Legalized sports betting in New Jersey more than a pipe dream
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Like a steamroller, the fight to legalize sports betting is slowly winding its way through the U.S. federal court system, and plaintiffs in the lawsuit say that they have more than a puncher’s chance of prevailing.
The months ahead will be filled with legal wrangling and at this point no one is willing to claim anything close to victory, but the United States Department of Justice at least knows that it has a fight on its hands as it moves to keep gambling illegal in all but four states.
“The government’s argument is filled with contradictions,” says Joe Brennan, president of Interactive Media & Gaming Association, one of several plaintiffs in the suit. “For example, the government says that New Jersey is free to pass a law allowing sports betting. Except that there is a federal law precisely making any New Jersey statute unenforceable.”
The suit, which seeks to overturn the 1992 Professional and Amateur Sports Protection Act (PASPA), is being heard in federal court in New Jersey, and on Tuesday, Aug. 3 the government issued its rebuttal to the plaintiffs’ case.
The ball is now in the court of the plaintiffs, mainly iMEGA, N.J. State Senators Ray Lesniak and Stephen Sweeney, and an amalgam of N.J. horse racing groups. Nov. 1 is the target date for the plaintiffs’ response, although the court could grant an extension. After that the court could set a trial date or issue a ruling. Only one thing appears certain – whichever side loses will take the case to the Federal Court of Appeals. The next step would be the Supreme Court.
The move to legalize sports wagering in New Jersey has had many stops and starts since the idea was first proposed by Lesniak, who like many lawmakers was searching for ways to plug the state’s budget shortfall and help Atlantic City’s casinos, which were bleeding red ink as the economy soured. In 1992 New Jersey had a one-year window to allow sports wagering, but political infighting in an election year and the legislature’s decision to concentrate on other issues put the issue to bed.
Now, a generation later, Lesniak and others say the time is ripe to re-visit the issue, especially in light of the fact that no one denies that sports wagering has created an underground (and non-taxable) economy and that offshore sports betting is benefitting no one in the state.
“The reasons given by the supporters of the ban are no longer valid,” Lesniak said in 2002, “or have been proved to be not valid in the first place. The time is ripe . . . to re-state opposition to the ban, so states can decide for themselves if legalized sports betting is good for their individual state.”
The suit was filed in March 2009, and Lesniak and the other plaintiffs have had to absorb a couple of hard body blows since then, not the least of which was the election defeat of former New Jersey Governor Jon Corzine. Corzine, a Democrat, had tried to become a party to the suit, which would have given the bid a solid jolt of gravitas.
But the court ruled that he could not join in until Nov. 2, the day of the election and Corzine – who never recovered from a personal scandal involving a female union official – lost to current Gov. Chris Christie. After months of consideration, the Republican decided not to join the suit – “At best a legal long shot,” said a spokeman for Christie at the time.
But while the loss of the governor’s office was tough to swallow, more curious on the surface was the opposition to the suit by the Atlantic City casinos themselves, which have been hemorrhaging money and in the face of competition from Pennsylvania and Delaware would seem to want to grasp onto any tumbling rock in the middle of an economic avalanche that was devouring them.
Even with gaming revenues at AC casinos down a staggering 13.2 percent in the 2009 calendar year, the Casino Association (comprised of the city’s 11 casinos) announced that it opposes the suit. The association argues that Atlantic City would actually be harmed if the public had access to sports wagering at race tracks and offshore sites.
Association President Mark Juliano did not respond to phone calls and e-mails seeking comment, but former president Joe Corbo was quoted as saying “the last thing that the state needs at this time is to undermine the destination resort model by expanding gambling to other parts of the state.”
But Lesniak, who has also introduced an interstate egaming bill that would allow Atlantic City’s 11 casinos to offer online versions of poker, blackjack and baccarat, claims that the association is merely carrying water for moneyed interests in Las Vegas, particularly Harrah’s. “Harrah’s is self-serving, duplicitous and they talk out of both sides of their mouth,” said Lesniak earlier this week. “They’re spending millions on lobbyists trying to kill sports betting in Atlantic City so they can protect their Las Vegas interests. Simple as that.”
(A phone call to the Harrah’s media communications department was not returned.)
“The government’s rebuttal to our suit leans heavily on standing,” says Richard Rudin, an attorney for the plaintiffs. “They basically state that the plaintiffs (Lesniak and Sweeney, specifically) have no standing to challenge the law. It’s pretty much what we expected them to say, particularly after the governor decided to not intervene. If they (the government) can get it dismissed on standing, they don’t have to significantly address the core issues we brought up.”
Jeff Standen, a professor of law at Willamette University in Salem, Ore., and a leading authority on sports and the law, says the chances of the law being overturned are not great, and that the plaintiffs’ best chance for success lies in the their contention that PASPA violates the 10th amendment to the constitution.
“It’s never an easy sell to convince a court that the Congress has overreached,” says Standen. “The Commerce Clause pretty clearly states that the government can treat states differently.” In a recent blog, though, Standen said that the plaintiffs have a viable 10th amendment argument:
“The tenth,” wrote Standen, “has been held to prohibit the federal government from forcing states to enact specific laws. What does PASPA do if not compel states to prohibit sports betting games? Put it this way: if PASPA were nationally uniform, then Nevada would have to change its laws to conform with the federal law. In this sense, a state (other than Nevada or one of the other exempted ones) in passing a lottery law must include a provision prohibiting games based on sports contests. So PASPA in effect requires states to pass state laws to conform with federal law. This poses a substantial tenth amendment issue.”
While the New Jersey legislators, iMEGA and the state horse tracks are pretty much going it alone against the government and assorted allies, the suit is being watched by state governments and casino interests in other states which have flirted with the idea of somehow, some way instituting sports wagering. A few years ago a Rhode Island legislator got the issue as far as a state house hearing, and California lawmakers are informally talking about it.
In Iowa, which has 12 casinos and a population of just over 3 million, the state’s Gaming Association is keeping its eye on developments in New Jersey and the state Senate has endorsed pro and college sports wagering if/when the federal law is overturned.
“We’re not going to be a party to the suit,” says Wes Ehricke, president of the Iowa Gaming Association, “but we certainly would see it as a benefit for the casinos here.”
IMEGA’s Brennan, who believes that internet sports bettors should have the same rights as those who wager at Nevada casinos, is optimistic that the law can be overturned.
“When this law went into effect in 1992,” says Brennan, “one of the leading opponents was Richard Thornburgh, and that was interesting because Thornburgh happened to be the attorney general of the United States. Now the current attorney general (Eric Holder) is in essence trying to uphold a law that his predecessor didn’t want to implement in the first place. They want it both ways.”
Pro or con, though, no one denies that the scope of illegal sports wagering. In 2007 authorities broke up a sports betting ring that was run by a reputed Philadelphia mafia associate, run out of the Borgata poker room. Reportedly more than $60 million exchanged hands, either at the poker room itself or through two web sites eaglesdp.com (shut down) and justwagers.com. Twenty-four persons, several of them with mob connections, were charged and two wound up doing time.
“Sports betting should be considered in New Jersey,” said David Schwartz, director of the Center for Gaming Research at UNLV, commenting shortly after the bust. “This shows people are willing to borrow money at rates of 50 percent to do it, and it might be better . . . if it were legal, regulated and protected.”
Like a steamroller, the fight to legalize sports betting is slowly winding its way through the U.S. federal court system, and plaintiffs in the lawsuit say that they have more than a puncher’s chance of prevailing.
The months ahead will be filled with legal wrangling and at this point no one is willing to claim anything close to victory, but the United States Department of Justice at least knows that it has a fight on its hands as it moves to keep gambling illegal in all but four states.
“The government’s argument is filled with contradictions,” says Joe Brennan, president of Interactive Media & Gaming Association, one of several plaintiffs in the suit. “For example, the government says that New Jersey is free to pass a law allowing sports betting. Except that there is a federal law precisely making any New Jersey statute unenforceable.”
The suit, which seeks to overturn the 1992 Professional and Amateur Sports Protection Act (PASPA), is being heard in federal court in New Jersey, and on Tuesday, Aug. 3 the government issued its rebuttal to the plaintiffs’ case. The ball is now in the court of the plaintiffs, mainly iMEGA, N.J. State Senators Ray Lesniak and Stephen Sweeney, and an amalgam of N.J. horse racing groups. Nov. 1 is the target date for the plaintiffs’ response, although the court could grant an extension. After that the court could set a trial date or issue a ruling. Only one thing appears certain – whichever side loses will take the case to the Federal Court of Appeals. The next step would be the Supreme Court.
The move to legalize sports wagering in New Jersey has had many stops and starts since the idea was first proposed by Lesniak, who like many lawmakers was searching for ways to plug the state’s budget shortfall and help Atlantic City’s casinos, which were bleeding red ink as the economy soured. In 1992 New Jersey had a one-year window to allow sports wagering, but political infighting in an election year and the legislature’s decision to concentrate on other issues put the issue to bed.
Now, a generation later, Lesniak and others say the time is ripe to re-visit the issue, especially in light of the fact that no one denies that sports wagering has created an underground (and non-taxable) economy and that offshore sports betting is benefitting no one in the state.
“The reasons given by the supporters of the ban are no longer valid,” Lesniak said in 2002, “or have been proved to be not valid in the first place. The time is ripe . . . to re-state opposition to the ban, so states can decide for themselves if legalized sports betting is good for their individual state.”
The suit was filed in March 2009, and Lesniak and the other plaintiffs have had to absorb a couple of hard body blows since then, not the least of which was the election defeat of former New Jersey Governor Jon Corzine. Corzine, a Democrat, had tried to become a party to the suit, which would have given the bid a solid jolt of gravitas.
But the court ruled that he could not join in until Nov. 2, the day of the election and Corzine – who never recovered from a personal scandal involving a female union official – lost to current Gov. Chris Christie. After months of consideration, the Republican decided not to join the suit – “At best a legal long shot,” said a spokeman for Christie at the time.
But while the loss of the governor’s office was tough to swallow, more curious on the surface was the opposition to the suit by the Atlantic City casinos themselves, which have been hemorrhaging money and in the face of competition from Pennsylvania and Delaware would seem to want to grasp onto any tumbling rock in the middle of an economic avalanche that was devouring them.
Even with gaming revenues at AC casinos down a staggering 13.2 percent in the 2009 calendar year, the Casino Association (comprised of the city’s 11 casinos) announced that it opposes the suit. The association argues that Atlantic City would actually be harmed if the public had access to sports wagering at race tracks and offshore sites.
Association President Mark Juliano did not respond to phone calls and e-mails seeking comment, but former president Joe Corbo was quoted as saying “the last thing that the state needs at this time is to undermine the destination resort model by expanding gambling to other parts of the state.”
But Lesniak, who has also introduced an interstate egaming bill that would allow Atlantic City’s 11 casinos to offer online versions of poker, blackjack and baccarat, claims that the association is merely carrying water for moneyed interests in Las Vegas, particularly Harrah’s. “Harrah’s is self-serving, duplicitous and they talk out of both sides of their mouth,” said Lesniak earlier this week. “They’re spending millions on lobbyists trying to kill sports betting in Atlantic City so they can protect their Las Vegas interests. Simple as that.”
(A phone call to the Harrah’s media communications department was not returned.)
“The government’s rebuttal to our suit leans heavily on standing,” says Richard Rudin, an attorney for the plaintiffs. “They basically state that the plaintiffs (Lesniak and Sweeney, specifically) have no standing to challenge the law. It’s pretty much what we expected them to say, particularly after the governor decided to not intervene. If they (the government) can get it dismissed on standing, they don’t have to significantly address the core issues we brought up.”
Jeff Standen, a professor of law at Willamette University in Salem, Ore., and a leading authority on sports and the law, says the chances of the law being overturned are not great, and that the plaintiffs’ best chance for success lies in the their contention that PASPA violates the 10th amendment to the constitution.
“It’s never an easy sell to convince a court that the Congress has overreached,” says Standen. “The Commerce Clause pretty clearly states that the government can treat states differently.” In a recent blog, though, Standen said that the plaintiffs have a viable 10th amendment argument:
“The tenth,” wrote Standen, “has been held to prohibit the federal government from forcing states to enact specific laws. What does PASPA do if not compel states to prohibit sports betting games? Put it this way: if PASPA were nationally uniform, then Nevada would have to change its laws to conform with the federal law. In this sense, a state (other than Nevada or one of the other exempted ones) in passing a lottery law must include a provision prohibiting games based on sports contests. So PASPA in effect requires states to pass state laws to conform with federal law. This poses a substantial tenth amendment issue.”
While the New Jersey legislators, iMEGA and the state horse tracks are pretty much going it alone against the government and assorted allies, the suit is being watched by state governments and casino interests in other states which have flirted with the idea of somehow, some way instituting sports wagering. A few years ago a Rhode Island legislator got the issue as far as a state house hearing, and California lawmakers are informally talking about it.
In Iowa, which has 12 casinos and a population of just over 3 million, the state’s Gaming Association is keeping its eye on developments in New Jersey and the state Senate has endorsed pro and college sports wagering if/when the federal law is overturned.
“We’re not going to be a party to the suit,” says Wes Ehricke, president of the Iowa Gaming Association, “but we certainly would see it as a benefit for the casinos here.”
IMEGA’s Brennan, who believes that internet sports bettors should have the same rights as those who wager at Nevada casinos, is optimistic that the law can be overturned.
“When this law went into effect in 1992,” says Brennan, “one of the leading opponents was Richard Thornburgh, and that was interesting because Thornburgh happened to be the attorney general of the United States. Now the current attorney general (Eric Holder) is in essence trying to uphold a law that his predecessor didn’t want to implement in the first place. They want it both ways.”
Pro or con, though, no one denies that the scope of illegal sports wagering. In 2007 authorities broke up a sports betting ring that was run by a reputed Philadelphia mafia associate, run out of the Borgata poker room. Reportedly more than $60 million exchanged hands, either at the poker room itself or through two web sites eaglesdp.com (shut down) and justwagers.com. Twenty-four persons, several of them with mob connections, were charged and two wound up doing time.
“Sports betting should be considered in New Jersey,” said David Schwartz, director of the Center for Gaming Research at UNLV, commenting shortly after the bust. “This shows people are willing to borrow money at rates of 50 percent to do it, and it might be better . . . if it were legal, regulated and protected.”
