New Jersey’s fight over sports betting

The state of New Jersey was forced to delay the opening of a new legalized sports betting venue after a federal judge issued a temporary restraining order that will expire on Nov 21. US District Judge Michael Shipp gave the order in response to a motion filed by four major sports leagues (MLB, NBA, NFL, and NHL) and the National Collegiate Athletic Association (NCAA) about a week ago. He will hear arguments about whether or not to extend the ban on Nov 20. If he does extend the ban, the state will probably appeal the decision to the Third Circuit Court of Appeals in Philadelphia.

On Oct 20, Governor Chris Christie had signed a bill that would partially repeal New Jersey’s ban on sports betting. This bill, which had been approved by the Assembly by a vote of 27-1, would allow New Jersey casinos and racetracks to offer sports betting services provided that the bets are placed on events outside of the state to avoid conflicting with a 1992 federal law.

Monmouth Park Racetrack, one of the oldest tracks in New Jersey, had originally planned to offer sports betting services as early as Oct 26, but Shipp’s restraining order has delayed that launch.

The battle over sports betting is a long one, and goes all the way back to 1976, when the Legislature passed an amendment to the state constitution that gave them the authority to pass the Casino Control Act. The Act permitted “gambling houses and casinos” within Atlantic City and gave the Legislature the power to determine the type and number of gambling games allowed. Sports betting was not one of the games permitted.

During the 80’s and 90’s, gambling became increasingly popular leading Congress to pass a law limiting the spread of sports betting in 1992. That law was called the Professional and Amateur Sports Protection Act (PASPA) and it took effect in January, 1993. PASPA prohibits any government entity from sponsoring, operating, advertising, promoting, licensing, or authorizing by law any lottery, sweepstakes, or any other kind of gambling involving competitive sports. The Act also stipulates that a civil suit can be brought in a federal court against violations of PASPA by the attorney general or by a sports organization that believes its game is the basis of the violation.

PASPA did have a grandfather clause that permitted states and cities like Atlantic City that already had sports betting to keep it. At the time, Atlantic City was the only city that fit the qualifications of the grandfather clause, while the four states that qualified were Nevada, Delaware, Montana, and Oregon.

Subsequent years saw a number of attempts to legalize sports betting. In 2009, Senator Raymond Lesinak tried to have PAPSA declared unconstitutional. He failed. At the end of 2010, the New Jersey Legislature agreed to a constitutional amendment that would authorize them to allow sports betting. Later, the Legislature amended the Casino Control Act to permit sports betting. The amendment allowed the Division of Gaming Enforcement and the New Jersey Racing Commission to grant licenses to casinos and racetracks that wanted to run sports betting operations. In Oct, 2012, the Division of Gaming Enforcement adopted regulations regarding sports betting.

In Aug, 2012, the four major sports leagues and the NCAA filed a suit in district court saying that sports betting would violate PASPA and therefore should not be allowed. They also argued that even if New Jersey’s laws did permit sports betting, federal law did not and federal law superseded state law. The state countered that PASPA was unconstitutional. The district court ruled that PASPA was constitutional in Feb, 2013 — and that sports betting violated it.

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