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New Jersey Leading The Charge To Legalize Sports Gambling

By Daniel S. Greene

As it stands today, sports gambling is legal in four states: Nevada, Oregon, Delaware, and Montana. These are the only states that legalized sports gambling before or within a year of the passage of the Professional and Amateur Sports Protection Act (PASPA) (http://www.americangaming.org/government-affairs/key-issues/past-issues/sports-betting). PASPA was enacted in 1992 and made it illegal for any government entity or person to promote or operate any form of sports gambling involving amateur or professional sporting events. (28 U.S.C.A. ยง 3702) (https://www.law.cornell.edu/uscode/text/28/3702). Despite this, New Jersey is looking to legalize sports gambling in an attempt to revitalize business in the dying resort and casino haven of Atlantic City.

In 2014, four casinos closed their doors, while gambling revenue fell by 48% from $5.2 billion to $2.7 billion over the past decade (http://triblive.com/sports/nationworldsports/8532845-74/sports-jersey-state#axzz3eh0TAXr1). "Increasing competition from neighboring states and the proliferation of off-the-books betting has left Atlantic City's gaming operations at a disadvantage," said New Jersey U.S. Representative Frank LoBiondo (R - 2nd District). "Sports betting can help give our famed resort town a hand up, providing yet another unique option for patrons in addition to the quality entertainment, dining, shopping and beaches" (http://www.nj.com/politics/index.ssf/2015/01/lobiondo_and_pallone_introduce_legislation_to_brin.html). In doing so, New Jersey is challenging the constitutionality of PASPA, arguing that the Act "violates constitutional principles by commandeering the states' regulatory authority," is "unlawfully discriminatory because it carves out an exception for Nevada and some other states," and "does not affect interstate commerce and Congress, therefore, did not have the power to enact it under the U.S. Constitution's Commerce Clause" (Supreme Court Asked to Uphold New Jersey Sports Gambling Law, 26 Westlaw Journal Entertainment Industry 1 (2014)).

Ironically enough, the movement to ban sports gambling across the nation was led by National Basketball Association (NBA) Hall of Famer and U.S. Senator from New Jersey Bill Bradley, in 1991. Bradley argued that sports betting sent a bad message to children, gave bookies too much control over the outcome of games, and he didn't want athletes "to be turned into roulette chips." On the other hand, former Atlantic City casino magnate Donald Trump and others argued that sports gambling would be beneficial to Atlantic City and New Jersey's economy as a whole. While PASPA was authorized in 1992, states were allowed to pass bills supporting legal sports betting until January 1, 1994. The New Jersey state legislature argued over this issue in a battle of money versus morality. Despite the bill passing the State Senate in December 1992, it died in the Assembly, and failed to be approved by the deadline (http://www.nj.com/politics/index.ssf/2015/03/the_story_of_njs_missed_opportunity_on_sports_bett.html).

Nearly 20 years later, in 2011, New Jersey Governor Chris Christie signed a bill to legalize sports gambling. However, the bill was blocked in federal court, following a lawsuit by Major League Baseball (MLB), the National Football League (NFL), NBA, National Hockey League (NHL), and the National Collegiate Athletic Association (NCAA) (http://www.nj.com/politics/index.ssf/2015/01/lobiondo_and_pallone_introduce_legislation_to_brin.html). While the court ruled PASPA to be constitutional, it left an opening for New Jersey to repeal its state laws against sports betting, in hopes that the removal of the state laws would keep federal law enforcement away. However, instead of completely revoking the state laws, Christie partially repealed the laws in 2014, allowing sports gambling only at New Jersey casinos and racetracks. The sports leagues filed suit yet again, leading to the upcoming ruling in NCAA, et al v. Governor of New Jersey, et al as the latest installment of the battle (http://www.washingtonpost.com/news/sports/wp/2015/07/01/everything-you-need-to-know-about-new-jerseys-pending-high-stakes-sports-gambling-ruling/?tid=hpModule_a4df998e-86a7-11e2-9d71-f0feafdd1394&hpid=z12).

The three-judge panel of the Third Circuit of the Court of Appeals, which coincidentally includes Donald Trump's sister, Maryanne Trump Barry, heard oral arguments on March 17th in Philadelphia, and while the court's decision was expected in June, those involved will have to wait anxiously at least over the holiday weekend. Experts are divided as to who will win the battle, but regardless, the decision will have a major impact on the future of sports gambling in the United States (http://sports-law.blogspot.com/).

If New Jersey prevails, not only will the legalization of sports gambling bring money into the State and re-energize Atlantic City, a victory could also lead the way for legalization elsewhere. As proposed, the bill, if passed, would give all states four years to make a decision on the legalization of sports betting. While Pennsylvania, which has legalized slots and table games within the past decade to keep gamblers within the Keystone State, and Delaware could immediately follow their neighbor, other states like Minnesota, Indiana, and South Carolina have already proposed legislation to legalize forms of sports gambling. If New Jersey wins, these states could expedite the process to have similar bills passed. In addition, a victory would likely lead to new federal laws regulating sports gambling throughout the country (http://sports-law.blogspot.com/).

However, if the sports leagues win, PASPA will remain intact, leaving Las Vegas as the sports betting capital of America, where $3.9 billion was gambled on sports in 2014, with $1.75 billion being on football (http://www.washingtonpost.com/news/sports/wp/2015/07/01/everything-you-need-to-know-about-new-jerseys-pending-high-stakes-sports-gambling-ruling/?tid=hpModule_a4df998e-86a7-11e2-9d71-f0feafdd1394&hpid=z12). The Garden State definitely wants to encourage some of those football wagers, especially since the New York Jets, New York Giants, and Rutgers University play football within the state's borders, and the Philadelphia Eagles and Pennsylvania State University play games in nearby Pennsylvania. Perhaps, with a victory in court, New Jersey can become the eastern capital for sports gambling just in time for the 2015 NFL and NCAA football season.

Aside from the money versus morality issue, there is also something to be said about the importance of regulating sports gambling. Even though PASPA prohibits betting on sports throughout the nation, there is still plenty of sports gambling throughout the country that happens underground, mainly due to the growth of the Internet. It was projected by the American Gaming Association that while Americans would bet $3.8 billion illegally on the 2015 Super Bowl, only $100 million of legal betting would take place. "We know that sports betting is occurring without regulation and that the revenues from it are going to illegal enterprises rather than businesses in New Jersey, like our casinos and racetracks," said Representative Frank Pallone Jr. (D - 6th District). "It is time to bring this activity out of the shadows and allow states to regulate it" (http://www.nj.com/politics/index.ssf/2015/01/lobiondo_and_pallone_introduce_legislation_to_brin.html).

That being said, the arguments from both sides are relatively strong. On one side, bringing money into the state and revitalizing a dying city sounds rather enticing, as well as regulating an already prevalent practice, which in turn could reduce organized crime. On the other hand, gambling can be very dangerous and addicting, and by making it more available and prevalent, it opens the door for people, especially athletes, to get caught up in the business (http://espn.go.com/chalk/story/_/id/12555614/betting-sports-betting-legalization-cause-more-problem-gamblers). It should be interesting to see what the federal court decides in the coming days regarding this issue. While definitely not a guarantee that sports betting will become legal this year, this recent conversation started by New Jersey along with the continuous growth of the Internet could likely lead to the legalization and regulation of sports gambling, perhaps similar to Canada (see Andrew Vacca, Sports Betting: Why the United States Should Go All in, 11 Willamette Sports L.J. 1 (2014)), in the very near future.

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This page contains a single entry from the blog posted on July 4, 2015 4:11 PM.

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