This case is the latest chapter in New Jersey’s years-long fight to legalize sports betting, which lawmakers hope could help revive business in struggling Atlantic City casinos, which have seen crowds ebb as casino gambling has spread across the country. Three federal judges on the Third Circuit Court of Appeals heard oral arguments on March 17 in Philadelphia. The court usually takes about three months to return an appeals ruling, legal experts said, so a decision was expected in June.
Unlike the Supreme Court, which releases decisions before it recesses for the summer, federal appeals courts work year-round, and release decisions when they’re done.
“The deadline is when they feel like it. Nobody can tell them to speed it along. Their first priority is getting it right,” said Daniel Wallach, a sports gaming law expert and lawyer at Becker & Poliakoff in Ft. Lauderdale.
Wallach attended the oral arguments in March, and while he expects the sports leagues to prevail, he isn’t ruling out a New Jersey win, as he explained in a detailed blog post analyzing the case.
A brief history of New Jersey’s battle for legal sports betting
In 1992, pro sports leagues successfully lobbied Congress to pass the Professional and Amateur Sports Protection Act – commonly known as PASPA – which barred states that didn’t already have legal sports betting from adding it. This law effectively gave Nevada a sports gambling monopoly.
In 2012, New Jersey lawmakers tried to legalize sports betting anyway, and the leagues sued in federal court to stop it. New Jersey’s lawyers argued that PASPA was unconstitutional, but lost. On an appeal, the same federal appeals court mulling the current case ruled in favor of the sports leagues, but the judges left an opening for New Jersey.
PASPA is constitutional, the judges said then, but nothing prevented New Jersey from repealing its state laws against sports betting. The court basically left a path to legal sports betting similar to how Colorado and Washington got legal marijuana: remove the state laws, and hope federal law enforcement doesn’t put up a fight.
New Jersey lawmakers didn’t want to completely get rid of their state prohibitions on sports betting, though, which would send gamblers to newly emboldened neighborhood bookies. So in 2014, Gov. Chris Christie partially repealed New Jersey’s laws against sports betting, allowing it only in casinos and racetracks. The sports leagues sued, again.
The current case basically hinges on a debate over the exact meaning of six verbs in PASPA. The law says states can not “authorize, sponsor, operate, advertise, promote, or license” sports betting. New Jersey is arguing that this latest attempt does none of those things. The sports leagues are arguing that, by trying to only allow sports betting in state-licensed casinos and race tracks, New Jersey is authorizing sports betting, and is basically licensing it, too.
What’s at stake?
In the short-term, money.
If New Jersey wins, officials at Monmouth Park race track – who have already partnered with British gambling company William Hill in anticipation of eventual legalization – say they could have a sports book operational by football season, which begins in September. That would be a good idea, because football is by far the most popular sport for American sports gamblers.
In 2014, $3.9 billion was gambled on sports in Nevada, according to an analysis of state gaming revenue reports by the UNLV Center for Gaming Research. Nearly half – $1.75 billion – was wagered on football. (That includes both the NFL and college football, the analysis doesn’t offer a breakdown by league). Basketball was the second most-popular sport for gambling, with $1.1 billion wagered. Baseball was third, with $722 million wagered.
In the long-term, a win for New Jersey could show other states interested in legal sports betting how to do it. And a win for the sports leagues could deal a crushing blow to the effort to legalize sports betting, or it could just be a setback, depending on the exact language of the ruling.
Why is the NBA suing to prevent legal sports betting if Commissioner Adam Silver has come out in favor of it?
Silver does want legal sports betting, but he wants a comprehensive, federal overhaul to America’s sports gambling law. Essentially, he wants PASPA repealed, so people across the country can bet on sports, and sports leagues and law enforcement can tightly control and monitor the American betting market, keeping an eye out for irregular betting activity that could indicate corruption.
Silver does not want an incremental, state-by-state switch, which is basically how America has always dealt with gambling. (See the histories of both state lotteries and casinos.) Interestingly, while the NBA is publicly opposing New Jersey in this case, some gaming law experts think Silver is privately hoping the sports leagues lose, giving him more leverage to convince his fellow commissioners that the fight to keep sports betting illegal outside Nevada is hopeless, and they should go to federal lawmakers and ask for a repeal of PASPA.
Can either side appeal?
Of course. This is the American judicial system, nothing is ever over. But this case is a big one, because any appeal faces long odds of getting heard. The losing side would first ask for a re-hearing en banc, which would mean asking all 23 judges in the Third Circuit, not just the three that heard the case, to weigh in. If that request is denied, there’s always the Supreme Court. But both are longshots. This ruling could be the last word from America’s courts on the fight to legalize sports betting for a while.