Supremes to Hear NJ Sports Betting Case

The U.S. Supreme Court will hear the state of New Jersey’s appeal of lower-court rulings invalidating the state’s sports betting law, which challenges the federal ban on sports betting. The decision was a surprise since the challenge has been defeated seven times before and the U.S. Solicitor General recently recommended that the court not take up the case.

High court will hear case in fall

The Supreme Court of the United States will hear the appeal of the state of New Jersey that challenges the federal law banning sports betting. The case will be on the high court’s docket in the fall.

The case appeals lower-court rulings striking down a New Jersey law that authorized state-regulated sports betting, meant to create sports books at Atlantic City casinos. Governor Chris Christie signed the law in 2014, drawing a swift lawsuit from the four major professional sports leagues and the NCAA. New Jersey voters overwhelmingly approved a sports betting referendum in 2011.

Arguments by the state’s lawyers have challenged the constitutionality of the federal 1992 Professional and Amateur Sports Protection Act (PASPA). The law bans sports wagering in all but four states that had previously approved some form of sports wagering. Of the four, only Nevada has full single-game sports betting; the other three have forms of parlay wagering.

“This federal takeover of New Jersey’s legislative apparatus is dramatic, unprecedented, and in direct conflict with this court’s Tenth Amendment jurisprudence barring Congress from controlling how the states regulate private parties,” Christie argued in the appeal before the Supreme Court.

New Jersey lawmakers crafted their sports betting law following an opinion by former U.S. Solicitor General Donald M. Verrilli, Jr., who asserted in a brief filed with the Supreme Court that New Jersey was free to repeal its state ban against sports wagering “in whole or in part” without violating PASPA.

The bill Christie signed into law did precisely what Verrilli had suggested—repealed the state ban on sports betting to institute a state-regulated system. However, the solicitor general’s office subsequently reversed Verilli’s opinion, saying that any state law authorizing sports betting would violate the federal ban. In May, current Solicitor General Jeffrey Wall filed a brief with the court recommending that the justices reject hearing New Jersey’s appeal.

The court’s decision last week to hear the case was a surprise to many, since the high court has typically followed the solicitor general’s opinion in declining to hear previous cases. In general, the Court only agrees to hear 2 percent to 3 percent of all cases referred to it, making any case a long shot from the beginning. The decision has given a boost to advocates of a PASPA appeal in suggesting the justices feel New Jersey’s arguments have merit.

None of those advocates has been more vocal than the American Gaming Association, which has been involved in a campaign to repeal PASPA as the New Jersey case has wound its way through the courts. In a press call immediately after last week’s announcement, AGA President and CEO Geoff Freeman said the court’s decision to hear the case is “another nail in the coffin of PASPA.”

“It’s another nail in the coffin of the failed ban on sports betting,” Freeman said, “which has created an unregulated $150 billion illegal market with no oversight for law enforcement and no accountability to regulators and no concern for the integrity of the games.”

Freeman repeated the AGA’s longstanding position that PASPA has failed to prevent sports betting, noting that while $150 billion was wagered illegally on sports in the U.S. last year, only $4.5 billion was wagered legally in Nevada.

He said that while adding one state to those offering legal sports betting is not going to solve this overall problem, the Supreme Court’s willingness to hear the case “furthers the likelihood of congressional hearings this fall” in the legislation introduced earlier this year to repeal PASPA, which is supported by the American Sports Betting Coalition, a group of lawmakers, law enforcement officials and local and state government the AGA assembled earlier this year.

Freeman also noted that the atmosphere in which the 1992 ban was passed no longer exists—the technology to regulate, control and monitor sports wagering, as proven by successful European programs, has advanced to the point of ensuring integrity both of wagering and the games themselves. He added that attitudes towards sports betting also have changed, with the heads of the major sports leagues—notably the NBA and the NHL—coming out recently in saying the federal ban should be at least re-examined if not outright eliminated.

Arizona, Louisiana, Mississippi, West Virginia and Wisconsin joined New Jersey’s effort to have the case heard by the Supreme Court.

In addition to holding the impromptu teleconference, the AGA and Freeman released a statement lauding the court’s decision to hear the appeal.

“The Professional and Amateur Sports Protection Act (PASPA) of 1992 has failed to protect sports and fans,” Freeman said in the statement. “PASPA, which is approaching its 25th anniversary, is fueling an unregulated $150 billion illegal gambling market that continues to deprive states of vital public funding for services such as law enforcement and infrastructure. 

“We are pleased the Supreme Court appears to have responded favorably to our arguments as to why they should hear this important case. And we are hopeful their engagement will provide further encouragement for Congress to take the steps necessary to create a regulated sports betting marketplace in the United States. 

“The gaming industry, and the American Sports Betting Coalition, is committed to working with all relevant stakeholders to build a system that protects states’ rights, fans and the integrity of sports.”

Meanwhile, reaction poured in around the industry to the Supreme Court decision. In Connecticut, representatives of both gaming tribes, the Mohegan Tribe and the Mashantucket Pequot Tribe, lauded the decision.

“We are pleased the Supreme Court has agreed that it should hear this important case,” Kevin Brown, chairman of the Mohegan Tribe, owners of Mohegan Sun, said in a statement. “And we are hopeful (the justices’) decision will provide further encouragement for Congress to take the steps necessary to create a safe and regulated sports wagering marketplace in the United States that will protect the players and the sports themselves. Mohegan is well poised to thrive in such a regulated marketplace.”

In an interview with The Day, Lori Potter, spokeswoman for the Mashantucket Pequot Tribe, which owns Foxwoods Resort Casino, also expressed hope that the decision will lead to the repeal of PASPA.

“We hope New Jersey’s case has a favorable outcome,” Potter said. “As gaming becomes increasingly competitive throughout our region, sports betting is a lucrative opportunity that would generate hundreds of millions in much-needed tax revenue for the state of Connecticut as well as tribal governments.”

Mississippi state Rep. Scott DeLano told the Biloxi Sun Herald that sports betting could usher in another golden age for the state’s casinos. “We feel this could be another 1990s for the state of Mississippi,” DeLano said, referring to the first explosion of construction and expansion for Mississippi casinos. “We want to be ready for any new investment that we can do in a responsible way. I would be surprised if we don’t get (sports betting) this coming session.”

Even Las Vegas casino operators, owners of a monopoly on legal sports betting, welcome expansion of wagering to other areas. “It’s not a bad thing for us,” MGM Resorts Sports Book Director Jay Rood told the Las Vegas Review-Journal. “Since we’re a brand that’s beyond Las Vegas, we’re interested in it being allowed in other jurisdictions, especially the jurisdiction where we currently reside (in New Jersey).” MGM owns the Borgata in Atlantic City, as well as properties in several other states.

Rood also said he now believes legalized sports betting is just a matter of time. “At this point, it’s sort of inevitable,” Rood told the Review-Journal. “It will happen at some point; it’s just a matter of when.”

Wynn sports book director Johnny Avello agreed, telling the newspaper, “It’s going to happen. Five years ago, I would’ve said no. But we’ve definitely moved a lot closer to this happening.”

In Washington, D.C., U.S. Rep. Frank A. LoBiondo, whose district includes Atlantic City, welcomed the Supreme Court review.

“A long time coming, today’s announcement is welcome news to the citizens of New Jersey who overwhelming voted for a constitutional amendment to allow sports betting in our state,” LoBiondo said in a statement posted on his website. “The billion-dollar sports betting industry should not be limited to a few states, nor should the federal government stand in New Jersey’s way.

“I have long argued that legal sports betting will have a significant and positive impact on South Jersey, bringing tourism and tax revenue to the state and reinvigorating Atlantic City. I remain committed to seeing sports betting become legal in New Jersey, and today’s announcement strengthens that commitment.”

In an article in LegalSportsReport.com, Dustin Gouker writes that states should be proactive in passing sports betting legislation or risk playing catch up.

“If I were a lawmaker in a state with horse tracks, lotteries or casinos, I would have started working in earnest on passing a sports betting bill yesterday.

“That goes double for any state, like New York or Maryland, where a constitutional amendment is needed, and where the timeframe to enact a law would be longer…

“States that are first movers in the sports betting space will enjoy new revenue and attract more visitors to their facilities almost immediately.”

The states that have currently passed laws legalizing sports betting are Connecticut, Hawaii, Maryland, Michigan, New York, Pennsylvania, South Carolina and West Virginia.

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