3rd Circuit Court of Appeals Should Rule on New Jersey Sports Betting Soon

Last updated on November 2nd, 2018

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Tomorrow is the first day the 3rd Circuit Court of Appeals is set to rule on the longstanding New Jersey sports betting case. The decision should go a long way to setting federal policies on sports gambling for years to come.

The case stems from a lawsuit filed in October 2014 by America’s five most important sports associations: the National Football League, Major League Baseball, The National Basketball League, The National Hockey League, and The National College Athletics Association. The 4 pro sports leagues and the NCAA sued the state of New Jersey to keep Monmouth Park in North Jersey from opening up a legal sportsbook.

Coverage of the Decision

As the day of truth approaches, a number of publications have offered experts opinions on the chances sports gambling will be approved. These news sources follow the conventional opinion that New Jersey does not have much of a chance to change federal law, though some suggest the sports leagues’ corporate deals with daily fantasy sports sites weaken the NFL’s, NBA’s, and MLB’s arguments about the integrity of the game.

Others have looked back at the past to see what experts and interested parties of yesteryear had to say.

Pete Rozelle and Art Rooney

The words of Pete Rozelle and Art Rooney, spoken decades ago, represent more compelling arguments for banning sports betting than the leagues can muster today. By reading the quotes of NFL leaders of previous years, people can get an idea what NFL lawyers argue in the 3rd Circuit Court of Appeals today when they talk of the “integrity of the game”.

In predicting what sports betting does to an average sports fan, both men predicted the effect of fantasy sports (or any adding of a game-within-a-game) does to sports fans.

Having played fantasy sports myself, I certainly am guilty of cheering for an outcome which has nothing to do with the game itself, due to personal interest associated with fantasy football. Their arguments still fall short, because it is easy for a sports fan to avoid such a situation: stop playing fantasy football or betting on games. If I felt like engaging in side bets and competitions with friends ruined my enjoyment of the game, I could make an informed, personal decision to do so. That decision should not be made at the federal level.

June 25, 2015 is the first day a decision might be rendered, but the appellate court might take some time to decide. Since this blog has not discussed the case for several months, let me give a refresher course on the PASPA.

Leagues Filed Citing PASPA Law

The lawsuit was filed by the sports associations to keep legal sportsbetting from spreading throughout the 50 U.S. states. At present, sports gambling is legal in only four states: Nevada, Delaware, Montana, and Oregon. When the 1992 Professional and Amateur Sports Protection Act (ACT) was passed, the four states which already had legalized sports gambling was grandfathered in to the new federal law. The sports leagues had lobbied in 1992 for all sports betting to be banned, but those four states successfully fought to retain their gaming industries.

The leagues argue that New Jersey had a one-year window to pass an amendment in the state which would have legalized sports betting, thus allowing the state’s casinos to operate sportsbooks. New Jersey could have been grandfathered into federal law, too, but the state’s lawmakers dropped the ball. Atlantic City was the only viable gaming destination on the east coast in 1992, so its casinos seemed strong. They did not seem to need a sportsbook, it would seem.

East Coast Gambling Niche

Over the next 12 years, gambling on the American eastern seaboard transformed radically. A 1987 US Supreme Court win by a California Indian tribe meant tribal governments could open up casinos on their reservations, so Mohegan Sun and Foxwoods opened in nearby Connecticut. Other tribal casinos opened in nearby states. Soon enough, lawmakers in those states began to see the possibilities, while the stigma against casinos was erased by the proliferation of tribal gaming.

The state lotteries also eliminated much of the stigma of gambling. Citizens figured, if states operated their own forms of gambling, then private gaming locations couldn’t be that immoral. By 2004, Pennsylvania legalized casino-style games in racetracks. Full casino gambling came shortly after. Pennsylvania became the second-leading state in gambling revenues behind Las Vegas. Those Pennsylvania gamblers stopped going to Atlantic City, and the AC casinos were in deep trouble. The Global Recession and Hurricane Sandy also hurt attempts at recovery. From a peak of $5.4 billion in revenues in 2006, Atlantic City casinos generated $2.4 billion in revenues in 2014.

Chris Christie and Steve Sweeney

Suddenly, Atlantic City casinos needed an advantage over rival operations in nearby states. State-level politicians like Gov. Chris Christie and Senate President Stephen Sweeney began pushing for measures to help Atlantic City, such as legalized online gambling and regulated land-based sports betting. The online gambling industry was launched in November 2013, but when Jersey moved to pass sports betting laws, the leagues sued to stop the state, citing the PASPA law. Through several rounds of court battles from 2012 to 2014, New Jersey lost. But with a few tweaks to New Jersey state law which the 3rd Circuit Court of Appeals suggested, Gov. Christie decided to challenge the PASPA again. When the lawsuit went before Judge Michael Shipp’s US District Court in Trenton in November 2014, Shipp found on the side of the sports leagues. But that did not end the battle. New Jersey appealed the process, despite four lost court cases (or appeals). On paper, it seems hopeless for New Jersey.

The problem for the sports associations is the PASPA discriminates against 46 other states to their detriment and to the advantage of a limited and unwarranted few. Under the Commerce Clauses of the US Constitution, the federal government is supposed to intervene only to encourage trade between the states and to assure fairness. New Jersey’s lawyers argue that the PASPA law is unconstitutional.