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Sports Betting in New Jersey -- Current Events


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3/10/2016
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Legal Update – Current Events – March 10, 2016

Sports betting is in the news in the Garden State, in a big way.  There is a prominent legal battle raging surrounding the legality of recent legislation pushed forward by Governor Christie to clear the way for a sports betting industry. In N.C.A.A., et. al v. Governor of New Jersey, Case No.: 14-4546, the Third Circuit Court of Appeals recently heard arguments en banc on Feb. 18, 2016 on the issue of whether sports betting would be legal in New Jersey under a state law that would neither regulate nor outlaw the practice.  The NCAA and other Professional Sports Leagues (NBA, NFL, NHL, and MLB) all argue that the law impermissibly steps on the toes of Federal legislation banning state “authorization” of the practice of sports betting and that they have standing to challenge the State law because it causes their organizations “reputational harm.”

New Jersey’s attempt to bring sports betting to the Garden State is on the chopping block now for the third time.  And despite Chris Christie’s and Sen. Raymond Lesniak’s efforts to indefinitely stay execution, experts believe that a majority of the 12 judges involved (including Donald Trump’s sister) will strike down their effort to bring sports betting to New Jersey as a constitutional infringement of existing Federal legislation.  Experts and commentators believe that the Appellate panel will find that federal legislation preempts New Jersey’s efforts to  “authorize” the practice, and that the State law that lawmakers have proposed conflicts with federal laws that place very restrictive boundaries on the practice of sports betting – whether New Jersey tries to push the authorizing legislation in through the front door or tries to sneak it in through the back door.

Under the Professional Amateur Sports Protection Act (“PASPA”), 28 U.S.C. § 3207, it is illegal for states to “authorize, sponsor, operate, promote, advertise or license” sports betting.  The stated purpose of the law is to prohibit sports gambling because it is a harmful practice for gamblers, for players, and for the official leagues.  The expressed purpose of PASPA is to "prohibit sports gambling conducted by or authorized under the law of any State of governmental entity" and to "stop the spread of State-sponsored gambling." The Senate Report specifically cites the concern for maintaining the integrity of amateur and professional sports.   

New Jersey’s attempt to allow sports betting, “spreading the practice,” while avoiding violating PASPA, is a creative one.  Sen. Raymond Lesniak (D-Union) championed an effort to bring sports betting to New Jersey by circumventing the ban with a law allowing private casinos and racetracks to offer sports betting as long as the State didn't sponsor or regulate it.  Critics readily point out that such a law, by its very nature, being a law, tacitly “authorizes” and continues the “spread” of the practice.  The bi-partisan Act, S2460, merely repeals sections of 2C:37, 2A:40 and 5:5 of the New Jersey Statutes – all provisions that prohibit sports betting.  The language of the bill also makes clear that it does away with regulation surrounding sports betting, but should not be construed to violate PASPA prohibitions on “authorizing” or “regulating” the practice.  Whether saying the legislation doesn’t violate PASPA will win the day, despite the obvious intended and expected effect of the bill to do exactly that, is an issue for the Third Circuit to decide.

https://legiscan.com/NJ/text/S2460/2014

http://www.nj.com/politics/index.ssf/2014/10/chris_christie_signs_law_allowing_for_sports_betting_in_nj.html

Increasingly, the NCAA and the other professional sports leagues, seem to want to maintain their monopoly on revenues from sports, rather than allowing sports betting promoters to cut into their market.  As with many other areas, laws have tragically become corporate revenue grabs rather than the moral, social and commercial mandates of the people in a self-governed democracy.  If New Jersey wins, the State and its casinos and ailing racetracks will see an influx of tax revenue and corporate profits, respectively, the lions share of which will inure primarily to the benefit of a group of corporate benefactors in the gaming industry who have major lobbying clout in Trenton, and to a lesser extent, will help bring some revenue into the State, albeit, primarily from the losses of its own citizens.  If New Jersey loses, the major sports leagues will maintain their monopolies and new players will be denied access to what will soon be a $1 trillion industry, a large part of which is still run in the black market under cloak of night.  As with the drug legalization debate, there are competing arguments as to whether it is better to criminalize or regulate a disfavored practice that people will engage in whether it is legal or not.

Sports betting is today a $400 billion industry.  President Obama regularly announces his sports picks and even joked with Stephen Colbert that he himself placed bets on the Super Bowl, and that if the illegality of his actions were ever questioned, he could always pardon himself.  Clearly, the stigma that once attached to the practice of sports betting has softened considerably, and attitudes are changing.

http://calvinayre.com/2016/02/09/sports/president-obama-jokes-about-betting-on-sports-during-super-bowl-50/

One need only observe the groundswell of newcomers to Fantasy Football to see the allure of sports betting.  Now, the forum for betting is itself a sports contest, where you pit your knowledge, skill and strategy against your peers.  You are not merely a participant in a game of odds---but, stand in the shoes of a General Manager and Coach of a fictional sports franchise.  The internet has facilitated an evolution of the betting process that has made “fantasizing” over outcomes far more interesting, and far different, from traditional sports betting.  Now it is competition as well as gambling.  It is bragging rights as well as dollars won and lost.  It is a pastime in its own right.  No doubt, this modern hybrid challenges the rigid moral classifications that have historically defined the debate.

Note that PASPA is a federal law that prohibits State regulation or State sponsorship of sport betting, but doesn’t make sports betting illegal.  Huh?  What is going on here.  The reason for this is that under Constitutional Law, federal laws preempt any conflicting state laws.  By 1992 when PASPA was passed, bookmaking was already a big business in some places.  Heard of Las Vegas, Nevada?  Drafting the bill the way they did let Congress satisfy the special interests in Las Vegas, but still allowed Congress the flexibility to take both sides of the issue and to satisfy both supporters and detractors of sports betting.  On the one hand, they did something about sports betting, limiting it to where it already existed, on the other hand, they didn’t interfere with states that already had an industry in place, thereby killing existing businesses and causing loss of jobs.  Ironically, Abraham Lincoln at one time supported and then later decried the absurdity of a slavery policy that similarly stopped the spread of slavery, but failed to outlaw it.  Check out the Republican Platform of 1860 which seems to call for an end to slavery, but then search for debate transcripts which talk about limiting the spread of slavery – a half-measure adopted to appease the divided electorate. http://www.presidency.ucsb.edu/ws/?pid=29620

Half-measures like this are common in American politics, but when tested logically, they often violate common sense, and sometimes shock the conscience.  While such half-measures and negotiated outcomes cannot be avoided entirely, the American people are increasingly frustrated and angry with a Congress that straddles the middle ground but fails to take a firm stand one way or the other on important issues.  The American people feel increasingly disenfranchised by a legislature that fails to take a stand for what is best for the people, and instead repeatedly caves to the demands of varying special interest groups, whose interests frequently run contrary to those of the electorate.  The same thing can’t be illegal in some places and legal in others.  But, with Congress, it is.  Ok.  Moving on.

So why didn’t PASPA just outlaw sports betting, which the Act claims is a public ill that diminishes the integrity of sports?  Politics.  As it was in the 1860s, the PASPA law applied its prohibition on sports betting to all states that did not already have a sports betting history; but, those that did had to apply for immunity and adhere to regulation to continue sports betting.  Nevada, Montana, Oregon and Delaware were Grandfathered in and decided to apply for immunity.  Las Vegas was then the Mecca of sports betting, and is even more so today.  On a historical note, New Jersey had a window of opportunity to get involved with sports betting under the Act within one year of its passage, but failed to do so.  New Jersey is now regretting that oversight.

As it stands, there have been two prior legal battles on the same subject, referred to as “Christie I” and “Christie II.”  Both involved failed efforts for New Jersey to get in on sports betting that were shut down by the Courts.  New Jersey faces a likely third strike.  No doubt, New Jersey will step up to the plate again, but in its current form, S2460 probably won’t pass judicial muster.

On a related note, a “Gambler’s Rights Attorney” is taking it to the house with a string of lawsuits, and now a book, about unfair casino practices aimed at skilled betters.  The lawyer’s name is Bob Nersesian.  He is currently representing Thom Kho, a black-jack player from New Jersey who claims that the Hard Rock Hotel & Casino in Las Vegas flagged him after he was up about $6,000 and casino guards told him he had to leave.  Kho was handcuffed and put in a back-room for allegedly counting cards.  The following day he decided to take legal action.

The jury is out on the future of sports betting in the Garden State.

Feel free to leave a comment and weigh in on the debate.

 

New York Times Article – Round 3 of Legalized Betting in New Jersey

http://www.nytimes.com/2016/02/18/sports/new-jerseys-fight-to-legalize-sports-betting-continues.html

https://www.washingtonpost.com/news/early-lead/wp/2016/02/18/after-court-arguments-is-new-jersey-any-closer-to-legalized-sports-gambling/

http://www.gambling-law-us.com/Federal-Laws/sports-protection.htm

 

Background artcicle – Previous Sports Betting Case – Professional and Amateur Sports Protection Act (PASPA)

http://www.nytimes.com/2015/10/15/sports/appeals-court-to-rehear-new-jersey-sports-betting-case.html

 

New York Post Article – Gambler’s Rights Attorney

http://nypost.com/2016/02/27/cheated-gamblers-are-turning-the-tables-on-casinos/

 

More Background Articles

http://www.law360.com/articles/708974/leagues-urge-3rd-circ-not-to-rehear-nj-sports-betting-case

https://en.wikipedia.org/wiki/Professional_and_Amateur_Sports_Protection_Act_of_1992

http://www.legalgamblingusa.com/articles/what-is-paspa.html

http://lawweb2009.law.villanova.edu/sportslaw/?p=3487

http://www.legalsportsreport.com/5262/new-jersey-sports-betting-en-banc/

 

Federal Preemption

https://en.wikipedia.org/wiki/Federal_preemption

https://www.manatt.com/SportsLaw/Hold-Your-Bets--Third-Circuit-Rejects-Sports-Betting-Law.aspx

 

Various

http://apps.americanbar.org/ababoards/blog/blogpost.cfm?catid=14911&threadid=28881

 



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