A federal appeals court ruled Tuesday that New Jersey’s attempt to allow sports betting in casinos and racetracks violates federal law, a decision that could set back efforts to expand legal sports gambling in the United States for years.
For the second time in two years, a three-judge panel from the Third U.S. Circuit Court of Appeals in Philadelphia ruled in favor of professional sports leagues and the NCAA, which have twice sued New Jersey to prevent attempts to expand legal sports betting into the state despite a 1992 federal law that bars most sports gambling outside Nevada.
For critics of the country’s legal stance on sports betting, like New Jersey State Sen. Raymond Lesniak, Tuesday’s ruling leaves two options: hope for a rare rehearing of this case, or push for Congress to repeal the Professional and Amateur Sports Protection Act of 1992, or PASPA.
“Our hopes are certainly lessened by this decision, although not extinguished,” said Lesniak, a Democrat who has hoped sports betting would attract business to New Jersey’s flagging casinos. “I’m looking forward to working aggressively with other state leaders to get Congress to do it right.”
In 2012, New Jersey argued in federal court that PASPA was unconstitutional, and lost. A panel from this same appeals court ruled PASPA is constitutional, but seemed to leave a path open to legal sports betting similar to how Colorado and Washington legalized marijuana: remove state prohibitions.
PASPA bars states from “authorizing” sports betting, so New Jersey lawmakers tried to come up with legislation that allowed sports betting without technically authorizing it.
In 2014, Gov. Chris Christie (R) partially repealed New Jersey’s prohibitions on sports betting in casinos and racetracks. Christie did not fully repeal New Jersey’s laws against sports betting, though. He kept it illegal to bet on college sporting events that involve New Jersey colleges or collegiate events taking place in the state.
In Tuesday’s decision, the judges concluded this artful attempt to expand sports betting without technically “authorizing” it failed, because New Jersey still selectively decided “where sports gambling may occur, who may place bets on such gambling, and which athletic contests are permissible subjects for such gambling.”
The NBA, whose commissioner, Adam Silver, favors expanding legalized sports betting, still opposed New Jersey in this case because Silver wants a federal overhaul. NBA spokesman Mike Bass, in a statement Tuesday, agreed with the court’s decision and said “the appropriate path to legal sports betting is through Congress.”
“We continue to support a federal legislative solution that would protect the integrity of the game while allowing those who engage in sports betting to do so in a legal and safe manner,” Bass said.
Sen. John McCain, the Arizona Republican who has been the most prominent legislator to call for Congress to reexamine federal law on sports betting, was unavailable for comment Tuesday.
The push to expand legal sports wagering outside Las Vegas seemed to gain momentum earlier this year, with Silver and McCain espousing a federal discussion of the country’s unique legal stance, which treats sports betting different than all other types of gambling.
Since PASPA’s passage in 1992, the United States has undergone an unprecedented expansion of every type of gambling except sports betting. Most states now have casino gambling, but bettors who want to legally wager money on a sporting event like an NFL or NBA game still need to travel to Las Vegas.
Nearly $4 billion is bet legally on sports in Las Vegas each year. Estimates for how much Americans wager illegally each year on sporting events like the Super Bowl, the NCAA men’s basketball tournament and others range from $80 billion to $400 billion.
“Today’s decision by the Third Circuit on sports betting and how gaming is regulated encourages deeper examination about the best path forward on this issue,” American Gaming Association President and chief executive Geoff Freeman said in a statement. “It’s clear that current law is not achieving its intended result.”
The sports leagues — most notably, the NFL — that continue to oppose changes to federal law on sports betting argue it threatens the integrity of their games by increasing the chance for game-fixing.
Since 1992, however, several game-fixing scandals have been uncovered only because oddsmakers in Las Vegas noticed strange betting activity, supporting the argument now embraced by Silver: The only way to effectively uncover and prevent game-fixing is to legalize, tightly monitor and regulate sports betting.
New Jersey will appeal Tuesday’s ruling, said Lesniak, and ask for a rehearing en banc, which would require a majority of the judges in the Third Circuit to agree to hear the case. The court should decide whether it will hear the case by the end of this year.
En banc hearings are rare, but this case may fit the narrow definition that would earn a second look, according to Daniel Wallach, a sports and gaming attorney at Becker & Poliakoff in Fort Lauderdale, Fla.
“An en banc hearing is an extraordinary occurrence, but this case has all the boxes checked that you’d be looking for,” Wallach said.
One of those major boxes, Wallach said, is whether the case is one of great public importance.
“And you have that here,” he said. “This not only affects New Jersey, but the legality of sports gambling across America.”