By Joe Drape
The United States Court of Appeals for the Third Circuit on Tuesday stymied New Jersey’s attempts to offer sports betting again, ruling against the state’s plan to operate sports books in its casinos and racetracks.
After a rare en banc session in which 12 judges heard arguments in February on whether New Jersey’s plan was legal under federal law, the court upheld the Professional and Amateur Sports Protection Act, known as Paspa, which prohibits states from authorizing, sponsoring, operating or licensing sports betting.
By a 10-to-2 vote, the court invalidated a law passed by New Jersey in 2014 that would have allowed sports betting at its casinos and racetracks and provided a desperately needed boost to the state’s revenue as once-prosperous Atlantic City continues to collapse.
“It’s a resounding defeat for New Jersey,” Matthew Stiegler, an appellate lawyer and the author of ThirdCircuitBlog.com, said in an email.
He added: “A sweeping majority of the court, from its most liberal judges to its most conservative, rejected New Jersey’s position. There’s nothing in today’s outcome to encourage other states to try what N.J. did.”
Hanging in the balance is money — lots of it. Nevada, where sports betting is legal, took in $4.2 billion in wagers last year. That haul is dwarfed, however, by the more than $150 billion in wagers placed annually with bookmakers, who are often affiliated with organized crime, or with offshore betting operations, according to industry and law enforcement estimates.
As in New Jersey, legislators in Pennsylvania, New York and California have pushed bills to legalize sports betting in order to increase state revenue.
New Jersey’s challenge to the Paspa law, passed in 1992, was considered a long shot, but the case has brought together a disparate group of sports wagering proponents — among them lawmakers, casino owners, international sports book operators and even members of the public.
According to a recent poll by Seton Hall University, 63 percent of the population believes that betting on sports should be legal, and 68 percent of the respondents said sports betting’s legality should be decided at the state level.
A formal lobbying effort on Capitol Hill for the expansion of legalized wagering may begin as early as 2017.
“Washington has a responsibility to fix a failed law that it created nearly 25 years ago,” said Geoff Freeman, the American Gaming Association’s president and chief executive. “A federal government prohibition has driven an illegal, and occasionally dangerous, sports betting market of at least $150 billion annually. Law enforcement, mayors, leaders in sports, fans and many others agree that it’s time for a regulated sports betting marketplace that protects consumers, communities and the integrity of sports we enjoy.”
The four major professional sports leagues and the N.C.A.A. sued New Jersey in 2012, saying that the expansion of legal sports betting would damage the integrity of their games and lead to more game fixing.
“We are pleased the Third U.S. Circuit Court of Appeals has denied New Jersey’s latest attempt to allow sports wagering in the state,” the N.C.A.A. said in a statement about Tuesday’s ruling. “As other courts have acknowledged, federal law does not permit New Jersey’s actions. The N.C.A.A. continues to believe that Paspa is an important law that appropriately protects the integrity of sport in America.”
In recent years, however, the professional leagues have acknowledged that they are getting ready for an era in which betting is legal. Commissioner Adam Silver of the N.B.A. has said that betting on his league’s games should be legal and regulated. The N.H.L. recently awarded its 31st franchise to Las Vegas, and the N.F.L. is considering allowing the Oakland Raiders to move there.
New Jersey lawmakers and sports gambling proponents have called the leagues’ shifting stances hypocritical, especially because Major League Baseball, the N.B.A., and the N.F.L. owners Jerry Jones of the Dallas Cowboys and Robert K. Kraft of the New England Patriots have financial stakes in daily fantasy sports companies, which are fighting their own battles with states to be declared legal. So far, only eight states have made such declarations.
“To date, the leagues and others have not sufficiently explained the difference between fantasy sports, sports betting and other forms of gambling,” Representative Frank Pallone Jr. of New Jersey, the top Democrat on the House Energy and Commerce Committee, said in May.