[toc]In trying to find a path toward legalizing sports betting in the United States, there are lots of theories about how best to go about it.
The paths for US sports betting
Some believe the courts — by challenging the constitutionality and boundaries of federal law — are the best recourse. (Petitions for an appeal to the US Supreme Court in the ongoing New Jersey sports betting case have been filed.)
Others — including the American Gaming Association — believe it needs to be done by changing the law itself via Congress.
Who is right? While both tracks can continue in parallel, which one is more likely to succeed probably won’t be known until the day legal sports betting takes place outside of Nevada and the three other states with limited wagering.
There is one subset of the court track that should be thrown out in the calculus of getting to the end result in the US. That’s the so-called “nuclear option” that some propose in the ongoing quest to have legal sports betting in NJ and beyond.
How the ‘nuclear option’ works via NJ
The premise behind this route to legal sports betting is pretty simple: New Jersey does a full repeal of its prohibition on sports betting in the state
The theory behind it
The repeal would amount to allowing unregulated sports betting anywhere in New Jersey’s borders. Having unregulated sports betting — instead of a regulated environment — would mean PASPA (the federal law that prohibits single-game wagering everywhere except for Nevada) doesn’t enter into the discussion.
To date, New Jersey has passed laws that amount to a partial repeal of its law regarding sports betting. The latest challenge would only allow casinos and racetracks to have sports betting; so far, that has been interpreted by the courts as an “authorization” of sports betting not allowed by PASPA.
New Jersey can bypass the legal challenge from the professional sports leagues and the NCAA under PASPA, at least theoretically, by giving up the legalistic gymnastics it has employed to date in crafting a pair of sports betting laws that have been struck down in the courts. This would take a law being passed by the legislature and signed by the governor.
NJ employing the “nuclear option,” the theory goes, would result in the leagues and Congress taking quick action to repeal PASPA, as unregulated sports betting is less desirable than regulated betting.
Some momentum for the effort
Sen. Raymond Lesniak, one of the champions behind the sports betting effort in New Jersey, has publicly said he is ready to go this route. From NJ.com:
Lesniak, however, said the legislation he is drafting would have New Jersey completely repeal state laws against sports betting to allow businesses across the state to offer the wagering without regulation.
And he is not the only one. In the wake of New Jersey’s loss in an “en banc” hearing in the US Court of Appeals for the Third Circuit:
“While I respect the Court’s decision, I respectfully disagree with the majority’s reasoning,” said Dennis Drazin, advisor to Darby Development LLC, operators of Monmouth Park, in a statement. “We will now ask the New Jersey legislature and the Governor for a full repeal of all laws which prohibit sports betting, while simultaneously filing a petition for a writ of certiorari to the United States Supreme Court and asking the U.S. Congress to repeal [the Professional and Amateur Sports Protection Act of 1992] altogether.”
Still, how likely is this to actually occur, beyond a draft bill?
Why the ‘nuclear option’ will never actually happen in NJ
To think that New Jersey will actually do a full repeal of its sports betting law is a great idea in theory. But putting it into practice ignores the political and logistical reality of what such a move entails.
Yes, the state is willing to do just about anything to help its casino industry and racetracks compete in an increasingly saturated market in the region, with competition in the likes of New York and Pennsylvania hurting the bottom line of Atlantic City. That’s what the sports betting effort has been about from the beginning.
But the full repeal is fraught with problems:
Lawmakers will be on the record basically legalizing criminal activity
What likely won’t be a popular move with lawmakers? Passing a law that literally lets anyone who wants to to open up a sportsbook.
That would include organized crime; it would be pretty difficult to stop criminal elements from opening up bookmaking operations on any corner they wanted to. As such, being on the record supporting such a bill is a potential political minefield for any lawmaker.
And while lawmakers in the districts around AC and the tracks might be OK with this, one can’t imagine it would be a popular move in other districts, who are left with the potential mess of unregulated sportsbooks outside of the confines of gaming establishments.
You wouldn’t have to go to a casino or a racetrack to place a bet
The above point also points to another issue. The purpose of the full repeal would be to prop up the casinos and racetracks. Would it really have that effect, however?
Yes, people are probably more likely to bet in places they trust than ones they don’t, and it would help their bottom lines, to be sure.
But if you aren’t close to Atlantic City, Monmouth Park, Freehold or Meadowlands, are you really going to drive there just to place a sports bet, when you would likely have myriad other options?
If you’re in PA or NY, for instance, you could just drive across the border to place a bet in this hypothetical world of unregulated sports betting.
Far less than 100 percent of the economic impact of a sports betting repeal would go to tracks and casinos.
There’s no guarantee that PASPA will get overturned quickly, or at all
The biggest piece of the puzzle in a full repeal is this: New Jersey has no desire for unregulated sports betting to persist, and it assumes some sort of action would be taken by Congress.
But it’s not like a flip can be switched on federal law. The repeal would basically be designed to spur Congress to action on PASPA. How quickly that action would come — if at all — is a variable with a wide window.
If you think Congress is going to fall over itself to repeal PASPA as quickly as humanly possible, you don’t pay much attention to what happens in Washington. And even if you assume Congress does act, it still leaves New Jersey with a period of months, or even years, where the unregulated environment exists.
And what would the leagues do? Would they actually ask for a repeal of PASPA — leading to what could be a massive and rapid expansion of sports betting? Or would they stomach NJ as an outlier? While the leagues’ views on sports betting have often been classified as “evolving,” that evolution hasn’t been put to the test in practice.
It leads to the possibility that New Jersey is simply left holding the bag with unregulated sports betting into perpetuity, which isn’t really the endgame that anyone wants to see.
The bottom line
For the reasons above, I think it’s exceedingly unlikely that New Jersey has the appetite for the ramifications created by a full repeal.
The routes of 1. a Congressional PASPA repeal through more organic means and lobbying and 2. creating a circuit split on PASPA in the federal court system are both more feasible by a large margin.
That being said, I do think a full repeal would be an effective route to taking PASPA off the books, should it be employed. I would love to be proven wrong, and see New Jersey “go nuclear”; but it’s a far better idea in theory than reality.