New Jersey Gov. 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 ruling is a blow to Christie, R, and New Jersey lawmakers who have touted sports betting as a way to revitalize New Jersey’s flagging casinos and racetracks. 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 New Jersey law partially repealing a ban on sports betting ran afoul of a 1992 federal law. The federal law 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.
“We conclude that the 2014 law violates PASPA because it authorizes by law sports gambling,” the court ruled.
Justice Julio Fuentes was one of two who 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.
Brian Murray, a spokesman for Christie, didn’t immediately respond to an e-mail asking for comment on the ruling. State Sen, Ray Lesniak, D, who sponsored the gambling bill signed by Christie in 2014, didn’t immediately respond to a voicemail message.
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, director of public affairs for the group.
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 league, 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.
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.
The ruling by the court sets binding precedent for New Jersey, Delaware, Pennsylvania and the U.S. Virgin Islands.
(c) 2016, Bloomberg · David Voreacos