New Jersey lawyers argued in briefs to the U.S. Supreme Court on the issue of federal sports betting laws. The briefs argued on constitutional principle that the Congress is barred from forcing states to repeal or reinstate their own laws.
The argument is at the heart of a lawsuit brought by the NCAA, NFL, NBA, NHL, and Major League Baseball two years ago. In several courts, the sports leagues have won decisions against New Jersey, which repealed provisions of a sports betting regulation law from 2012.
New Jersey and PASPA
The issue involves New Jersey's 5-year attempt to get around the 1992 Professional and Amateur Sports Protection Act (PASPA), which bans sports betting in all but 4 US states. The sports gambling allowed in those states were grandfathered into the law. Faced with the economic fallout of the Global Recession and Hurricane Sandy, New Jersey voters in 2011 approved sports betting in their state.
The resulting legal challenge by the sports leagues led to several defeats in district and appellate courts for New Jersey. The latest set of legal battles involve New Jersey's subsequent attempt to repeal prohibitions, which were a way to get around federal law by not officially authorizing sports gambling in the states. Once again, judges in district and appellate courts sided with the leagues.
State's Rights vs. Federal "Instruction"
This week's briefs argued that the federal government may not "require the states to govern by Congress' instruction". That is, the federal government can regulate citizens directly, but it cannot force the states to become an arm of the federal government by proxy.
New Jersey lawyers argue that the Third Circuit Court of Appeals ruling last August violates the Constitution, because it amounts to "authorizing a federal court injunction mandating that a State reinstate prohibitions it has chosen to repeal."
Selective Enforcement Equals Tacit Approval
The sports leagues and the US Department of Justice, on the other hand, argue that New Jersey's 2014 effectively authorizes sports betting at racetracks and casinos, because it prohibits the same activity everywhere else. Because Gov. Chris Christie's officials chose to look the other way while sports betting took place at Monmouth Park, but still cracked down on local bookies, it was tacitly approving sports betting at chosen facilities. That amounted to a violation of the federal PASPA law.
The U.S. Supreme Court justices are expected to decide next month whether they will hear the case. Many believe the Supreme Court will decline to hear the case, because they declined to hear the original case back in 2014.
Atlantic City Sportsbooks
New Jersey believes the legalization of sports betting would help to save Atlantic City's casino industry, and with it Atlantic City itself. The city is now down to only 8 casinos, which represents a catastrophic loss of jobs and property tax revenues.
Each year, Nevada sportsbooks generate well over $2 billion in revenues. The American Gaming Association believes about 97% of all sports betting is done illegally, so the PASPA law costs gambling operations perhaps $90 billion each year. With tax levels at 10% to 20% on casino revenues, the PASPA costs state governments roughly $10 billion to $15 billion a year.
Several States Join New Jersey
For that reason, several states signed on to New Jersey's sports betting brief before the Supreme Court this week: Mississippi, Louisiana, Wisconsin, West Virginia, and Arizona. If New Jersey won it's court case, those states also would be allowed to legalize, license, regulate, and tax sportsbooks.
Many of those who oppose New Jersey have stated they believe federally legalized sports betting is only a matter of time. NBA Commissioner Adam Silver supports federal legalization and regulation of sports betting, while his predecessor, David Stern, said at the Global Gaming Expo in September that he supported the same thing. MLB Commissioner Rob Manfred said he is open to a discussion of a lifting on the ban, while NHL Commissioner Gary Bettman has said hockey is less impacted -- thus implying he would take whatever stance the other leagues take.
With more states legalizing and regulating daily fantasy sports and the major sports leagues signing partnership deals with DFS companies, many see the ban on sports betting as illogical. With gambling more commonplace than it was in previous generations, the American public seems to be less concerned with the impact of sports betting on organized sporting events.
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