(Corrects spelling of name of NCAA counsel Donald Remy in 13th paragraph of story published March 1.)
March 1 (Bloomberg) -- A federal judge in New Jersey threw out a law to legalize sports gambling in the state, siding with groups including the National Collegiate Athletic Association and the National Football League that sued to block the legislation from taking effect.
The state law, signed by Republican New Jersey Governor Chris Christie in January 2012, permits wagering on professional and college sports at racetracks and Atlantic City casinos.
The NCAA, NFL, National Basketball Association, National Hockey League and Major League Baseball, along with the U.S. government, argued that the measure would undermine the integrity of professional sports, and should be barred under a 1992 federal law requiring states to restrict sports betting. New Jersey argued that the federal law was unconstitutional.
“After careful consideration, the Court has determined that Congress acted within its powers and the statute in question does not violate the United States Constitution,” U.S. District Judge Michael Shipp said in a ruling yesterday.
New Jersey lawyers argued that the federal law violated the state’s sovereign rights. The U.S. Professional and Amateur Sports Protection Act of 1992 bans sports betting in all but four states: Nevada, Delaware, Montana and Oregon.
“We believe firmly in the principles of our position on sports betting and that the federal ban is inequitable, violates New Jersey’s rights as a state and is unconstitutional,” Michael Drewniak, a spokesman for Christie, said in an e-mailed statement. “Even the trial judge has noted that he was not likely the final arbiter in the matter. We are confident that the federal court of appeals will conclude that New Jersey should be treated equally with other states.”
The judge issued an injunction prohibiting New Jersey from “sponsoring, operating, advertising, promoting, licensing, or authorizing a lottery, sweepstakes or other betting, gambling, or wagering scheme” based on amateur or professional competitive games.
Legalized sports gambling could generate $1 billion in bets and as much as $100 million in new annual revenue for the state in its first year, William J. Pascrell III, a lead lobbyist for the measure, said in an earlier interview.
“We wanted this in place by the Super Bowl,” Pascrell said today by phone. Pascrell, an attorney who is a partner in Trenton-based Princeton Public Affairs Group, said he didn’t expect an appeals court to resolve the matter before the February 2014 game at MetLife Stadium in East Rutherford, a 15-minute drive from Manhattan.
The sports leagues earlier challenged Delaware’s betting rights and, in 2009, the U.S. Court of Appeals in Philadelphia ruled that the state could only offer “parlay” bets on at least three NFL games, not single games.
As Atlantic City’s dozen casinos have suffered due to increased competition in neighboring states including Pennsylvania, backers of the sports betting plan saw it as a way to lure new customers and reverse the declines.
Representative Tim Frank of the NBA said in an e-mailed message that he had no comment. Bernadette Mansur of the NHL and Pat Courtney of MLB didn’t immediately reply to e-mails seeking comment on the judge’s ruling. Greg Aiello, a spokesman for the NFL, declined to comment.
Donald Remy, chief legal officer for the NCAA, said in an e-mailed statement that the group is pleased with the ruling.
“The NCAA maintains that the spread of legalized sports wagering is a threat to the integrity of athletic competition and student-athlete well-being,” he said. “We hope the decision in this case is a step in the direction of preventing that from happening.”
Last October, the NCAA said it would move five championships from New Jersey because of the state’s bid for sports gambling.
Senator Ray Lesniak, a Democrat from Elizabeth who sponsored the referendum legislation, said the injunction delays Atlantic City’s plans for as long as one year. Lesniak said an FBI analysis estimated illegal sports betting is a $500 million-a-year industry.
“Obviously, we’ll take an appeal but that delays any opportunity to have sports betting for at least a year,” Lesniak said today in a telephone interview. “Meanwhile, Nevada and Las Vegas will keep raking in those dollars from sports betting and the tourism that goes with it.”
Lesniak was also a sponsor of legislation signed by Christie this week that would legalize Internet gambling as well in an attempt to boost Atlantic City’s fortunes. The city is foundering after six consecutive years of declining gambling revenue.
The city’s 12 casinos generated $3.05 billion in revenue last year, down from a peak of $5.2 billion in 2006.
“For Atlantic City to become the type of resort Las Vegas is we need to have the type of sports betting that Las Vegas has,” Lesniak said. “Atlantic City will do OK, but it will always be a shadow of what it could be” without sports gambling.
He said sports betting in New Jersey would be a multibillion-dollar industry. People love the excitement of sports betting, including the social atmosphere and watching games on television with friends in casino lounges, Lesniak said.
“I can’t understand how Congress can allow this to continue,” he said. “I also can’t understand why other states don’t stand up to fight for this.”
The case is National Collegiate Athletic Association v. Christie, 12-4947, U.S. District Court, District of New Jersey (Trenton).
To contact the reporters on this story: Phil Milford in Wilmington, Delaware, at email@example.com; Sophia Pearson in Philadelphia at firstname.lastname@example.org; Terrence Dopp in Trenton, New Jersey, at email@example.com