Last Tuesday, an en banc panel of 12 judges from the 3rd U.S. Circuit Court of Appeals once again rejected New Jersey’s efforts to offer legal sports gambling in the state. The 10-2 decision marked yet another major setback in the state’s nearly seven-year fight to legalize sports betting, beginning with a voter approved referendum in 2011, a bill signed into law by Gov. Chris Christie in 2014 and multiple legal battles spurred by lawsuits from the NCAA and the four major North American sports leagues.
Christie has vowed to keep fighting. After the 3rd Circuit decision last week, Christie suggested that New Jersey was willing to take the decision to the Supreme Court. Christie, however, acknowledged that Supreme Court review is unlikely given that the court typically only hears approximately 1 percent of all petitions. The Supreme Court declined to hear an earlier version of the New Jersey dispute in 2014.
Perhaps more telling was Christie’s comments accompanying his vow to take the matter to the high court. During his appearance on the “Boomer & Carton” radio program, Christie emphasized what he believes is hypocrisy from the major sports leagues.
Particularly, Christie drew attention to the fact that the leagues and their owners are profiting from affiliations with fantasy sports operators while continuing to outwardly oppose sports gambling.
Christie, a Republican, also outwardly criticized President Barack Obama and framed the sports gambling issue as a states’ rights issue. Christie stated, “A state should be able to decide whether or not they want to have this in the state. If they want to have it, they should be able to have it.”
Christie, it appears, would leave the decision to legalize sports gambling to each state — and he is not alone in that thinking.
Look at other states’ legislative efforts, including Pennsylvania. The problem is that an overarching federal law remains in place that has been deemed constitutional by the states, which currently governs the sports gaming industry. The statute is known as the Professional and Amateur Sports Protection Act. 29 U.S.C. 178 et seq.
The act was put into place in 1992 and prohibits states from authorizing, operating and/or licensing sports gambling. The proposed New Jersey law sought to circumvent these restrictions by allowing casinos and racetracks to offer sports betting without state oversight.
Currently, four states, Delaware, Montana, Nevada and Oregon are exempt from the act under a grandfather clause. Interestingly, New Jersey had a one-year window to legalize sports gambling after the act was started, but did not do so.
There is a growing groundswell to amend or repeal the act, but political forces will largely dictate whether, or how quickly, that happens. One concern is whether legislators will support such a controversial initiative.
Framing the narrative in terms of states’ rights, one would think that the Republican-controlled Congress would be ripe for such action, though action before the November election seems unlikely. However, the 10-2 en banc New Jersey decision included conservative and liberal judges alike and suggests that the political lines may not be so clear cut.
Competing lobbies are also likely going to have say in the future of a revised gambling act. At a recent American Gaming Association conference, it was suggested that the sports gambling industry may organize a formal lobbying effort at the federal level as early as next year.
On the other side are the leagues, among others with interests opposed to sports betting and gambling in general.
As noted, the major sports leagues were the primary objectors to New Jersey’s proposed sports gambling law. At the professional level, the anti-gambling stance may be softening with the NHL awarding an expansion franchise to Las Vegas and the NFL’s Oakland Raiders also considering such a move.
Still, the softening has not transitioned to full-blown support. Despite the Las Vegas NHL franchise, wagering on the team will not be permitted and the NHL still formally opposed recent sports gambling legislation in Canada. Additionally, the NCAA remains vehemently opposed to legalization, once again speaking out in favor of the strict gambling law now in place.
State legislatures may play a role in determining the path of legalized sports gaming as well. The Pennsylvania House of Representatives recently passed a resolution that urged Congress to repeal the sports protection act. As the marijuana industry shows, if enough states support a cause, it can spur change at the federal level. While marijuana remains an illegal Schedule I drug at the federal level, enforcement efforts have sharply declined under the Obama administration.
Another factor that could influence the sports gambling movement is the growth of daily fantasy sports, which has, at minimum, brought attention to the issue of sports gambling, both in the eyes of the public and Congress, which recently held a hearing on fantasy sports before the House Subcommittee on Commerce, Manufacturing and Trade.
The post-gambling act fallout is illustrative of how political forces are likely to shape the industry moving forward.
For example, Oregon used to offer limited sports gambling in the form of parlay bets under its exemption, but the NFL made it clear that the state would not be considered for a team until it changed its laws. Further, the NCAA refused to play NCAA tournament games in the state. In 2007, sports betting was outlawed in Oregon, and the NCAA returned shortly thereafter.
Even if the current gambling law is repealed, states may be forced to balance their fiscal interests. Sports activity in the states surely spurs economic activity, but whether that is outweighs participation in sports gaming, an estimated $150 billion industry, is a difficult assessment.
New Jersey was willing to take that risk, and other states surely would, too. What is clear is that the recent New Jersey decision is not the end of the road in efforts to legalize sports gaming in the U.S.
The court system may not have been the right avenue to effectuate the change, but the state and federal legislatures might be.