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After court arguments, is New Jersey any closer to legalized sports gambling?

(Ethan Miller/Getty Images)

On Wednesday, the state of New Jersey argued its case for legalized sports gambling before the U.S. Third Circuit Court of Appeals in Philadelphia. The state has long sought to implement sports betting in order to prop up the sagging fortunes of its casinos and racetracks, only to be blocked twice by the same Third Circuit appeals court after challenges were raised by the NCAA, NFL, NBA, NHL and Major League Baseball.

Wednesday’s hearing was different than the previous two, however. Instead of the three-judge panels that heard the first two cases, Wednesday’s arguments were heard by all 12 of the Third Circuit’s active judges, an “en banc” hearing that is granted only in exceptional circumstances.

At the center of the issue is the Professional and Amateur Sports Protection Act (PASPA), a 1992 federal law that prohibits all but four states — Nevada, Oregon, Montana and Delaware — from authorizing sports gambling. The questions raised Wednesday sought to not only determine whether New Jersey was violating PASPA in its attempts to legalize sports gambling, but whether PASPA is even constitutional.

In its first attempt to legalize sports gambling in 2012 (short-handedly known as “Christie I,” after Gov. Chris Christie), New Jersey argued that PASPA violated the 10th Amendment of the U.S. Constitution in that it compels the state to enforce a federal law not expressly written into the Constitution. The three-judge panel disagreed, saying New Jersey was free to repeal its bans on sports gambling if it so wanted.

And that’s what New Jersey did, repealing its sports gambling prohibitions, leaving oversight to the state’s casinos and racetracks and promising they wouldn’t be prosecuted for allowing sports gambling. Once again the sports leagues sued to stop New Jersey, and once again they were successful: In what has come to be known as “Christie II,” the Third Circuit appeals court ruled that New Jersey’s actions constituted a “de facto” authorization of sports gambling, in violation of PASPA.

It was thought that Wednesday’s hearing would be an attempt by the judges to reconcile those seemingly contradictory rulings, but the judges also seemed interested in asking the two sides about PASPA’s constitutionality.

As a result, we likely are looking at three possible outcomes when the court issues its ruling later this year, according to gaming-law attorney Christopher L. Soriano of Duane Morris LLP in New Jersey:

It’s always difficult to tell where a court may be headed, but it seems that the Court had more difficult questions for the state than for the leagues.  That said, there seems to be three camps on the Court: those who believe PASPA is unconstitutional (and thus NJ gets regulated sports betting); those who believe PASPA is constitutional but NJ has complied with PASPA in its partial repeal (and thus NJ gets unregulated sports betting in casinos and racetracks) and those who believe PASPA is constitutional and that NJ’s partial repeal violates it (and thus no sports betting).

Most experts, such as sports and gaming lawyer Daniel Wallach, say New Jersey faces an uphill battle in this specific case, but that it also could be the beginning of the end of PASPA:

For New Jersey to win, it must convince seven of the 12 judges to take its side. At least three of them already have ruled against the state, making its battle even tougher.

The Third Circuit isn’t expected to issue its ruling until at least June.