How Long Is The Wait For Legal Sports Betting In New Jersey And Elsewhere?

June 20, 2016
How Long Is The Wait For Legal Sports Betting In New Jersey And Elsewhere?

Whenever you are discussing a topic as heated as gambling, there is bound to be disagreement on some issues.

But at the recent East Coast Gambling Congress & iGaming Institute at Harrah’s Resort in Atlantic City, all of the presenters seemed to be united on one issue. They agreed that the current federal ban on sports betting in most states needs to be repealed.

If casino gambling is legal, why not sports betting?

Approximately 85 percent of American adults have placed a sports wager of some type at some point in their lives. Therefore, it is a reasonable assumption that given the option to place a sports bet at a casino, many of these people, as long as they are going to visit the casino to play anyway, would want to take advantage.  

Many gamblers would applaud an end to the law banning sports wagering in most states, because it would make it much easier to place these bets safely and legally.

Another plus would be a very high level of confidence that they are being given fair odds and if they win, they will be paid promptly. In addition, because the bets would have been made with cash rather than on credit, any worries on the part of losing gamblers about how they are going to pay the bookmaker would be eliminated. There is less likelihood of getting in over one’s head.

At the same time, legalization of sports betting is viewed as being a very good thing for the casino industry and for the states offering it. The sports betting market in the United States is currently estimated at $150 billion. Legalized sports betting nationwide would be capable of generating a minimum of $8 billion in additional annual revenue.

About $15 billion is wagered in this country annually on the Super Bowl and March Madness alone, 97% of which is done illegally online or through bookies. Any such money, along with other illegally placed wagers, that is not returned to winning players stays with the illegal operators and is used to fund other illegal gambling activities. The states do not benefit in any way.

In addition, as the sports leagues themselves are beginning to realize, illegal wagering poses a threat to the integrity of the game. Therefore, sports betting needs to be regulated.

New Jersey is pushing for sports betting

One state which has been trying for some time to challenge the constitutionality of the current law forbidding sports betting is New Jersey.

With Atlantic City desperately trying to reinvent itself to attract more players in the face of increasing competition from other states, there is no doubt that legalized sports betting would be a big draw. Its eight casinos would love to be able to offer this option, which would appeal across generations to millennials and older gamblers alike.

It would also encourage many more visitors to stay in town for a few days, like in Las Vegas, during which time, they would also presumably play in the casinos. But for now, it is no more than wishful thinking because, legally, the casino operators’ hands are tied.

The problem is PASPA

Currently there are only four states where any form of sports betting is considered legal — Nevada, Delaware, Montana and Oregon. Those four states were all declared exempt from the Professional & Amateur Sports Protection Act of 1992 (PASPA), which bans all sports betting in the U.S. except in those states where it was already legal or in municipalities which qualified by virtue of satisfying other criteria.

If a municipality already had legal casino gambling for at least 10 years prior to the enactment of PASPA — and if legislation were adopted to allow sports betting there as well within one year of PASPA’s January 1, 1993 effective date — exemption could be granted.

New Jersey — via Atlantic City — would have been the one jurisdiction in the country that would have been eligible. But it lost the opportunity when it failed to meet the deadline for coming up with a referendum for voters in that year’s general election. As a result, sports betting has remained illegal in New Jersey.

Individuals in New Jersey who want to place a wager, like in all of the other states where sports betting is not allowed, will have to do so illegally, either online or with a bookmaker.

What PASPA does, and what it doesn’t do

Nevada is by far the state which offers sports bettors the most legal options. Unlike Delaware — where sports betting is permitted on the NFL only and further limited to future bets on the Super Bowl and otherwise to parlays and teasers consisting of three teams or more — the Nevada sportsbooks take bets on all sports.

In Nevada, bets can be placed on as few or as many games as the individual wishes to have action. Bettors can wager legally not just on parlays and teasers, but on single games and overs and unders, and a tremendous variety of propositions and future bets.

When PASPA was enacted into federal law in 1992, it had the support of all of the major professional leagues (NFL, MLB, NBA and NHL) as well as the NCAA. The rationale behind it was threefold:

  • To stop the spread of state-sanctioned sports gambling.
  • To maintain the integrity of professional and collegiate sports.
  • To limit exposure of youth and other vulnerable groups to the temptations of sports gambling.

After more than 20 years, it has become increasingly clear that the law has been ineffective in accomplishing what it set out to do. Instead, tremendous amounts of money are being bet on sports illegally, and benefiting nobody but the perpetrators. The situation is analogous to the prohibition on alcohol last century.

If at first you don’t succeed …

Even though all of the efforts on the part of New Jersey over the past few years to try to get PASPA repealed have run into a wall, those supporting the cause are not giving up the fight.

In the 2011 general election, NJ voters approved a bill to offer sports betting in the state’s casinos and racetracks, and in 2012 Gov. Chris Christie signed the bill into law. However, on August 7, 2012, the four major professional sports leagues and the NCAA filed a lawsuit in District Court seeking an injunction on the grounds that the New Jersey law would violate the provisions of PASPA.  

One of the arguments that the state of New Jersey used in support of its case was that the leagues sanction fantasy sports. However, that argument was shot down on the grounds that fantasy sports do not constitute gambling as covered by federal law. Another argument maintaining that PASPA is unlawfully discriminatory because some states are exempt was also unsuccessful.

The court sided with the sports leagues regarding the constitutionality of PASPA and ruled that New Jersey’s efforts to implement state regulated sports betting violated the terms of that federal law. Accordingly, the court issued a permanent injunction against New Jersey going forward with implementing its plan to offer regulated sports betting at casinos and racetracks.

Subsequently, the Third Circuit Court of Appeals upheld the ruling, after which the U.S. Supreme Court refused to hear the case.

Take two on sports betting

So it was back to the drawing board, and on October 17, 2014, Christie signed a new version of the state law to allow sports betting with additional provisions, which was known as the Sports Wagering Act of 2014. It was hoped that the Sports Wagering Act, unlike its predecessor, would be deemed fully compliant with federal law.

The act also stipulated that no one under age 21 would be allowed to place sports wagers in the state of New Jersey. In addition, in recognition of the importance of ensuring the integrity of the various sports, no wagers could be placed on any collegiate games taking place in New Jersey or any games, regardless of venue, involving a college from New Jersey.

Once again, however, the sports leagues intervened to prevent the new state law from taking effect, and just like before, both the District Court and the Court of Appeals sided with the plaintiffs. But this time the state of New Jersey applied for and was granted a rehearing by the Court of Appeals with a panel of 12 judges.

The hearing at the Third Circuit Court of Appeals took place on February 17, 2016, with the decision still pending. If the results are the same, New Jersey could try once again to take its case to the Supreme Court, but with no guarantee the case will be heard.

Meanwhile, not only the New Jersey Division of Gaming Enforcement and all of the New Jersey casinos and racetracks, but interested parties in other states are anxiously waiting for the next court ruling. Will 2016 be the year when PASPA, a federal law many people believe to be not only ineffective, but both antiquated and unconstitutional, is finally overturned?

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