Stock Market Reaction to the Supreme Court’s Consideration of PASPA

A landmark decision (Murphy v. NCAA) by the Supreme Court of the United States (SCOTUS) in 2018 ruled that the federal government could not prohibit individual states from allowing sports wagering. Our study explicitly assesses the stock market’s response to this case’s progression through legal rev...

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Bibliographic Details
Published in:International journal of sport finance 2022-02, Vol.17 (1), p.18-28
Main Authors: Krieger, Kevin, Davis, Justin L
Format: Article
Language:English
Subjects:
Decision making
Efficiency
Efficient markets
Federal regulation
Gambling
Judicial reviews
Prediction markets
Professional soccer
Rates of return
Securities markets
Sports betting
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Summary:A landmark decision (Murphy v. NCAA) by the Supreme Court of the United States (SCOTUS) in 2018 ruled that the federal government could not prohibit individual states from allowing sports wagering. Our study explicitly assesses the stock market’s response to this case’s progression through legal review phases, culminating with a landmark SCOTUS decision. Surprisingly, we find that the stock market failed to efficiently interpret key events precipitating SCOTUS’ eventual decision. Even though serious indications suggested that the Professional and Amateur Sports Protection Act (PASPA) was likely to be overruled, markets did not acknowledge such a possibility early. Instead, prices only responded when SCOTUS’ ruling was finalized.
ISSN:1558-6235
1930-076X
1930-076X
DOI:10.32731/IJSF/171.022022.02