If New Jersey Wins Sports Betting Appeal, What Might Happen Next In U.S.?

Posted on February 16, 2016

[toc]The most crucial moment in the fight to legalize sports betting in New Jersey will take place on Wednesday, when the U.S. Third Circuit Court of Appeals holds an en banc rehearing in NCAA et al vs. Christie.

It is one of the final steps in New Jersey’s quest to offer sports betting within its borders that dates back to 2009.

A decision in the case isn’t expected until June, but if New Jersey were to win its case, it could set into motion a number of dominoes as it relates to sports betting in the U.S.

Here is a quick look at the case, and the potential impacts of a victory for New Jersey.

The backstory on the NJ sports betting case

In 2014, New Jersey passed a law in which it partially repealed its own sports betting ban, allowing wagering to take place in the state. The major professional sports leagues in North America — the NFL, NBA, NHL and Major League Baseball — along with the NCAA  banded together to challenge the law in court and prevent it from going into effect.

At issue at 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 nearly everywhere, with a few exceptions — most notably Nevada.

The courts, so far, have ruled that the New Jersey law allowing sports betting is a violation of PASPA. New Jersey originally lost a verdict in the Third Circuit by a 2-1 margin.

But New Jersey asked for an en banc rehearing — a rarely granted type of appeal that has the potential for all of the court’s active justices to rehear a case. That request was granted in October.

New Jersey will argue its case again in front of 12 judges, needing a 7-5 verdict in order to prevail. Legal analysts have handicapped New Jersey’s chances anywhere from a slight favorite to a substantial underdog.

If New Jersey wins

A lot of things can happen if New Jersey wins its case. The most obvious result? New Jersey will likely be able to offer sports betting immediately.

The leagues and the NCAA will likely appeal the case to the U.S. Supreme Court, although the nation’s highest court taking up the issue appears to be a longshot (of course, an en banc rehearing, which is granted in a very small percentage of cases at the federal level, was also a longshot.)

Many other things could happen, however, if New Jersey wins.

Pennsylvania and Delaware fast track sports betting bills

The Third Circuit covers New Jersey, Pennsylvania and Delaware, and a New Jersey win in the rehearing would immediately create binding precedent in PA and DE.

Both states could implement sports betting in the same manner that New Jersey did. Delaware already offers parlay wagering, legally, and would certainly welcome the opportunity to offer single-sport betting. Pennsylvania indicated its interest in sports betting recently when a committee passed a resolution calling for a repeal of PASPA.

So, New Jersey being able to offer sports betting could very well mean two more states follow in short order.

Even more states look at sports betting legislation

While the Third Circuit’s en banc ruling would be binding for three states, it would also be precedent on the books everywhere in the U.S.

While other circuit courts are not beholden to the Third Circuit’s finding, it would certainly be a lot of weight on the scale for any state that attempts to legalize sports betting. If any other state were to pass sports betting legislation —  and a variety of states would likely try to do just that in the wake of a positive NJ ruling — it’s possible or even likely that the leagues and the NCAA would challenge the law just like it did for New Jersey.

But, if it gets into the court system, the Third Circuit ruling would stand as good precedent for any state that wants to go that route.

Momentum picks up to revisit PASPA

This is perhaps the most important thing that could come from a New Jersey win: a real effort to take a second look at PASPA, or repeal it entirely.

The leagues and the NCAA are steadfastly against sports betting — at least in the way New Jersey goes about it. The way the state is attempting to get around PASPA is by simply legalizing sports betting, without any sort of overarching regulatory scheme. Casinos and tracks would be responsible for regulating themselves.

Suffice it to say, no one really thinks this is a fantastic idea. If the prohibition on sports betting goes away and is replaced with the idea that states can allow what amounts to unregulated sports betting, then calls for PASPA to be revisited will likely come quickly.

What the leagues all think about sports betting in general varies from the NBA (commissioner Adam Silver wants regulated sports betting) to the NFL (commissioner Roger Goodell says publicly the league is against legal sports betting). But given the choice between the environment a New Jersey win creates and a regulated sports betting structure, the leagues would likely all come down on the same side — regulation. And that means lobbying to take PASPA off the books, or reworked to allow states to put in place regulations.

DFS in New Jersey

This is a much smaller impact, but New Jersey has made it clear it does not want to consider the issue of daily fantasy sports until its sports betting case is put to bed.

At a hearing about DFS held last year, lawmakers made it clear that they had no intention of moving on any sort of DFS regulation until the state’s sports betting case was resolved.

Any sort of attempt to regulate DFS could be seen as being at odds with the sports betting law. New Jersey is clearly more concerned with being able to offer sports betting — an activity that is not allowed right now — than with regulating DFS — an activity that is allowed right now.

The resolution of the case, either way, would free up New Jersey to consider DFS. Although regulation of DFS could bring up the same PASPA concerns as the sports betting law — at least in the case of a New Jersey loss.

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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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