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Future of sports betting in New Jersey up to federal court

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Posted Sept. 24, 2012 @ 12:25 p.m. ET
By Mike Wilkening

New Jersey’s bid to offer sports betting has been met with resistance from all major sports leagues, the NFL included. For now, those hoping to get a legal sports wager down in New Jersey are left to turn their attention toward federal court, where attorneys for the state and the sports leagues have begun to make their cases.

Legal filings made by the leagues and the state paint a picture of two sides on opposite ends of the battle to extend sports wagering in the United States beyond already existing and limited boundaries.
In August, as New Jersey started to take the procedural steps to begin offering sports betting, the NFL, NCAA, NBA, NHL and Major League Baseball filed a federal lawsuit in the U.S. District Court’s District of New Jersey against New Jersey governor Chris Christie, who has championed sports betting, as well as David Rebuck, the state’s assistant attorney general and the director of the state’s gaming enforcement division; and Frank Zanzuccki, the executive director of the state’s racing commission.

In the lawsuit, attorneys for the sports leagues argue that New Jersey’s plan is in violation of the federal Professional and Amateur Sports Protection Act (PASPA), which forbids all but four states — Delaware, Montana, Nevada and Oregon — from legally booking sports bets. The law allowed for individual states to approve sports betting between Jan. 1, 1993 and Jan. 1, 1994, but New Jersey did not do so, attorneys for the leagues noted. Attorneys for the leagues also argued that the sporting leagues’ “reputation and goodwill will be irreparably damaged” if sports betting were allowed in New Jersey. The lawsuit claimed “the sponsorship, operation, advertising, promotion, licensure and authorization of sports gambling in New Jersey would irreparably harm amateur and professional sports by fostering suspicion that individual plays and final scores of games may have been influenced by factors other than honest athletic competition.”

The NFL, which has long opposed sports gambling, submitted a signed declaration from commissioner Roger Goodell to support the sporting leagues’ legal bid to stop the state from taking sports bets. The declaration, filed with the court in August, stated that “(the) spread of sports betting, including the introduction of sports betting as proposed by the state of New Jersey, threatens to damage irreparably the integrity of, and public confidence in, NFL football.”

NFL spokesman Brian McCarthy told PFW Friday that there was no update to offer on the case. “Nothing has changed since August,” he wrote in an email, noting that the NFL wasn’t the only sports league to be fighting New Jersey’s sports-betting plans.

In September, attorneys for the state filed a motion to dismiss the case. Among the state’s arguments: the leagues’ lawsuit “alleges no facts that would suggest” that existing legal and illegal sports gambling “has harmed the ‘reputation’ or ‘goodwill’ of the Leagues.” By extension, the state’s attorneys wrote that “there is no reason to believe that sports wagering in New Jersey will cause harm to the Leagues” now or in the future.

Even if the state were to win in federal court, there would not be live-money sports betting in New Jersey until at least Dec. 1. That is the earliest the state’s Division of Gaming Enforcement (DGE) will be able to issue the licenses necessary for sportsbook operators to begin taking real-money bets, said Lisa Spengler, a spokesperson for the division. The state’s betting regulations will be officially finalized on Oct. 15, Spengler said; at that time, sportsbook operators, which could include the state’s racetracks and casinos, will be able to apply for licenses. 

As the legal wrangling continues, Dennis Drazin, the leader of a group that operates New Jersey horse-racing track Monmouth Park, is making plans to be ready to take sports wagers whenever authorized. In advance of taking any real-money bets, Drazin intends to partner a cross-promotion with an Atlantic City casino to create a free football contest. Moreover, Drazin told PFW he has been approached by multiple notable sportsbook operators that are interested in running Monmouth’s sports-betting business. He said he’s also willing to mount a legal challenge of his own on the constitutionality of PASPA if the sporting leagues prevail in court, though he’s deferring to the state’s legal efforts for the time being.

New Jersey isn’t the first state to challenge federal gaming law. Three years ago, Delaware approved a sports-betting law, but the state is restricted to taking multigame, or “parlay” wagers on NFL games after the sporting leagues — the NFL included — won a legal battle to forbid the state from taking single-game bets on a variety of sports. A federal judge ruled that Delaware, which offered a parlay-style game on NFL contests in 1976, was restricted by PASPA to take only parlay bets. PASPA allows sports betting in states that allowed such gambling between Jan. 1, 1976 and Aug. 31, 1990, and only “to the extent that the scheme was conducted” in that time frame, according to the wording of the law.

Paul M. Anderson, an adjunct professor of law at Marquette University and the associate director of The National Sports Law Institute, believes that New Jersey could have an uphill battle winning in federal court.

“Based on the precedent of the Delaware decision, I think the NFL and other league plaintiffs have the stronger case here,” Anderson wrote in an email to PFW.

Should New Jersey win in federal court, however, it’s anyone’s guess as to the ramifications. Both Anderson and Drazin believe other states would begin to start crafting sports-betting plans of their own. If New Jersey has the green light to start taking sports bets, “I can’t imagine all the other states sitting back and not trying to advance a bill,” Drazin said. 

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