Despite an apparent scheduling conflict with the state’s attorney, Ted Olsen, the rehearing of the New Jersey sports betting case is set for February 17, 2016. Unlike the first hearing earlier this year, the February rehearing will take place in front of a panel of eleven Third Circuit Court judges, not just three.
The group of three judges from the Third Circuit ruled against New Jersey in August (by a 2-1 margin), which prompted New Jersey to file another appeal, followed by the full Third Circuit issuing an “en banc” decision which means the entire (or most of) Third Circuit will rehear the case, and at the same time vacates the August ruling.
According to law experts, en banc decisions are extremely rare and are a good, but not ironclad, sign that New Jersey has a chance to win. As State Senator Raymond Lesniak indicated at the time of the en banc decision, “I think it’s unlikely the court would have vacated the previous ruling only to reinstate it.”
The case has the potential to be a watershed moment for legal sports betting in the United States. It could open the door for more states to follow New Jersey’s lead, and perhaps even lead to the repeal or gutting of the 1992 Professional and Amateur Sports Protection Act (PASPA).
PASPA currently limits legal sports betting to Nevada, and in a more limited capacity, in three other states – Montana, Oregon, and Delaware. However, legal experts have indicated that it will take several months for a decision to be filed, so don’t expect the proverbial floodgates to open in February. We won’t know how the Third Circuit is going to rule until May or even later.
As we get closer to the rehearing, the sports betting case will likely push all other gaming talk – from daily fantasy sports to online gaming expansion – to the side in 2016. States are certainly interested in these other forms of gambling expansion, but make no mistake about it, legalized sports betting is seen as the holy grail of gambling.
Here is a bit more background on the case if you’re not up to speed, and some background on PASPA and what aspects of the 1992 law New Jersey is contesting.
What will the NJ sports betting case be decided on?
At the heart of the case are two dichotomous rulings issued against New Jersey over the past two years.
From 2009 to 2011, the state attempted to bypass PASPA through the front door, by legalizing sports betting through legislative means. The state’s passing of a sports betting bill, which later was approved in a referendum, led to a lawsuit and a lengthy court battle that the state lost on the grounds that its sports betting law violated PASPA and didn’t, as the state argued, give Nevada preferential treatment over other states.
Undeterred by its court loss, New Jersey went back to the drawing board.
In 2014, the state tried to bypass PASPA by going through the back door. Instead of legalizing sports betting, New Jersey instead repealed older statues that prevented private businesses from offering sports betting in the state. This strategy seemed to take PASPA out of play, as the 1992 federal law only disallows states from regulating or providing oversight for sports betting.
What New Jersey did was leave that regulation and oversight up to the business – the state has nothing to do with it and therefore, theoretically, is not in violation of PASPA.
This back door approach led to another lawsuit, and once again the courts ruled against New Jersey.
The reason given by the two Third Circuit judges who ruled against the state was that because New Jersey didn’t do a full repeal (only casinos and race tracks would have the state ban on sports betting repealed), it was little more than a creative attempt at authorizing sports betting, and not a repeal of an existing law. In their written opinion, the two judges, Marjorie Rendell and Maryanne Trump Barry stated, “Had NJ law been complete repeal, we’d be hard-pressed to find an “authorization” in violation of PASPA. That’s not what occurred here.”
However, others argue this is a moot point, as the 2013 decision clearly states that the reason New Jersey was on the losing end of that decision was because the state was trying to authorize sports betting, and one of the paths that ruling outlined was the later-adopted repeal of pre-PASPA state laws prohibiting sports betting.