The hopes of sports fans in New Jersey who are itching to put a few bucks on a game were dashed Tuesday as a three-judge panel on the U.S. Third Circuit Court of Appeals in Philadelphia ruled by a 2-to-1 vote that sports betting would have to remain illegal in the Garden State.
It may actually come as a surprise to some people that sports betting is outlawed in New Jersey, as it has been the east coast hub for gambling in the United States for years, but the Professional and Amateur Sports Protection Act of 1992 (PASPA) prohibited gambling on sports in all but four states: Nevada, Oregon, Montana, and Delaware. Congress actually gave states that already had legalized casino gambling for the previous ten years a one-year window during which to opt-in to sports betting, but New Jersey did not act on the opportunity. Now it is regretting that decision.
New Jersey Has Wanted Sports Betting for Years
In 2011, plans to launch a sports betting regime were actually passed by a statewide referendum, but it was fought by the country’s major sports leagues – NFL, NBA, MLB, NHL, and the NCAA – who said legalizing sports betting violated PASPA. Their challenge was successful in court.
The latest court decision stems from a bill passed in New Jersey last year that attempted an end-around on the court’s PASPA ruling. The 2011 law that was overwhelmingly approved by New Jersey voters was called the Sports Wagering Act, which again, would have legalized sports betting. Last year’s bill that flew through the state legislature, S2460, took a different angle: it repealed the state’s ban on sports betting.
In upholding PASPA previously, the court said that the state could not explicitly legalize sports betting and could not issue sports betting licenses. What S2460 did was simply repeal the ban without technically making it legal. The state would not issue licenses or anything, but would let casinos and racetracks offer sports wagering if they saw fit. It was essentially, “Hey, you casinos do what you want. We’re not going to help you, but we’re not going to stop you.”
Of course, the sports leagues fought New Jersey once again, leading to today’s ruling. The panel ruled that even without officially regulating and legalizing sports betting, repealing the ban was as good as government authorization. From the decision:
We now turn to the primary question before us: whether the 2014 Law violates PASPA. We hold that it does. Under PASPA, it shall be unlawful for “a governmental entity to sponsor, operate, advertise, promote, license, or authorize by law or compact” sports gambling. 28 U.S.C. § 3702(1). We conclude that the 2014 Law violates PASPA because it authorizes by law sports gambling.
The panel basically nailed New Jersey for trying to be clever. Though the state argues that lifting the ban on sports betting is not the same as authorizing sports betting, the 2014 law did specifically say that casinos and racetracks could offer the form of gambling and put restrictions on who can gamble on what, so yes, the state authorized sports betting.
DFS Community Weighs In
Reaction to the ruling in the DFS community has been mixed. Some are actually relieved that the judge panel ruled against New Jersey. On Rotogrinders.com, poster “tclii85” wrote:
DFS operators and investors can take a sigh of relief. This would have opened a road map to multiple states offering single game betting and had the potential to crush DFS. The industry will continue to have dynamic growth in the near term. Legalization of normal betting was the elephant in the room, now that it is gone, at least in the near term, DFS is king.
Others on his side opine that people would prefer to just bet on games rather than play DFS because making simple money line bets and bets against the spread are much easier than spending the time to study and construct a fantasy team. Additionally, you just have to be right, not “right-er” than all your opponents.
Other people argue that it can only be a positive to get as much sports betting legalized as possible. Additionally, those on the “pro-New Jersey” side feel that the traditional sports betting audience and DFS audience do not have as big of an overlap as one might think (DFS requires more knowledge and study, traditional sports betting is enjoyed more by casual bettors), so the DFS market should be fine if sports betting were to be legalized.