As most people reading this blog have probably heard, the U.S. Supreme Court recently decided the matter of Murphy v. NCAA. In short, the Court ruled that the Professional and Amateur Sports Protection Act (PAPSA) which essentially prohibited the states from authorizing betting on sports, is unconstitutional. What followed was largely a reaction that legalized sports gambling was on the way across the country, the value of sports franchises were increasing overnight, and gambling chaos would ensue. But before you start sizing up the over/under line on your son’s or daughter’s little league game, the reality is that while this ruling does open the door in the future don’t expect legal sports gambling to invade North Carolina overnight. While a few states will likely move quickly to establish sports gambling most states will need time to study the impacts. After all, at least as of today, it is still illegal in North Carolina (See NCGS 14-292). The Court’s decision also arguably leaves room for Congress to step in and attempt to regulate sports gambling on its own accord (or at the request of one of the major professional sports leagues).

But if the day comes that sports gambling is authorized in North Carolina what should local governments be preparing for?

Zoning Regulation

Will sports gambling take place entirely online or will brick and mortar establishments arise? Maybe both? With any new type of business or land use, zoning departments need to plan for its entry into their community. This could mean defining the business such that it falls into an existing category or creating a new one and determining what regulations will apply to it. Anyone who has read the decision in Byrd v. Franklin County, 765 S.E.2d 805 (2014) knows that not addressing a use can lead to complications. Any regulation would of course be contingent on what authority the state provides local governments but it’s likely that if the Legislature takes the step to authorize such activity local governments will be able to regulate the use as it does most others. But for any municipality that has wrestled with state law concerning Internet Sweepstakes/Cafes that is not always so simple. It’s also worth noting that like with internet sweepstakes, sports gambling uses may become a frequent secondary or accessory use that local governments may need to recognize.

Law Enforcement

It’s unknown what form of establishments would arise from the legalization of sports gambling. Would it be a “disruptive” use? Would there be the potential for other activities that may be illegal? Is there a possible crossover with zoning regulations that would warrant separation requirements between these businesses and others, or possibly traffic concerns? One benefit in North Carolina is that another state (New Jersey in particular, which challenged PAPSA) will likely move sooner rather than later to establish legalized sports gambling and local governments will have some opportunity to see how some of these issues play out in other locations. Another question that may come with the introduction of legal sports gambling is whether additional legislation will be needed to address forms that may not be legal. There are certain to be aspects that law enforcement, whether locally or on the state level, will be tasked with addressing.

Revenue

Should North Carolina ultimately authorize sports gambling a big unknown is what revenue will be generated for the state and/or local governments. And similar to the lottery, how should that revenue be allocated? There is an obvious tax revenue that is associated with any new industry but will the Legislature consider any other source of revenue? Privilege license fees are largely nonexistent now (other than beer and wine) but will there be an opportunity created for local governments from a local tax or fee perspective?

Again, it’s entirely possible that Congress will look to place regulations on sports gambling that will shape what states do or don’t do. But the commercial gambling lobby will likely be a strong one and states may have big decisions coming soon. It’s probably best for local governments to start thinking about how those decisions will impact them sooner rather than later.

June 5, 2018/by NCBARBLOG

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