Christie-Backed Sports Betting Law in N.J. Blocked by Court

  • Appeals court bars state from legalizing sports gambling
  • NFL, NCAA, three other leagues sued to block 2014 betting law

New Jersey Governor Chris Christie’s bid to expand legal sports betting beyond Nevada failed again as a U.S. appeals court rejected his state’s latest attempt to permit wagering at casinos and racetracks.

The decision is a blow to Christie and New Jersey lawmakers who have touted sports betting as a way to revitalize New Jersey’s flagging gambling economy. It’s a victory for four sports leagues, including the National Football League, and the National Collegiate Athletic Association, which sued to overturn the law. 

The U.S. Court of Appeals in Philadelphia ruled Tuesday that a 2014 state law partially repealing a ban on sports betting ran afoul of a 1992 federal statute. The latter bars such wagering in all but four states, including Nevada, the only one to allow single-game betting. In 2015, Nevada casinos made $232 million on sports betting on $4.2 billion in gaming revenue, or 2 percent.

The leagues said legal wagering is barred by the Professional and Amateur Sports Protection Act, or PASPA. They argued that New Jersey’s partial repeal of its ban on sports betting to allow it at casinos and racetracks violated PASPA’s prohibition against authorizing wagering. The appellate court agreed.

Dissenting Opinion

“We conclude that the 2014 law violates PASPA because it authorizes by law sports gambling,” the court said in a 10-2 ruling.

Justice Julio Fuentes dissented, rejecting the majority’s view that the partial repeal amounted to an authorization of sports betting.

“The majority fails to explain why a partial repeal is equivalent to a grant of permission (by law) to engage in sports betting,” Fuentes wrote.

One of those ruling against Christie was Judge Maryanne Trump Barry, the sister of Donald Trump, the Republican nominee for U.S. president.

Paul Loriquet, a spokesman for New Jersey Attorney General Christopher Porrino, said the state is reviewing the opinion. State Senator Ray Lesniak, a Democrat from Elizabeth who sponsored the gambling bill signed by Christie in 2014, didn’t immediately respond to a voice-mail message.

‘Political Pressure’

New Jersey could appeal to the U.S. Supreme Court. With the appellate court upholding the constitutionality of PASPA again, advocates of legal sports betting may have to turn to Congress to amend the law, said Jeremy Temkin, an attorney at Morvillo Abramowitz Grand Iason & Anello PC.

“The political pressure would be solely on Congress,” Temkin said.

The American Gaming Association, the industry’s lobbying group, supports a repeal of PASPA, a process that it estimates could take three to five years to push through Congress, said Sara Rayme, senior vice president of public affairs for the group.

“Washington has a responsibility to fix a failed law that it created nearly 25 years ago,” the association said Tuesday in a statement. “A federal government prohibition has driven an illegal, and occasionally dangerous, sports betting market of at least $150 billion annually.”

U.S. Representative Frank Pallone Jr., a New Jersey Democrat, said he was “deeply disappointed” with the ruling and will introduce federal legislation to allow sports betting in New Jersey.

2012 Law

The legal fight in New Jersey stretches back to 2011, when voters approved an amendment to the constitution to allow sports betting. In 2012, New Jersey enacted a law that gave Christie’s administration broad authority to regulate wagering at casinos and racetracks. The leagues sued, saying the law violated PASPA.

A judge ruled in favor of the leagues, and New Jersey appealed, arguing that PASPA violated a constitutional ban on telling states what laws or regulations to enact. An appellate panel ruled for the leagues, saying New Jersey violated the federal law, which the judges declared constitutional.

In 2014, New Jersey then enacted a new law that repealed its prohibition on gambling, but only at casinos and racetracks. The leagues sued again, saying such a partial repeal still violated federal law. Once again, a judge backed the leagues and a three-judge appellate panel ruled against New Jersey.

En Banc

The Philadelphia appeals court granted New Jersey’s request to rehear the case with all of its judges. Such a review is rare, happening in fewer than one in 1,000 cases.

At arguments on Feb. 17, New Jersey’s attorney, Theodore Olson, said the state’s partial repeal didn’t amount to an authorization. He said the wagering allowed under the new law would be unregulated by the state.

The judges questioned Olson and the lawyer for the leagues, Paul Clement, at length about whether it was possible to enact a partial repeal of state gambling prohibitions that would be acceptable under PASPA. In the opinion, the judges sidestepped the question of the proper line to set. 

“We need not, however, articulate a line whereby a partial repeal of a sports wagering ban amounts to an authorization under PASPA, if indeed such a line could be drawn,” according to the judges.

Sports-law expert Daniel Wallach said the court “punted” on the issue of guiding New Jersey on how to craft a permissible repeal of gambling laws. The “nuclear option” for New Jersey is to repeal all gambling laws, allowing sports betting by bookies, organized crime and retail stores, he said.

“The question is whether New Jersey has the political will to go that route,” said Wallach, an attorney at Becker & Poliakoff in Fort Lauderdale, Florida.

The case is NCAA v. Governor of New Jersey, 14-4546, U.S. Court of Appeals for the Third Circuit (Philadelphia).

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