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New Jersey’s attempt at legalized sports betting suffers another big setback in court

This won’t be coming to New Jersey, at least in the short term. (Ethan Miller/Getty Images)

The U.S. Third Circuit Court of Appeals on Tuesday upheld the prohibition of sports gambling in New Jersey, ruling that the state’s 2014 attempt at legalizing the practice violated the Professional and Amateur Sports Protection Act (PASPA), the 1992 federal law that prohibits sports gambling in all but four states: Nevada, Oregon, Montana and Delaware.

New Jersey has made two attempts at legalizing sports gambling in an attempt to shore up the lagging fortunes of the state’s Atlantic City casinos, which have been decimated by the spread of legalized casino gambling in neighboring states. The state has been opposed by the NCAA, MLB, NBA, NFL and NHL, who have long argued that the expansion of legalized gambling violates federal law.

The leagues won their first victory in U.S. District Court, and last August a three-judge panel of the Third Circuit Court of Appeals ruled that New Jersey’s most recent attempt to legalize sports gambling, in 2014, amounted to a de facto authorization, in violation of PASPA, even though the state only wanted to repeal its laws prohibiting sports betting and would not actually be involved in the regulation of sports gambling, leaving that to the casinos and racetracks.

In turn, New Jersey asked that the entire Third Circuit panel hear its argument, a so-called en banc hearing that is granted only under exceptional circumstances. In February, state attorneys presented their case before all 12 active judges of the Third Circuit.

In a 10-to-2 vote, the Third Circuit sided Tuesday with the NCAA and the sports leagues, though two of the judges wrote dissenting opinions.

“We now hold that the District Court correctly ruled that because PASPA, by its terms, prohibits states from authorizing by law sports gambling, and because the 2014 Law does exactly that, the 2014 Law violates federal law,” Judge Marjorie Rendell wrote in the majority opinion, adding that PASPA is indeed constitutional because it does not commandeer the states to enforce a federal law not expressly written into the Constitution.

In his dissent, Judge Julio M. Fuentes writes that New Jersey’s attempted repeal of its sports gambling prohibitions did not amount to an authorization of sports betting in the state because New Jersey would not be officially regulating sports gambling, instead merely allowing it. A literal reading of PASPA would allow such a move, Fuentes writes. Judge Thomas I. Vanaskie, in a separate dissent, repeated his earlier assertion that PASPA as a whole is unconstitutional.

Bot Fuentes and Vanaskie had sided with New Jersey in previous court decisions.

According to sports-law expert Daniel Wallach, New Jersey has until Nov. 7 to petition the U.S. Supreme Court to hear the case, and State Sen. Raymond Lesniak, a longtime supporter of legalized gambling, told ESPN’s David Purdum that the state will do exactly that. Both Wallach and Lesniak both have their doubts about whether the Supreme Court will hear the case, with Lesniak on Tuesday calling it “a long shot.”

Wallach does note, however, that the rise of daily fantasy sports and the specific legalization of DFS in certain states may pave the way for legalized sports gambling overall in the United States, especially in light of the fact that the professional leagues have financial agreements with DFS companies in place. States that have legalized DFS could argue that the Department of Justice is selectively enforcing PASPA by prohibiting sports gambling but allowing legalized DFS.

“They can’t have it both ways. Either PASPA applies to both or to neither,” Wallach says.