PHILADELPHIA (CN) – New Jersey cannot bring sports betting to casinos or racetracks in the state, not without violating federal law, the Third Circuit ruled today.
The 2014 law struck down Tuesday represents New Jersey’s attempt curing the defects in similar legislation that the same courts struck down in 2013.
With some estimating that legalization of sports betting would bring the state as much as $10 billion in licensing fees and tax revenue, leading sports leagues have based their legal objections to the state’s legislative maneuverings on a 1992 federal law called the Professional and Amateur Sports Protection Act.
When Congress passed PASPA in 1992 as a way to prohibit state-sanctioned sports gambling, it exempted several states, including New Jersey, on the condition that they enact a sports gambling scheme by the end of 1993.
New Jersey missed the deadline but voters supported a 2011 referendum by a margin of 3-2 in favor of permitting sports gambling.
When that law failed, the New Jersey Legislature in 2014 attempted to “repeal” the state prohibitions on sports gambling, a move limited to casinos and racetracks, thus keeping the bar in-state or college betting illegal.
In their complaint last year, the National Collegiate Athletic Association, National Football League, Major League Baseball, National Basketball Association and National Hockey League said New Jersey’s 2014 law “is just as unlawful as its previous attempts” to get around the PASPA, and called it “a transparent attempt to circumvent [the Third Circuit’s injunction” against such measures.
U.S. District Judge Michael Shipp again blocked the measure under PASPA, and the Third Circuit affirmed 2-1 Tuesday, five months after spirited oral arguments .
New Jersey failed to sway the court that its new law was written to prohibit sports gambling in all areas except casinos and racetracks, not to authorize gambling in those areas.
“This is not a situation where there are no laws governing sports gambling in New Jersey,” Judge Marjorie Rendell wrote for the majority.
Citing the “myriad laws” that prohibit sports betting in the state, Rendell said “the 2014 law provides the authorization for conduct that is otherwise clearly and completely legally prohibited.”
For sports gambling to fly in New Jersey, the 2014 law would also have had to repeal all existing prohibitions on sports gambling, Rendell wrote.
“This is not a repeal,” she wrote, “it is an authorization.”
Though the state had criticized the NFL and other leagues for “unclean hands,” noting that they hold events in Las Vegas and sanction fantasy sports leagues and betting, the court emphasized that there would need to be a showing of abuse exclude the leagues as interested parties.
“It is not ‘unconscionable’ for the leagues to support fantasy sports and hold events in Las Vegas or London, nor is doing so ‘immediately related’ to the 2014 law,” Rendell wrote.
Judge Julio Fuentes wrote in dissent that the 2014 law should be allowed to stand since it strips away previous prohibitions on sports gambling.
“There are no laws governing sports wagering and the right to engage in such conduct does not come from the state … [but] from the inherent rights of the people,” Fuentes wrote.
While the 2012 law tried to institute a licensing scheme for certain types of sports betting, and therefore violated the PASPA, the 2014 acts repealed the entire scheme, and therefore should be allowed to stand, Fuentes said.
The attorney representing the sports leagues did not immediately return requests for comment. The New Jersey Thoroughbred Horsemen’s Association, a supporter of the law, could not be reached for comment.
The American Gaming Association, which is not a party in the case, said in a statement it will assess the ruling and that it is leading an industrywide task force to study the sports-betting industry. The AGA estimates $140 billion is spent illegally every year on sports betting.
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