The Long Road to Legalized Sports Betting in NJ

Avatar Updated on October 10, 2014

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Sports betting in New Jersey remains illegal, but that could all change in a matter of weeks. U.S. District Judge Michael Shipp was initially set to make a ruling on October 6th, but he postponed the final hearing to the last day of the month, Halloween, adding yet another level of suspense to the four year long crusade to make gambling on games legal in the Garden State.

 

After several failed appeals, the Christie administration found away to sidestep a federal law that prohibits sports betting in the Garden State. The Professional and Amateur Sports Protection Act (PASPA), enacted in 1992, bars states from licensing or regulating sports betting, with the exception of Nevada, Delaware, Montana, and Oregon, which were grandfathered under the act.

Ironically, one of New Jersey’s own senators sponsored PASPA, former professional basketball star Bill Bradley, who felt that sports gambling threatened the integrity of professional sports. The law gave New Jersey one year to decide whether Atlantic City would too be grandfathered in, but state lawmakers passed.

Twenty -two years later, New Jersey officials are working feverishly to reverse the work of their contemporaries, arguing that the law is a violation of state’s rights. Integrity aside, sports betting is widely viewed as the key to revitalizing the state’s struggling casinos and racetracks.

An Uphill Legal Battle

The legal battle to enact sports betting in New Jersey goes back to 2011 when the people of New Jersey overwhelmingly voted to legalize sports betting. The legislature followed by passing a bill that Governor Chris Christie signed into law in early 2012. The law would allow waged bets on all sporting events, with the exception of games involving New Jersey colleges and college games played in the state.

State officials believed the law would curb illegal sports betting and bring in millions of dollars in sports revenue.

leaguesHowever, sports league officials sued to block the law from taking effect. In a largely symbolic stand against legalized sports betting, the National Collegiate Athletic Association, Major League Baseball, the National Basketball Association, the National Football League, and the National Hockey League joined forces for the lawsuit.

The state lost to the leagues three times in federal court. The final appeal took place in September where the 3rd Circuit ruled against sports betting 2-1.

As a last ditch effort, lawmakers appealed to the nation’s highest court, hoping to prove that the Professional and Amateur Sports Protection Act violates the 10th amendment, which allows states to regulate when the federal government does not.

When the Supreme Court declined to hear the appeal, State Senator Raymond Lesniak, sponsor of the original sports betting bill, hatched a new plan. He noticed a loophole in the federal law that only bans states from authorizing gambling. The federal law says nothing about New Jersey’s rights to repeal existing prohibition laws.

Accordingly, Lesniak introduced a bill to circumvent federal law by repealing old state laws that prohibited sports betting at casinos and horse tracks. The move would enable private companies to run sports betting operations, without state regulation.

Lesniak’s bill (S2250/A3476) cleared the state Senate and the Assembly, before Governor Chris Christie vetoed it. Instead, in early September, Christie shocked everyone with an apparent about-face. He ordered the Attorney General’s office not to prosecute casinos and racetracks if they offered sports betting unregulated by the state.

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The move would essentially render federal law void by refusing to enforce it.

It’s a directive harkens back to New Jersey’s early gambling era, between 1894 and 1939, all gambling was illegal, but enforcement was spotty at best. Hence bookmaking, numbers games, and slot machines flourished.

 

Implications

As New Jersey’s gambling empire declines, state officials are pinning their hopes on sports betting. It seems to be the most viable way to counter increasing competition from nearby casinos in Pennsylvania and Connecticut. With all that money at stake, New Jersey has pumped millions of taxpayer money in its attempt to protect the future of gambling. $3.1 million went to outside law firm Gibson, Dunn & Crutcher, the same firm Christie hired to conduct his office’s internal investigation into the George Washington Bridge scandal.

If the federal court approves sports betting, racetracks and casinos will spring into action almost immediately. Monmouth Park Racetrack has indicated it will offer sports betting as soon as next month, given the legal okay.

But even if the Garden State gets the green light, sports leagues remain opposed. After Christie announced the directive to ignore federal law, the leagues and the NCAA filed a response that called Christie’s move “astounding,” “specious” and a “blatant violation”.

League officials fear that sports betting, like performance-enhancing drugs, would erode the integrity of American athletics, motivating players and referees to throw games. Those concerns are not without just cause. The World Cup, an international sporting event that attracts millions of dollars in illegal wagers, has come under frequent scrutiny for suspicious outcomes. Following the 2014 games, officials launched an investigation into seven players from Cameroon.

Lucrative player salaries in the pro-leagues dissuade athletes from cooperating with gambling syndicates, but at the college level, where there is no pay, the threat of fixed games is still very real, even without legalized gambling.

Stack Of CashHowever, money talks, and could turn even the strongest opposition into supporters. Already the NBA’s commissioner David Silver acknowledged that there is a potential silver lining in sports betting. At the Bloomberg Business Summit in New York last month, he said, “If you have a gentleman’s bet or a small wager on any kind of sports contest, it makes you that much more engaged in it. That’s where we’re going to see it pay dividends. If people are watching a game and clicking to bet on their smart phones… then it’s much more likely you’re going to stay tuned for a long time.”

For now, the biggest scare this Halloween would be a ruling against sports betting. For lawmakers, it would be back to square one in regards to finding a new cure-all for an ailing industry.

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