All Bets Are Off: New Jersey Sports Betting Remains Illegal After Appeals Court Ruling

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Dustin Gouker

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NJ Sports Betting

There will be no legalized and regulated sports betting in New Jersey in the near future, after an appeals court affirmed a lower court’s ruling, keeping a ban on wagering outside of Nevada in place.

The news and the backstory on NJ sports betting

The news has been filing in via Twitter about the case, the result of which had been anticipated for months. The U.S. Third Circuit Court of Appeals held the status quo, which is sports betting cannot take place in New Jersey:

In 2014, New Jersey had passed a law that would allow sports betting to take place at its casinos.

The professional sports leagues in the U.S. (NBA, NFL, MLB and NHL), the NCAA and the U.S. Department of Justice took New Jersey to court over the law, trying to keep the ban in place. The leagues won in the lower court before again winning this appeal.

What the court ruled

At issue was how New Jersey’s sports betting law intersected with the Professional and Amateur Sports Protection Act of 1992, which more or less banned sports betting nationwide. (That’s true except for Nevada; limited sports wagering takes place in both Montana and Delaware, as well. Oregon was not impacted by PASPA, but later banned sports betting on its own).

New Jersey’s argument did not convince two of the court’s three judges hearing the case:

Soriano, a gaming and litigation attorney at Duane Morris LLP, summarized both the majority and dissenting opinions. Soriano notes the fact that the dissenting judge just two years ago wrote an opinion holding that PASPA was constitutional, but now reasons that it is unconstitutional. You can read the entire opinion here.

What’s next for sports betting in New Jersey?

Many had hoped that a New Jersey victory in the Third Circuit would lead to a cascade of states legalizing and regulating sports betting, but that appears not to be in the cards, for now. The case is not dead yet, however. It can be appealed to the Third Circuit en banc — in which all active judges in the court would hear the case — or to the U.S. Supreme Court. New Jersey State Senator Ray Lesniak said “this fight must go on,” according to a statement from Monmouth Park, a racetrack in New Jersey:

As referenced in the majority opinion today, “New Jersey State Senator Ray Lesniak, a sponsor of the law, has likewise stated, ‘[s]ports betting will be a lifeline to the casinos, putting people to work and generating economic activity in a growth industry.’” “I’ve made that statement prior and I continue to make it today,” Lesniak said. “This is an issue that strikes to the will of the people. After more than 60% of the citizenry approved sports betting and the Court provided contours for us to make it permissible, we did just that. It is imperative for our horse racing and casino industries, which have struggled as of late, to have alternative revenue sources, and sports betting provided just that. Racing in New Jersey is an economic engine that accounts for tens of thousands of jobs and billions to the state economy, not to mention the open spaces and green acres that are accompanied with it. I won’t rest until this industry is on firmer footing.

While some are bullish on the chances of an appeal, not all believe this case will be heard again, at least not in the Third Circuit:

Daniel Wallach, a sports and gaming attorney, noted that it may be difficult for New Jersey to legalize sports betting via anything other than an appeal:

The best hope might be a repeal of PASPA itself, which NBA Commissioner Adam Silver has called for.

Reaction to the sports betting ruling

American Gaming Association President and CEO Geoff Freeman released the following statement:

“Today’s decision by the Third Circuit on sports betting and how gaming is regulated encourages deeper examination about the best path forward on this issue. With Americans betting at least $140 billion on sports illegally each year, it’s clear that current law is not achieving its intended result. As the AGA leads an industry-wide task force to study sports betting, we will assess the implications of the court’s decision as the gaming industry continues to develop innovative ways to provide products and experiences that meet consumers’ demands.”

MLB, the NBA and the NCAA had statements on Tuesday:

The NFL had no comment, so far, according to Purdum.

Daily fantasy sports remains the only game in town

For now, DFS sites like DraftKings and FanDuel will not have to see what impact legalized sports betting would have on the nascent industry. A recent survey suggested that the availability of legal sports betting would not greatly impact the habits of DFS players, and many believe the two industries would not necessarily cannibalize one another. DFS even came up in arguments regarding the sports betting case, as New Jersey argued that some of the plaintiffs — namely the pro sports leagues — have relationships with daily fantasy sports companies. But the court dismissed the “unclean hands” argument from NJ:

 

Of course, the court was not examining DFS and whether it rises to level of gambling/sports betting. DFS might have its own fight on its hands soon, depending on the outcome of a “legal analysis” in Nevada. The ruling is also a blow to the rising eSports betting industry, which would benefit greatly from gaining a foothold in the U.S.

Photo by Baishampayan Ghos used under license CC BY-SA 2.0

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Dustin Gouker

Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer — including stops at The Washington Post and the D.C. Examiner.

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