The timeline to bring legal sports betting to the United States was pushed back significantly after the Third Circuit Court of Appeals ruled, in a 2-to-1 decision, against Governor Chris Christie and the State of New Jersey earlier this week. The decision by the federal appeals court in Philadelphia upheld a lower-court ruling that had voided legislation enacted by New Jersey legalizing sports gambling.
If this sounds familiar, it’s because we’ve been here before. In 2012, New Jersey passed a law that permitted sports betting at casinos and racetracks across the Garden State. New Jersey’s push to legalize sports betting was largely motivated by an effort to boost its struggling economy. The implementation of sports gambling was forecasted to generate millions of dollars in tax revenue for the State, as well as provide a huge boost to a tourism industry largely buoyed by the East Coast’s gambling Mecca – Atlantic City.
Christie’s efforts were stymied, however, by the NCAA and all four major U.S.-based professional sports leagues – the NFL, NBA, MLB, and NHL (the “Leagues”) – who, in August 2012, filed a lawsuit seeking to prevent the implementation of Christie’s sports gambling law. The Leagues’ case was primarily based on the argument that New Jersey’s legislation violated a 1992 federal statute, the Professional and Amateur Sports Protection Act (“PASPA”), which restricted certain forms of state-sponsored sports gambling to a handful of states that were grandfathered in under the law.[i] Christie, in turn, challenged that PASPA was unconstitutional, with arguments grounded in Tenth Amendment and Equal Sovereignty principles.
The court’s decision was undoubtedly a significant blow for advocates of sports betting and for Christie, who spent millions of dollars in litigation. Had Christie been successful, it would have provided a roadmap for individual states to legalize revenue-injecting sports betting laws. According to Daniel Wallach, a partner at Becker & Poliakoff, P.A., and a leading expert on gaming law, “a victory by New Jersey would have had an immediate and dramatic impact on the sports betting industry — namely, there would be unregulated sports betting in New Jersey and other states would pass similar legislation to mimic New Jersey’s approach.” Other states or Indian tribes could still pass sports betting laws and press a PASPA challenge in another federal circuit – the Third Circuit’s holding is only binding precedent on the three states within its jurisdiction, New Jersey, Pennsylvania and Delaware – but winning such a challenge might be a long shot after a federal court has now ruled twice on, and affirmed each time, the legality of PASPA.
A victory by New Jersey may also have forced Congress to act swiftly to amend or repeal PASPA. For example, NBA commissioner Adam Silver is on record that he believes the expanded legalization of sports gambling is “inevitable,” and that, in fact, his league stands to benefit from it. What Silver does not want, however, is incremental, state-by-state legalization – particularly of the “unregulated” variety proposed by Christie. Rather, he wants a comprehensive, federal overhaul to America’s gambling law. By repealing or amending PASPA, people across the country would be able to bet on sports, and more importantly, the Leagues and law enforcement could tightly monitor and control the American betting market, keeping an eye out for irregular betting activity that could indicate corruption.