A New York Sports Betting Bill Is Coming, But It Is No Slam Dunk

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NY sports betting bill

An effort to legalize sports betting in New York appears to be on the way for 2017. But such legislation is likely to run up against hurdles in the Empire State on a variety of fronts.

The NY sports bill, and what we know

The NY sports betting bill has not been introduced yet, but it does look like it will be next year. Per ESPN’s David Purdum:

That such legislation might eventually appear from the office of Assemblymember J. Gary Pretlow was originally reported by GamblingCompliance this summer:

“Don’t be surprised if you see a state like New York put through legislation on this very shortly,” Pretlow told GamblingCompliance on the sidelines of a gaming law conference in Saratoga Springs.

“I’m looking at challenging the feds on this, but I have more homework to do.”

Now it looks likes the Pretlow bill will happen. The bill will attempt to present a challenge to federal law, much like the ongoing New Jersey sports betting case.

The Professional and Amateur Sports Protection Act (PASPA) bans single-game wagering everywhere in the US — except for Nevada — and allows limited wagering in some other states.

There would be a PASPA lawsuit

First things first: The law would be challenged in court, as soon as it is enacted.

How do we know this? The NY bill will follow the model of what New Jersey has been attempting for years, which is a partial repeal of its gambling laws to allow for sports betting.

The two laws passed by the state have been challenged by the major professional sports leagues (NFL, NBA, NHL, MLB), along with the NCAA and the Department of Justice. To date, NJ has lost at every turn; it has appealed its case to the US Supreme Court.

The New York law would face a similar challenge. But the idea would be this would end up in a different circuit of the federal court system. New Jersey is in the Third Circuit; New York is in the Second Circuit.

The rulings against NJ to date in the Third Circuit would be used as weight on the scale in a PASPA challenge. But it’s at least possible the Second Circuit would come to a different conclusion about the constitutionality of PASPA. The hope would be to create a split in the circuits that would warrant a SCOTUS review.

All of that’s not to mention that New York is encountering a legal challenge to a daily fantasy sports law passed earlier this year.

So the question then becomes: Does New York care enough to go through a lengthy court battle to offer sports betting?

The calculus is different in NJ and NY

As New York introduces a sports betting bill and it attempts to make its way through the legislature, consider this: the starting point for New Jersey and New York is vastly different.

New Jersey has been attempting to legalize sports betting in an attempt to prop up the state’s racetracks and Atlantic City casinos. (Five have closed in AC in recent years, most recently the Trump Taj Mahal.)

Part of the reason the gambling industry in NJ is in trouble? It’s because of increased regional casino competition, from the likes of New York and Pennsylvania. The first of four new commercial casinos just launched in New York.

New York’s gaming industry –which also includes racetracks and tribal casinos — would obviously stand to benefit if sports betting were allowed within its borders. But it’s nowhere near the level of need in New Jersey, where the casino closures have resulted in a state takeover of AC and possible bankruptcy of the city.

All that’s to say is that the pitch for sports betting and the ensuing legal battle is a much different one in NY than in NJ. For the former, it would simply be nice, not something viewed as necessary for the overall health of the casino industry. (It’s difficult to argue that the state should be giving out commercial casino licenses if the current or future health of the existing licensees depends on legalizing sports betting.)

There’s a political will in New Jersey to go to court for sports betting. It’s not yet clear such a will exists in New York.

The leagues and New York

The leagues would certainly get involved legally after a NY sports betting law is passed. However, might they get involved while it’s still a bill, as well?

The pro sports leagues are all headquartered in New York. Given their opposition to partial sports betting repeals thus far in New Jersey, the leagues might just try to head off the legislative effort in NY at the pass via lobbying.

The conventional wisdom on the leagues is that they might step aside to allow for a federal framework for sports betting, in which states could then opt in to allow sports betting. But even the NBA, which has been the most bullish on regulated, legal sports betting has been tepid on a state-by-state approach.

Any of the major pro leagues stepping aside to allow sports betting is not something we’ve seen in practice yet. And if the leagues get involved on the legislation in a material way, clearly the bill would face significant headwinds.

All of that adds up to the idea that a sports betting bill being introduced would be significant, but far from a done deal in terms of a law being enacted.