Americans who want to bet on sports are going to have to travel to Nevada or play daily fantasy sports for the time being, as a three-judge appellate court panel ruled against the state of New Jersey Tuesday in its efforts to legalize sports betting.
It is a little strange to think of Atlantic City as being a place where sports betting is prohibited, but because of the Professional and Amateur Sports Protection Act of 1992 (PASPA), it is. PASPA made sports wagering illegal in all but four states in which it was grandfathered in: Nevada, Montana, Oregon, and Delaware. Nevada, though, is the only one with full-fledged sports betting – the others have watered down versions of parlay betting that don’t appeal to most gamblers. New Jersey actually had the opportunity to joint that group, as states that had legal casino gambling during the ten years prior to PASPA had one year during which to opt-in, but for whatever reason, New Jersey passed.
In recent years, New Jersey’s gambling industry has been on the decline, as casinos in neighboring states such as Delaware, Connecticut, Maryland, and Pennsylvania have taken business away from Atlantic City. Sports betting, while not a cure-all, could give New Jersey a much-needed revenue jolt. In 2011, a statewide referendum passed, allowing sports betting, but the country’s major sports leagues – the NFL, NBA, MLB, NHL, and NCAA – banded together to challenge it, saying it violated PASPA. A court agreed in 2013, killing the new law.
New Jersey felt that the ruling, despite it going against the state, actually provided an opening. The logic is a bit hand-wavy, but in a nutshell, the court said that New Jersey could not legalize sports betting, nor could it issue sports betting licenses. So, last year, the state legislature passed S2460, which repealed the state’s ban on sports betting. It didn’t explicitly legalize it, it just basically told the state’s casinos and racetracks that if they wanted to offer sports betting, that was fine. Nobody would stop them because it wasn’t illegal anymore. The government wasn’t going to prescribe regulations or issue licenses, but if some gambling venues wanted to start a sportsbook, more power to them.
Naturally, the sports leagues didn’t like this, so they challenged the law again. The three-judge panel ruled 2-to-1 in favor of the leagues, saying that while S2460 did not explicitly legalize sports betting, it certainly authorized it by lifting the ban (the law also set forth a minimum age for bettors and placed restrictions on the types of games that could be bet on) and thus violated PASPA. Stated the ruling:
We now turn to the primary question before us: whether the 2014 Law violates PASPA. We hold that it does. Under PASPA, it shall be unlawful for “a governmental entity to sponsor, operate, advertise, promote, license, or authorize by law or compact” sports gambling. 28 U.S.C. § 3702(1). We conclude that the 2014 Law violates PASPA because it authorizes by law sports gambling.
Appellate judges Marjorie Rendell and Maryanne Trump Barry were the two to vote against New Jersey, but Judge Julio Fuentes sided with the state, essentially saying in his dissension that PASPA was a major overreach of the federal government.
