The Third Circuit Court of Appeals once again rejected New Jersey’s bid to legalize sports betting.
Barring a successful appeal to the full Circuit or the U.S. Supreme Court, the only way sports betting will become legal in New Jersey is through a change of law at the federal level by repealing the Professional and Amateur Sports Protection Act (PASPA).
Biggest losers in New Jersey sports ruling
The most obvious loser in this case is New Jersey. The hope was to use sports betting as a draw to give the state’s racetracks and Atlantic City casinos an advantage in the saturated regional gaming market.
Sports bettors are also losers in this case. Players looking to get some action on a game will continue to use offshore sites and local bookies. This comes with risks that include getting stiffed, paying astronomical fees to withdraw and being forced to engage with criminal enterprises.
Legal bookmaking operations lost in this ruling. William Hill, an experienced international betting company that operates in Nevada and Delaware, was poised to launch sports betting at Monmouth Park in New Jersey. Those plans are postponed indefinitely.
A ruling in New Jersey’s favor would have opened the New Jersey market to these companies with more states likely to join.
New Jersey media companies would have benefited from legal New Jersey sports betting.
Las Vegas consistently ranks just behind home team TV markets in terms of ratings. Often times, Las Vegas is the number three city in NFL ratings. When it drops a few notches, a team’s secondary or rival markets are the only cities between the main markets and Las Vegas. Las Vegas consistently beats any other neutral market in NFL TV ratings.
While sports betting was not going to be taxed under the New Jersey law that was struck down, the activity would have generated revenue from other sources. Sports bettors would have purchased food and beverage at betting shops that is subject to sales tax. Some gamblers would use hotel rooms or play casino games that are taxed.
Jobs would have been created, which would have generated income tax. The IRS lost out on its sports betting handle tax and potential income taxes.
The biggest winner in the New Jersey sports betting case is the illegal bookmaking market. Offshore sites and local bookmakers can continue to accept bets from players in New Jersey without the fear of legal competition.
There is also no fear of legalized sports betting spreading to other states in the near term. The black market of underground sports gambling will continue to thrive, a market that is estimated to be worth $140 billion.
Daily fantasy sports sites do not have to be worried about the spread of sports gambling. These sites can continue to enjoy a monopoly on sports action. There is evidence that traditional sports betting may not cannibalize fantasy sports. Fantasy sports sites do not have to find out if that is true, at least any time soon.
Nevada comes out a winner here. It remains the only destination where gamblers can go to make straight sports wagers. This provides its tourism a boost during major sporting events like the NFL playoffs and March Madness.
Delaware is also a winner in this. It draws NFL bettors from New Jersey and other surrounding states. The NFL parlay system in Delaware is operated through the lottery. New Jersey prevailing with an unregulated sports betting industry would not have benefited Delaware’s wish to offer a full slate of action through its lottery.