The U.S. Supreme Court agreed today to hear New Jersey’s sports betting appeal. No time is set for the Supreme Court hearing, but the next court term begins in October.
New Jersey wants to legalize sportsbooks inside its boundaries by striking down the Professional and Amateur Sports Protection Act, better known as “PAPSA”. The PASPA bill was passed in 1992 and became law in 1993, after states were given one year to enact pro-sports gambling laws.
PAPSA: Federal Sports Betting Law
Since then, PASPA has been a ban on bookmaker operations of any sort in 46 U.S. states. Nevada is the only US state with fully legal sportsbooks, while Delaware, Oregon, and Montana parlay-type bookmaker bets called “sports lotteries”. All four states had such laws prior to the PASPA and received exemptions after months of lobbying the US Congress.
New Jersey had support back in 1993 to legalize sportsbooks in Atlantic City casinos. Unfortunately, the New Jersey General Assembly Speaker at the time, Chuck Haytaian, refused to put the issue to a vote on the Assembly floor. Time elapsed and New Jersey’s business and political leaders have regretted the decision ever since.
New Jersey Casinos Need Sports Betting
In 2011, Gov. Chris Christie sought the legalization of sports betting in his state. It was the height of the Global Recession and the aftermath of Hurricane Sandy. Few people in the state had the funds to gamble in Atlantic City casinos, while racetracks like Monmouth Park had seen their better days.
A few years earlier, Pennsylvania passed laws to legalize and regulate racetracks in their state, creating a string of racetrack-casinos or “racinos”. These racinos were a major blow to Atlantic City casinos, as Pennsylvania generated the second-most tax revenues in the United States (behind only Nevada). Pennsylvania gamblers no longer visited Atlantic City.
Atlantic City casino revenues declined, due to the succession of economic disasters. Legal sports betting, along with online gambling, offered a new potential revenue source. In a statewide referendum in 2011, the voters of New Jersey agreed to legalize, regulate, and tax sports betting. Based on that decision, the New Jersey State Legislature agreed to legalize sportsbooks in the state in 2012.
New Jersey Sports Betting Law
That decision led to a lawsuit by the NFL, NBA, Major League Baseball, NHL, and NCAA. The sports associations argued that legal sports betting in New Jersey would lead to a decline in public confidence in their sports. It was the same argument the leagues made in 1992: the integrity of the sport was on the line.
The argument worked. US District Judge Michael Shipp, brother of ex-NFL running back Marcell Shipp, agreed that legal sportsbooks in Atlantic City were a threat to American sports leagues. A 3-judge panel in the 3rd Circuit US Court of Appeal in Philadelphia voted 2-1 in September 2013 to uphold Judge Shipp’s decision.
New Jersey saw a silver lining in that decision. The judge with the minority opinion in the case wrote that New Jersey’s laws and regulations were a direct challenge to the PASPA, but an indirect challenge might prove successful.
Thomas Vanaskie on PASPA
Judge Thomas Vanaskie, the dissenting judge in the case, wrote in September 2013, “Thus, under PASPA, a state may repeal its sports wagering ban, a move that will result in the expenditure of no resources or effort by any state official.
“On the other hand, a state may choose to keep a complete ban on sports gambling but it is left up to each state to decide how much of a law enforcement priority it wants to make of sports gambling, or what the exact contours of the prohibition will be.”
Judge Vanaskie’s opinion became the foundation of New Jersey’s current case. The appellate process had to play out before New Jersey took Vanaskie’s advice. Gov. Chris Christie appealed the 3rd Circuit decision to the U.S. Supreme Court in December 2013. In June 2013, the Supreme Court rejected Christie’s request for a hearing.
Monmouth Park and William Hill Sportsbook
New Jersey’s lawmakers were not discouraged. From August to October 2014, the legislature hammered out a new law with the Christie Administration. In October 2014, this led to the repeal of New Jersey’s 2012 regulations on sports betting.
Gov. Christie advised his attorney general to ignore New Jersey racetracks and casinos which operated a sportsbook, while continuing to prosecute bookies who took illegal bets. Monmouth Park agreed with William Hill to run a sportsbook out of a bar on the racetrack’s complex. The two groups began training staff for the new bookmaking venue.
Days before the Monmouth Park/William Hill sportsbook was set to open, the group led by the NFL, MLB, and NBA once again sued to stop the sports betting activity. New Jersey and Monmouth Park were named in the case. A whole new set of legal battles began.
Judge Julio Fuentes on Sports Betting
The early results were no different than before. Judge Michael Shipp ruled in favor of the sports leagues. The Third Circuit Court of Appeals upheld Judge Schipp’s decision by a 2-1 margin. Third Circuit judges Maryanne Trump Barry and Marjorie Rendell voted to uphold Shipp’s ruling, saying that New Jersey’s attempts to restrict sports betting to casinos and racetracks (while not punishing those gaming venues) amounted to legalization, which was illegal.
Judge Julio Fuentes, who voted against New Jersey in the original case, wrote in August 2015, “There is simply no conceivable reading of PASPA that could preclude a state from restricting sports wagering.”
New Jersey’s Sports Betting Appeals
Things took a slight deviation when New Jersey appealed the decision to the Third Circuit for an “en banc” decision, which would require all 12 sitting judges to rule on the case. In September 2016, the ruling came back as a 10-2 defeat for New Jersey.
After 5 separate lost court battles, many urged Chris Christie to give up the costly legal campaign. Instead, he appealed the Third Circuit Court’s 10-2 ruling to the U.S. Supreme Court. After months of speculation that the Supreme Court once again would deny New Jersey’s appeal, the court agreed to hear the case today.
The US Supreme Court’s decision to hear New Jersey’s sports betting appeal sent reverberations around the brick-and-mortar and online gambling industry today. Here are some of they key arguments on behalf of legalization.
PASPA Is Unconstitutional
Several points of contention are at the heart of New Jersey’s case. One, New Jersey argues that the federal government does not have a constitutional right to determine the legality of sports betting. The federal government has the authority given to it under the U.S. Constitution. If authority is not given to the federal government, it belongs to the states.
If the federal government intervenes in interstate commerce, it should use it to foster more interstate commerce — not choose favorites among the states. The Commerce Clause in the US Constitution calls for Washington D.C. to do just that.
Differences between 1992 and 2017
Two, the sports leagues’ contention that New Jersey sportsbooks present a danger to the intergrity of their sports is absurd. For 24 years, the sports leagues have allowed Las Vegas sportsbooks to offer betting. No one assumes Atlantic City sportsbooks would generate more betting action than Las Vegas, so the leagues want to squelch a lesser hub of gaming activity.
Also, the world has changed since 1992-1993. The Internet allows potential US sports gamblers to place bets online at a wide array of online sportsbooks and sports betting exchanges. While those are unlicensed sites, it does not keep Americans from engaging in $150 billion a year in sports bets. PASPA doesn’t work.
Smartphone Sports Bets Are Common
In the age of Android smartphones and iPhones, sports betting is easier than ever. The idea that the PASPA is somehow protecting the integrity of American sports by banning walk-in sports betting in Monmouth Park and Atlantic City — while any person in American with a smartphone could gamble 24/7 — is once again a ridiculous notion.
Finally, American attitudes towards gambling have changed in the past 25 years. There might have been a time when Americans were concerned about the integrity of NFL football games, MLB baseball games, and NBA basketball games because of the outcome of sports bets. Gambling is a lot more prevelent than 1992. Tribal casinos are in almost every state. Multi-state lottery companies like Powerball and Mega Millions exist in 45 states. Private casinos are found in dozens of states.
Fantasy Sports’ Impact on American Culture
Americans play fantasy sports, so the idea that gambling might ruin their fun from a purist fan perspective is obsolete. Daily fantasy sports is available in many US states, including New Jersey. Gambling is mainstream in the United States now. Sports gaming is available in a variety of forms. Any American with a smartphone can bet on sports with a few clicks. The PASPA is not stopping anything.
What the PASPA does is create an underground economy which organized crime flourishes in. Like Prohibition or the War on Drugs, if Americans want to do something, the federal government cannot ban the activity. Attempst to ban it only help fund organized crime. Like ending Prohibition, it is far better for the US government to legalize and regulate such activities, because state government can raise taxes off the activity. Also, they can protect sports bettors with regulations and oversight.
New Jersey Sports Betting Quotes
With the New Jersey sports betting challenge to PASPA reaching its climax, readers might want to know what people are saying about legal sportsbooks in America. Below is a few quotes and quotations from judges, politicians, and gaming experts.
- William Hill USA CEO Joe Asher said in August 2015, “It’s pretty clear to me that this matter is far from over. I remain convinced that legal sports betting will come to New Jersey. It’s a matter of when, not if.” (William Hill USA partnered with Monmouth Park on its prospective sportsbook in October 2015.)
- US District Judge Michael Shipp said in 2013, “More legal gambling leads to more total gambling, which in turns leads to an increased incentive to fix plaintiffs’ matches.“
- U.S. Representatives Frank Pallone and Frank LiBiondo wrote in an opinion piece, “Not only do the citizens of New Jersey overwhelmingly support legalized sports betting and the revenue that would come to the state with it, but existing federal law picks winners and losers, and is unconstitutional and arbitrary. Several states can already operate sports betting, but New Jersey has been shut out despite the will of our citizens.”
- Rep. LiBiondo later told ESPN in a phone interview, “I still firmly believe that the sports leagues are wrong with this. They want us to believe that there is no illegal betting going on. Depending on whose estimate you’re taking, it’s somewhere between $150 or $300 or $400 billion.”
- American Gaming Association president Geoff Freeman echoed those remarks when he said, “With Americans betting at least $140 billion on sports illegally each year, it’s clear that current law is not achieving its intended result.”
- NBA spokesman Mike Bass said in August 2015, “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 manner.”
- NCAA chief legal officer Donald Remy said in 2015, “The NCAA maintains that the spread of legalized sports wagering is a threat to student-athlete well-being and the integrity of athletic competition.”
- President Donald Trump said in a 2015 Fox Sports interview that he was “OK” with legalized sports betting, because “It’s happening anyway.”
Legal US sports betting might become a reality in the next few months. The sports leagues are the undefeated champiosn in this process, while New Jersey has been like the old Washington Generals basketball team. Despite that trend, New Jersey only needs to win one decision to strike down the Professional and Amateur Sports Protection Act (PASPA).
All the experts seem to believe it is a matter of time. The time for New Jersey to legalize sports betting in American might be now.
