The Final Countdown: US Supreme Court To Decide NJ Sports Betting Case Soon

Posted By Eric Ramsey on May 2, 2018

There’s not much sand left in the hourglass of the US Supreme Court. The judicial calendar ends next month, and several key cases remain unresolved.

Murphy vs. NCAA is one of them, the one most relevant to the gaming community. As you may know by now, it centers around the efforts of New Jersey to regulate its own sports betting industry. The five major sports leagues have successfully blocked those efforts in court, citing a 1992 federal ban known as PASPA. For the time being, Nevada is still the only state with single-game wagering.

In an unexpected move last year, though, SCOTUS agreed to hear NJ’s appeal at the highest level. The court only takes up a fraction of the cases it’s presented, and it’s been known to overturn lower rulings when it does.

The parties presented oral arguments before the court in December, and most analysts walked away predicting a win for the state. The justices will almost certainly render their decision on NJ sports betting before the summer recess, with May 14 as the next possible date.

In preparation, let’s take a lap around the industry-in-waiting, both in NJ and in other states throughout the east.

Dozens of sports betting bills, a few new laws

Over the past year, almost 20 states have introduced sports betting bills. Some, like Illinois, have as many as five or six of them in the hopper. Movement at the federal level has initiated a legislative race to prepare for the possibilities.

A few of those states have fully passed bills into law, too. The list of those ready for sports betting now stands at six, excluding Nevada:

  • Connecticut
  • Mississippi
  • New Jersey
  • New York
  • Pennsylvania
  • West Virginia

It should be said that more legislative work is needed in some of those states.

New York, for example, probably needs to include tribal casinos and the horse racing industry in the law that passed. Connecticut has tribal issues of its own to sort out, and Mississippi isn’t even sure it wants sports betting yet.

The list of candidates will likely grow quickly if SCOTUS hands down a favorable ruling. Some state lawmakers (Minnesota Rep. Pat Garofalo, for example), are holding onto their bills until the NJ sports betting case is decided.

NJ sports betting remains in the spotlight

New Jersey has remained at the center of the issue, and rightly so. The fate of state-regulated sports betting hinges on its arguments before SCOTUS.

Keep in mind, though, that NJ doesn’t actually have regulations ready to go. The bill that’s being challenged in court simply moves to lift the state’s own prohibitions; it does nothing to address the logistics.

To that end, a new sports betting bill is set to appear in the statehouse. It’s sponsored by three House Democrats, and it moves to give regulatory oversight to the NJ Division of Gaming Enforcement. The NJ Racing Commission would also be involved with the process of licensure for horse tracks and off-track betting facilities.

The NBA and MLB have retained lobbyists in Trenton, even trotting out a pair of former athletes to pitch their model legislation. Take a moment to try to rationalize the idea that the same companies suing to block NJ sports betting are now lobbying the state for a share of its proceeds.

Lawmakers surprisingly gave them a listening ear, at least temporarily. The aforementioned bill initially included provisions for an integrity fee, but that language has been stricken from the most recent draft.

Anyhow, given its position at the front of the conversation, don’t expect NJ to have any trouble getting regulations through. And don’t expect those regulations to include any of the leagues’ demands.

Next steps after SCOTUS decision

There are three buckets the Supreme Court decision might fall into, each creating a very different path forward.

SCOTUS could:

  1. Declare PASPA unconstitutional; states are free to regulate sports betting at their discretion
  2. Grant NJ a narrow victory permitting sports betting; other states remain unaffected
  3. Uphold PASPA and the rulings of lower courts; status quo remains

If NJ wins, one way or the other

The first option is obviously the best option for states interested in sports betting.

If SCOTUS decides that PASPA overreaches, states would be permitted to decide for themselves whether or not to approve sports betting. This ruling would also serve to activate the new laws in the states that have recently passed them. Each of those bills includes language that requires a repeal of PASPA before going into effect.

There’s at least a decent chance that the second scenario comes to pass, too.

Murphy vs. NCAA is about sports betting, but it also touches on some serious constitutional issues like commandeering and federal preemption. The question before the court is less about the activity itself and more about whether or not the federal law should trump state law on comparable matters (such as marijuana reform, for example). It’s possible that SCOTUS will altogether avoid deciding the broader issues in this arena.

In that case, it could issue a narrow ruling that would allow only NJ to move into sports betting. To be more specific, it would allow NJ to repeal its prohibition on sports betting but not regulate it. That ruling would give the state an eastern monopoly akin to Nevada in the west, and it would almost certainly result in subsequent litigation from other states. Nobody wants an unregulated marketplace, either.

Regardless, NJ operators will be prepped and ready to offer sports betting under either of these rulings. Blueprints for sportsbooks are already floating around Atlantic City casinos, and some racetracks say they could be taking bets within weeks of a decision.

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If NJ loses

The last scenario would provide an unwelcome resolution for many states.

If SCOTUS rules that everything is fine the way it is, the federal prohibition would remain in place. Nevada would retain its monopoly on single-game wagering, and the other 49 states would continue to be barred from competing.

This ruling likely wouldn’t be the end of the issue, though. The sports betting snowball has picked up so much momentum in recent months that the conversation has begun to appear at the congressional level. If the high court takes a pass on change, it’s at least possible that Congress will carry the issue forward. There’s certainly no guarantee, though.

Here’s hoping we don’t have to worry about packing for a long trip down that narrow path.

Eric Ramsey Avatar
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Eric Ramsey

Eric is a reporter and writer covering the NJ gambling industry, online poker, sports betting regulation, and DFS. He comes from a poker background, formerly on staff at PokerNews and the World Poker Tour.

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