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Appeals Court Dashes New Jersey's Hope For Legal Sports Betting

Illustration for article titled Appeals Court Dashes New Jerseys Hope For Legal Sports Betting

Score another one for the bookies.

Almost exactly one year ago, the Third Circuit Court of Appeals, in a 2-1 opinion, blocked New Jersey’s attempt to allow sports betting at the state’s racetracks and Atlantic City’s casinos. The judges who relegated sports betting to under the table bets with bookies or offshore websites were none other than Marjorie Rendell, the former wife of Ed Rendell, a Democratic former governor of Pennsylvania; and Maryanne Trump Barry, a sister of the Republican Presidential candidate Donald Trump.


New Jersey then sought an en banc hearing in front of the entire circuit’s stable of judges, which, although exceedingly rare, was granted.

The re-hearing, however, was an exercise in futility as the NCAA, NFL, NHL, NBA, and MLB scored a 10-2 victory today to prevent New Jersey from allowing sports betting. (full opinion below).


Absent Congress completely repealing the Professional and Amateur Sports Protection Act (“PASPA”) or a Supreme Court reversal, we are now left with a system in which Nevada enjoys the revenue generated by sports betting, Delaware can offer select parlays, and the rest of the states can ponder why we have such incoherent and inconsistent gambling laws as they stare at empty coffers.

Writing for the majority, Judge Rendell explained that even though 64 percent of New Jersey residents voted to permit sports betting and the state desperately needs the revenue, federal law simply does not allow it.

As a preliminary matter, we acknowledge the 2014 Law’s salutary purpose in attempting to legalize sports gambling to revive its troubled casino and racetrack industries.

. . .

Moreover, PASPA is not without its critics, even aside from its economic impact. It has been criticized for prohibiting an activity, i.e., sports gambling, that its critics view as neither immoral nor dangerous. It has also been criticized for encouraging the spread of illegal sports gambling and for making it easier to fix games, since it precludes the transparency that accompanies legal activities. . . While PASPA’s provisions and its reach are controversial (and, some might say, unwise), “we are not asked to judge the wisdom of PASPA” and “[i]t is not our place to usurp Congress’ role simply because PASPA may have become an unpopular law.” We echo Christie I in noting that “New Jersey and any other state that may wish to legalize gambling on sports . . . are not left without redress. Just as PASPA once gave New Jersey preferential treatment in the context of gambling on sports, Congress may again choose to do so or . . . may choose to undo PASPA altogether.” Unless that happens, however, we are duty-bound to interpret the text of the law as Congress wrote it.


Unfortunately, the Court is likely right.

Although outlawing sports betting is antiquated and “bad for business,” so to speak, PASPA prohibits an entity like New Jersey from sponsoring, operating, advertising, or authorizing “a lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly (through the use of geographical references or otherwise), on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games.”


The heart of the case is whether New Jersey, through repealing its own prohibition on sports betting, “authorized” a betting system in violation of PASPA.

Remember, though, that PASPA did grant New Jersey one year to enact a sports betting system before it went into place. However, the Garden State could not get their shit together in time, so now I have to fly to Vegas to legally wager on sports instead of just making a quick trip across the Ben Franklin Bridge. Thanks, Jersey.


As Judge Rendell explained,

The exception would have permitted sports gambling at New Jersey’s casinos, which is just what the 2014 Law does. We can easily infer that, by explicitly excepting a scheme of sports gambling in New Jersey’s casinos from PASPA’s prohibitions, Congress intended that such a scheme would violate PASPA. If Congress had not perceived that sports gambling in New Jersey’s casinos would violate PASPA, then it would not have needed to insert the New Jersey exception. In other words, if sports gambling in New Jersey’s casinos does not violate PASPA, then PASPA’s one-year exception for New Jersey would have been superfluous. We will not read statutory provisions to be surplusage.


Yet, the only reason we have this court case is because Section 3703 of PASPA provides a private cause of action to the sports leagues to challenge New Jersey. The federal government is not enforcing PASPA here. Instead, it is the NCAA, NFL, NHL, NBA, and MLB — organizations deeply intertwined with daily fantasy sports and organizations that profit greatly from the TV ratings that sports betting generates.

With Americans wagering about $150 billion per year on sports betting, and only 3 percent of that bet in Nevada, the rest of the country is missing out on significant revenue that is instead going un-taxed to bookies and offshore websites thanks to a federal law enacted before internet wagering was so prevalent.


Hell, you can even wire money to Nevada mutual funds to bet for you. Yet, placing a bet in a regulated and legal manner in your home state is still illegal.

It is time for Congress act, which of course means they will do nothing. Absent a miracle at the Supreme Court, you better go settle up with your bookie before football season starts.


Steve Silver is a former sports reporter for the Las Vegas Sun and is now a lawyer in Philadelphia. You can reach him at steve@thelegalblitz.com or on Twitter@thelegalblitz.

Photo courtesy of Getty Images.

3rd Circuit Sports Betting Decision

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