New Jersey Hits The Flop, But Will It Hit The River?

By:  Jonathan Gordon, Ruling Sports contributor (Twitter: @JonathanCGordon)

New Jersey took a monumental stride last week in its attempts to bolster the state’s gambling and betting scene. After five days of testing online gambling to ensure such a system can be effective and regulated, the state announced that residents are officially able to gamble online for traditional casino games such as poker, blackjack, and the like.

While New Jersey has drastically stimulated its gambling industry, it remains in the dark with regards to its sports betting industry. Looking back at the last few years shows just how far the state has come with online gambling – and just how far it still needs to go with sports betting.

ONLINE GAMBLING

January 2011: New Jersey legislature passes a bill that allows online gambling to take place as long as the computer servers which operate the gambling websites are located at licensed casinos in Atlantic City.

March 2011: New Jersey governor Chris Christie vetoes the January bill over various concerns.

February 2013: New Jersey (both the legislature and Christie) approves of a restructured bill allowing Internet gambling.

November 21, 2013: New Jersey implements a 5-day testing program to ensure online gambling systems are effective and efficient. All seven of the casinos that were granted Internet gambling permits are tested.

November 25, 2013: New Jersey gives all the tested casinos except for the Golden Nugget permission to immediately begin providing statewide online gambling services.

SPORTS BETTING

November 2011: New Jersey voters approve of a referendum allowing sports betting.

January 2012: Governor Christie signs referendum into law, legalizing sports betting.

August 2012: The NFL, NBA, MLB, NHL, and NCAA file a federal lawsuit against New Jersey in an attempt to prevent the state from allowing sports betting.

February 2013: Federal court rules in favor of the leagues. New Jersey is not allowed to issue sports betting licenses.

September 2013: Three judge panel from the federal 3rd Circuit U.S. Court of Appeals upholds the February ruling. New Jersey is still not allowed to issues sports betting licenses.

November 15, 2013: New Jersey asks the full court to hear its appeal. Its request is denied.

November 22, 2013: The state confirms that Governor Christie will take his appeal to the U.S. Supreme Court.

Colin Reed, a spokesman for Christie: “Gov. Christie has said all along this issue should be decided by the U.S. Supreme Court, and that’s what he hopes will happen next. He has asked the attorneys representing the state to file the necessary paperwork. The people of New Jersey voted overwhelmingly to bring sports betting to New Jersey, and the Governor agrees with his constituents and will not give up this fight.”

What does this mean going forward? Will sports betting become legal in New Jersey? Interestingly, New Jersey sports betting and online gambling share a similar history. Both received a sense of approval at first, with the online gambling bill being passed by legislation and the referendum on sports betting being approved. Both, then, experienced setbacks as Governor Christie vetoed the online gambling bill and the NCAA and professional leagues sued the state over sports betting. While these similarities provide interesting context, they are by no means applicable in court. They do, however, give comfort to the state of New Jersey. Legal setbacks are common and the legal process can be a lengthy and arduous one. Will sports betting end up with the same fortunate fate online gambling did?

The issue is certainly an interesting one. When the professional leagues and the NCAA filed a federal lawsuit against New Jersey, they won on the claim that sports betting in New Jersey would directly violate the Professional and Amateur Sports Protection Act (PASPA). Essentially, PASPA (a federal law enacted in 1992) makes sports betting illegal – except in the four states of Nevada, Delaware, Montana, and Oregon because these states legalized sports betting before the enactment of PASPA.

Though it was seemingly upheld in the original lawsuit, the main point of contention lies in the Tenth Amendment of the Constitution.

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

New Jersey claims that PASPA violates this amendment. As sports betting is not an issue addressed by the Constitution, New Jersey believes the right to legalize sports betting should be determined by the State.

This seems to be a fairly valid argument for the state of New Jersey. However, New Jersey argued this same claim in the original lawsuit and lost in District Court. Will the Supreme Court reverse the decision?

Having already lost once, it would not be surprising to see New Jersey lose in its appeal. However, it would be no less surprising to see the state emerge victorious. Frankly, this would be the best decision for all parties involved.

For one, legalizing sports betting in New Jersey would provide a major boost to the state’s economy with hundreds of millions of additional revenue. Should other states follow and pursue sports betting as well, the national economy as a whole would be substantially better off. The government would be opening up an industry that is currently monopolized by Las Vegas.

Whether the government or the NCAA or the professional leagues wish to accept it or not, sports betting will still happen regardless of the final verdict. It happens today with offshore betting accounts and the like. By formally addressing its legality, the government can better regulate the industry.

Though the following is a bit outdated, it presents a similar situation to the one today. In 2000, the NCAA proposed to ban all sports wagering on non-professional (collegiate) events. Then-President of University of Nevada Las Vegas (UNLV), Carol Harter addressed the issue:

“Outlawing legal betting on collegiate sports would neither eliminate nor significantly reduce betting on those sports. Rather, it would drive sports wagering further underground, on campuses and elsewhere…

At present, legal sports books assist the NCAA and law enforcement agencies by monitoring betting activities and alerting authorities (and each other) to anomalies, such as huge bets on underdogs, that may indicate illegal activity. Professor Shannon Bybee, director of the UNLV International Gaming Institute and a former member of the Nevada Gaming Control Board, points out that it was Las Vegas sports books who tipped authorities to probable illegal activity involving an Arizona State basketball game in 1993.”

While this situation solely focused on collegiate sports, the same principles can be applied to include professional sports. Legalizing sports betting would reduce the presence of illegal sports books. Rightfully so, the NCAA and professional sports leagues are concerned about maintaining fair games. However, as Harter addresses, legalizing sports betting would actually help in this endeavor.

Legalizing sports betting would be best for all the parties involved. You can bet on that.  New Jersey may have flopped a winner with online gambling, but it remains to be seen what the river holds. For everyone’s sake, let’s hope it’s another winner.

Born and raised in Las Vegas with casinos in his backyard, Jonathan Gordon is a junior at the University of Notre Dame and the founder of Sports Analytics Blog.

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