New Jersey Sports Betting Appeal Shot Down By Federal Court

Posted on: August 9, 2016, 01:17h. 

Last updated on: August 9, 2016, 01:21h.

Casino.org Staff Writer Read More

Expertise: Commercial Gaming.

New Jersey sports betting will officially remain an illegal activity for the foreseeable future. Nearly six months after the Third District Court of Appeals came together in Philadelphia for a rare en banc hearing to listen to New Jersey make its case, the federal appeals court ruled in favor of the NCAA.

Along with the NFL, MLB, NBA, and NHL, the NCAA has said that New Jersey doesn’t have the right to legalize sports betting, due to the Professional and Amateur Sports Protection Act (PASPA) passed in 1992. On Tuesday, the court agreed.

But New Jersey argued back that the Tenth Amendment specifically grants states the right to decide issues that are not explicitly covered in the US Constitution. With that in mind, back in 2014, New Jersey passed a law to legalize sports betting at its casinos and racetracks.

The Third Circuit had previously ruled against New Jersey in three-judge decisions. The latest en banc hearing brought 12 judges to the bench in a move that hinted that at least some of the justices believed the US Constitution favored the state’s reasoning.

But in the end, New Jersey lost.

“We now hold that the District Court correctly ruled that because PASPA, by its terms, prohibits states from authorizing by law sports gambling,” Judge Marjorie Rendell wrote in the verdict. “The 2014 law violates [that] federal law.”

According to the Third Circuit, only Congress has the power to amend the country’s current sports gambling law.

Weak Case

The decision to hold an en banc hearing was considered a historic win for New Jersey. In recent years, the Third Circuit has moved to en banc in just one out of every 1,000 cases it decides. And no one was more optimistic at the time than New Jersey State Senator Ray Lesniak (D-District 20).

“I think it’s unlikely the court would have vacated the previous ruling only to reinstate it,” Lesniak opined.

But when the two sides came together in February, the state seemingly made a less-than-stellar impression.

“The court appeared skeptical,” sports attorney Daniel Wallach told NJ.com last winter. “You could see it on the faces . . . They were not buying what the state was selling.”

Former US Solicitor General Theodore Olson represented New Jersey, while another former US Solicitor General, Paul Clement, argued for the NCAA.

Win for DFS

The Third Circuit’s decision is, however, a massive victory for daily fantasy sports (DFS). A legalized sports betting market in New Jersey would have theoretically voided the need for DFS platforms like DraftKings and FanDuel in the Garden State.

But for proponents such as Lesniak and New Jersey Governor Chris Christie (R), it’s a devastating defeat.

The American Gaming Association estimates that Americans illegally wagered $149 billion on sports in 2015. Sports betting would have provided a much-needed economic stimulus to Atlantic City. Last week, the Trump Taj Mahal announced it would become the fifth casino casualty in the gambling town since 2014.

Arming Atlantic City with an offering neighboring state casinos couldn’t provide would have made the beachfront town more desirable for many gamblers.