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New Jersey Can’t Legalize Sports Betting, U.S. Court Says

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Sept. 17 (Bloomberg) -- New Jersey’s law legalizing sports gambling conflicts with federal statutes, a U.S. appeals court ruled, barring the Legislature’s attempt to expand wagering.

The law, which would permit betting on professional and college sports at racetracks and Atlantic City casinos, is pre-empted by the 1992 Professional and Amateur Sports Protection Act, a federal statute that restricts sports gambling, a U.S. Court of Appeals panel in Philadelphia ruled today 2 to 1.

“We are not asked to judge the wisdom of the PASPA or of New Jersey’s law, or of the desirability of the activities they seek to regulate,” the court said. “We speak only to the legality of these measures as a matter of constitutional law.”

Legal sports gambling might generate $1 billion in bets and as much as $100 million for the state in its first year, William J. Pascrell III, a lobbyist for the measure, said in January.

“We will continue to fight this injustice by either appealing to the U.S. Supreme Court or to the entire Court of Appeals,” State Senator Raymond J. Lesniak, a sports-betting advocate, said in an e-mailed statement after the ruling.

Federal appeals court decisions are usually made by three-judge panels, with the loser having the right to ask for a review by the full court.

During a campaign stop today at a senior citizens picnic in Paramus, New Jersey, Republican Governor Chris Christie also said the state will challenge the decision in the Supreme Court.

“Two years ago, the people of New Jersey voted overwhelmingly” in favor of sports betting, Colin Reed, a spokesman for the governor, said in an e-mailed statement. “The governor agrees with his constituents.”

Dissenting View

Reed said the dissenting judge in the ruling agreed with New Jersey’s central argument that the federal law is unconstitutional. “This makes the issue all the more appropriate to be decided by the U.S. Supreme Court,” Reed said.

The federal government, along with the National Collegiate Athletic Association, the National Football League, the National Basketball Association, the National Hockey League and Major League Baseball, argued that New Jersey’s law would undermine professional sports’ integrity and violate the federal statute. That law bans sports betting in all but four states: Nevada, Delaware, Montana and Oregon.

New Jersey countered that the statute violates the state’s sovereign rights and is unconstitutional. U.S. District Judge Michael Shipp sided with the federal government and the sports leagues in February. He barred New Jersey from sponsoring or operating a betting, gambling or wagering system based on amateur or professional competitive games.

‘Contravenes Federalism’

U.S. Circuit Judge Thomas I. Vanaskie today partly disagreed with his colleagues’ conclusions, saying, “I respectfully dissent from that part of the majority’s opinion that upholds PASPA as a constitutional exercise of congressional authority.”

“By prohibiting states from licensing or authorizing sports gambling, PASPA dictates the manner in which states must regulate interstate commerce and thus contravenes the principles of federalism,” and “conscripts the states as foot soldiers to implement a congressional policy choice,” Vanaskie wrote.

Lesniak, a Democratic senator, said of Vanaskie’s dissent that for the first time a judge backed New Jersey, and “that gives us hope.”

The sports leagues earlier challenged Delaware’s betting rights and, in 2009, the same appellate court ruled that the state could offer only “parlay” bets on at least three NFL games, not single games.

The case is National Collegiate Athletic Association v. New Jersey, 13-1714, U.S. Court of Appeals for the Third Circuit (Philadelphia).

To contact the reporters on this story: Sophia Pearson in federal court in Philadelphia at spearson3@bloomberg.net; Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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