the states,” he said.
Rose theorizes that justices took the case to decide where to draw the lines. What are the limits on the power of the federal government, especially Congress and administrative agencies, to tell the states what they can and can’t do?
The case was briefly alluded to in Wednesday’s Gaming Policy Committee meeting, at which the 12-member board agreed to pause for a few weeks before coming up with policy recommendations on whether casino companies should allow conferences and trade shows about marijuana to convene in resort convention facilities.
Lack of direction
Gov. Brian Sandoval, who called the committee together to discuss marijuana’s presence in the resort corridor, is frustrated with the lack of direction from federal Justice Department leaders about their stance on pot.
Marijuana is classified as an illegal controlled substance, yet the Justice Department does little toward enforcement.
The Nevada Gaming Commission, following recommendations from Gaming Control Board member Terry Johnson, has established policies warning gaming licensees from doing business with companies that promote the use of marijuana.
Las Vegas is the leading convention and trade-show destination in North America, and Nevada is the acknowledged gold standard in gaming regulation. Is it possible for casino companies and their convention facilities to access the millions of dollars conferences and trade shows generate without running afoul of drug laws, money-laundering statutes and racketeering charges that could come with the marijuana business?
What happens if?
What happens if long-dormant enforcement policies suddenly come to life in the always-surprising Trump administration? What would happen post-Trump?
Would gaming licensees become liable as potential co-conspirators in a drug, money-laundering or racketeering case? That’s a scenario that legal expert Brian Barnes, an associate with the Washington-based Cooper & Kirk law firm, outlined in his presentation before the Gaming Policy Committee. State regulators definitely don’t want to see their licensees in the crosshairs of federal prosecutors because they then would be compelled to punish them for damaging the state’s reputation.
And then, there’s the issue of the use of medical marijuana. Las Vegas is trying to gain a foothold in medical tourism, and Gaming Commission Chairman Tony Alamo, who also has medical doctor credentials, told fellow committee members that he is a believer in medical marijuana.
“There is a need for medicinal marijuana,” Alamo said before the committee. “It’s the drug of last resort. There are a subset of people that through conventional medications and therapies have to go to this to get their ailment solved or relieved.”
But he also acknowledged that, as a gaming regulator, he has to remember that there’s also state policy that requires licensees to comply with all federal, state and local regulations or face disciplinary action.
That’s where the Supreme Court hearing comes in. If Rose is correct, the court’s decision could affect more than just sports betting.
Handicapping the outcome
What will the court do? The American Gaming Association and other supporters of legalizing sports betting nationwide seem confident that the court will rule in favor of Gov. Chris Christie and New Jersey and strike down the Professional and Amateur Sports Protection Act, which prevents states from taking sports bets.
Two local bookmakers aren’t quite as confident.
Jay Kornegay, vice president of race and sports operation at the Westgate Las Vegas SuperBook, said he thinks it’s a coin toss as to whether Christie or the NCAA prevail.
“I hear a lot of optimism surrounding the case for those that are looking for the expansion of sports gambling, and I can understand that because there are so many reports that it’s leaning in that direction,” Kornegay said.
“I don’t have any information that would make me lean one way or the other. I wish I did. Both sides have their starting quarterbacks playing, so pick ’em.”
His counterpart at Station Casinos, Art Manteris, is more analytical and sees five possible outcomes, all having an equal shot.
“I know that a lot of pundits and legal analysts are of the position that the Supreme Court would not be hearing the case if they didn’t intend to overturn it,” he said. “I don’t completely agree with that.”
Manteris said there could be an outright appeal of the PASPA law, a partial repeal, the maintaining of the status quo, a re-emphasis of the law or no decision at all.
“If I were booking it, I’d say all outcomes are equally likely, so it would be 3-to-1 odds on each,” he said.
Manteris also said he believes the size of the illegal market has been wildly overestimated.
While some have said it’s as high as $400 billion a year and the American Gaming Association has quoted it as $149 billion a year, he thinks it’s actually closer to $50 billion to $60 billion.
He said it’s clear that most people outside of Nevada don’t have a basic understanding of the industry, not realizing what a small percentage sports wagering represents in casinos, how tight the margins are and how volatile the action is from week to week.
That’s why he thinks if PASPA is repealed, Nevada could — and should — become the hub of sports wagering nationwide.
“We have the regulatory infrastructure, the technical capacity and the liability management expertise right here,” Manteris said.
“It bothers me that Nevada isn’t in the forefront of the discussion.”