Once again New Jersey’s efforts to bring legalized sports betting to the state have been derailed by the courts.
New Jersey was denied the chance to offer sports betting by the courts on Tuesday when the Third Circuit Court of Appeals affirmed the decision by the District Court.
The affirmation states that the 1992 Professional and Amateur Sports Protection Act (PASPA) was designed to prohibit states from legalizing sports betting. This ruling strikes down the law passed in 2014 by the New Jersey legislature that would have allowed certain entities (New Jersey casinos and racetracks) to offer sports betting.
The state will likely appeal the decision, but legal experts have indicated these appeals are rarely granted.
New Jersey’s quest for sports betting
Following the financial collapse of 2008, and with its casino industry floundering, New Jersey went in search of new revenue streams, and one of the revenue streams the state legislature took a look at was sports betting.
Led by State Senator Raymond Lesniak, the New Jersey legislature started working on a bill that would legalize sports betting in the state in 2009.
In 2011 the measure passed and went to the public as a referendum and was passed.
However, when the state tried to enact the law it was greeted by a lawsuit. The NCAA and several professional sports leagues sued New Jersey to prevent the state from legalizing sports betting.
Standing in the state’s way was PASPA, which ironically was crafted by New Jersey Senator Bill Bradley.
PASPA originally allowed New Jersey a year to accept a PASPA exemption (Nevada, Oregon, Delaware, and Montana all received exemptions as well) but at the time the New Jersey legislature decided to pass on a PASPA exemption.
The decision is made all the more baffling when you consider it wouldn’t require New Jersey to legalize sports betting at the time; it would simply leave the door open for the state to legalize it down the road.
After a lengthy court battle (New Jersey lost every step of the way), the 2011 law and referendum passed in New Jersey made its way to the Supreme Court in 2013. The SCOTUS declined to hear the case, which left the lower court’s ruling in favor of the NCAA et al. in place.
Having been stymied to pass a law that would legalize sports betting, New Jersey got creative.
In 2014 the state legislature, once again led by Senator Raymond Lesniak, crafted a bill that wouldn’t legalize sports betting, rather it would repeal the state’s older laws prohibiting sports betting. The theory was (bear in mind I’m not a lawyer) that so long as the state didn’t oversee a business’s sports betting enterprise, it wouldn’t run afoul of PASPA.
Once again the NCAA and professional sports leagues stepped in and sued the state, which led to Tuesday’s ruling.
Why the ruling went against New Jersey
The two judges writing for the majority, Marjorie Rendell and Maryanne Trump Barry, did empathize with New Jersey’s point of view, writing, “PASPA has clearly stymied New Jersey’s attempts to revive its casinos and racetracks and provide jobs for its workforce.”
Rendell and Trump Barry went on to outline a path forward, stating that Congress could undo PASPA altogether, essentially handing the ability to legalize sports betting back to the individual states.
Feelings aside, Rendell and Trump Barry concluded that the language of the 2014 law New Jersey tried to pass was selective, and would only legalize sports betting at certain locations.
“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,” Rendell and Trump Barry wrote.
Because of this, they concluded the 2014 law’s artful language claiming to be a repeal of an existing law was in fact an “authorization” for sports betting.
A ten page dissent by Judge Fuentes disagreed with this assessment. The judge wrote that the 2014 law did not authorize sports betting and was in fact a partial repeal.
“NJ law does not ‘authorize.’ There is no explicit grant of permission in the 2014 Law for any entity to engage in sports wagering,” Judge Fuentes wrote in his dissent.
For a complete breakdown of the 33-page ruling and ten page dissent, I highly recommend sports and gaming law expert Daniel Wallach’s Twitter feed.
What the future holds
It looks like the only way New Jersey or any other state will be able to offer legal sports betting is through federal action.
Considering the pace Congress acts on laws, even if there is a tremendous appetite for it, it could be a while.