New Jersey and Sports Betting: A Losing Proposition

The state of New Jersey has entered an appeal to the United States Supreme Court over sports betting.  This was done at the apparent insistence of the Christie administration in conjunction with some state legislators who are in favor of sports betting.  Being a resident and voter in New Jersey and having worked in the gaming industry in the state with knowledge of the law and the political history here, I believe I am qualified to comment on this event.

First, let’s look at judicial reality.  It takes four Justices to grant the appeal after the petition is received by the Court.  After the petition is received, it is assigned a docket number and placed on the conference calendar for review by the Justices.  Usually prior to this conference held most Fridays while the Court is in session, the law clerks of the Justices have read the merits of the petition and made “suggestions” to the Justices.  However, the final decisions are those of the individual Justices.  They then vote at the conference whether to take the case for full review.  The “Orders List” comes out the Monday or Tuesday after the conference listing cases that are accepted, denied, or “held over.”  Cases are held over to the next conference if there is a similar case pending before them or if there are questions that need further answering.  However, overall 96% of cases are disallowed or dismissed.  It is rare when the Court announces the reasons for refusing a case, but when they do it is called a per curium decision and is usually not even signed by any Justice.

There are three general ways to get a case heard.  The first is the obvious- it must be a serious constitutional issue that requires Supreme Court intervention.  Second, similar cases decided differently by lower appeals courts- “circuit splits-” can get a case heard since the Supreme Court strives towards constitutional and statutory consistency across circuits.  Third, an issue may be uniquely raised that piques the interest of at least four Justices.  If anyone ever reads any petitions, it becomes obvious that circuit splits are usually a guarantee for full review.  Once granted review, opposing parties then file their briefs as well as any other interested parties (amicus briefs), but only insofar as the Court allows.

Right from the start, the state of New Jersey’s odds here are somewhere south of 10%.  Then there is the legal and political history involved here.  At issue is a 1992 law- the US Professional and Amateur Sports Protection Act which was the brain child of former the US Senator from New Jersey and NBA star, Bill Bradley.  That law passed in the Senate on a recorded vote of 88-5 in favor which obviously suggests very strong bipartisan support.  The House then amended and approved the law on a voice vote suggesting strong bipartisan support again.  The Senate approved those amendments and passed the final version on October 7th, 1992- again on a voce vote!  President George H.W. Bush signed it on October 28th and it went into effect January 1, 1993.

At the time, four states technically allowed sports betting under either state law or their constitutions- Nevada, Oregon, Delaware and Montana.  Obviously, only Nevada actually had organized legal sports betting.  However, there was a carve-out in the final bill: any state that had approved casino gambling for at least ten years previous to enactment of the law would be given a one-year window of opportunity to approve organized sports betting.  That carve-out applied to only one state at the time- New Jersey.  But, 1993 was a gubernatorial election year.  In early 1993, the New Jersey state senate approved a voter referendum question to be placed on the ballot that year allowing sports betting.  But, the referendum was never approved in the lower house-  the New Jersey State Assembly.  Both houses were, at the time, Republican controlled.  Regardless, the clock ran out, Whitman was elected a Republican governor and New Jersey has no sports betting today.

There are three general reasons put forth for the inaction by the state assembly which basically killed the referendum.  First, some believe that Senator Bradley may have intervened since he was such a big sponsor of the federal law.  His position, being an ex-NBA star, had considerable weight, even with Republicans.  Second, others believed that Nevada gaming interests put pressure on Assembly members in order to maintain their monopoly in this area.  Remember that in 1993, Nevada and Atlantic City were the only two casino markets in the country, unlike today.  Finally, and most likely, the Republican controlled Assembly failed to act realizing that Christine Whitman had a very legitimate chance of being elected Governor.  Putting a sports betting question on the ballot would have increased voter turnout and increased the chances of unpopular Democratic Governor Jim Florio being reelected.  Thus, politics kept the state from having sports betting.

Even still, the forces for it insisted that a referendum was not needed and that the Casino Control Commission can allow it by regulatory fiat.  In a 4-1 vote, the Commission rejected that view.  Undaunted, the proponents took it to state court and they too rejected it based on testimony when casino gambling was approved in New Jersey and that record indicated a preference against sports betting.  Even the one man most responsible for bringing gambling to New Jersey- Steven Perskie- argued that a referendum was needed.

Since then, the legal gambling landscape of the country has changed dramatically.  New Jersey and Nevada no longer hold a monopoly on casinos.  New Jersey now argues that the 1992 is unconstitutional since it allows gambling in four other states.  After passing a law approving sports gambling, the NCAA along with the NBA,NHL, MLB and the NFL sued in District Court to enjoin the state from acting.  That injunction was granted by a District Court in Trenton who argued that the law violated the 1992 federal law and was thus preempted.  The state then took the case to the 3rd Circuit Court of Appeals in Philadelphia who affirmed the District Court decision in a 2-1 vote.  An appeal to the 3rd Circuit to hear the case en banc (or before the entire 3rd Circuit panel) was denied.  Thus, New Jersey is appealing to the United States Supreme Court.

The two main arguments are that the 1992 federal law unfairly grandfathered in the four other states.  In light of the fact that the law actually created a carve-out for New Jersey renders this line of argument laughable.  New Jersey had its chance and for whatever the reason(s), that chance was squandered.  The second argument is under the 10th Amendment since the federal law forces states to ban sports betting while gambling within a state’s borders has always been left up to the individual states.  In fact, during the original debate before the United States Senate Judiciary Committee in 1991-92, Senator Charles Grassley of Iowa raised these very concerns.

The problem for New Jersey is twofold here- one constitutional and one practical.  Besides their argument over the Tenth Amendment, they ignore the equally important Commerce Clause.  One can make a strong case that the federal law is permissible under this Clause.  In fact, the 3rd Circuit decision states that state-licensed wagering on sports is “quintessentially economic activity” that falls under the Commerce Clause.  The state further argues that the 1992 law runs afoul of the “commandeering principle” which forbids the federal government from telling states what to do.  The 3rd Circuit reasoned the law does not tell New Jersey what to do, but it bars the state from doing something.  That, they said, falls squarely under the Supremacy Clause.  If the Supreme Court should address these issues, it is so fine a legal point that it is doubtful they would upset decades of jurisprudence in this area, especially if the vehicle is sports betting.  Speaking purely from a legal standpoint, it is hard to see New Jersey prevailing here.

From the practical standpoint, one has to question the cost of litigation thus far.  It is estimated that to bring a case before the Supreme Court can cost anywhere from $250,000 to $2 million.  To me, this state money could be put to better use.  Also, should New Jersey prevail even under the best of circumstances, the ruling would not turn back the clock to 1993 and allow only New Jersey to approve sports betting.  Is New Jersey under the delusion that other states with casino gambling would not then jump at the chance to provide sports betting?  Any competitive advantage  New Jersey would receive from a favorable ruling would be short-lived at best.

Sports betting is not going to resurrect casino gambling in New Jersey just as their recent approval and enactment of on-line betting will not help it that much.   The fact is that New Jersey had their legal opportunity to have sports betting in 1993 and they squandered it for political gain.  New Jersey also had a monopoly on East Coast gaming in the most populous region of the country and squandered that opportunity also.  Given the amount of revenues casinos took in during that period and the amount of tax revenues generated, one would think that Atlantic City would be a beacon of urban renewal.    Not to dis the city too much, but years later there is still sleazy prostitutes prowling the streets, drug-related crime and urban blight within a stone’s throw of casinos.  Others have mentioned in response to previous articles by me that other jurisdictions have better amenities.  For example, gambling in upstate New York has ski slopes and top notch golf courses.  Well, Atlantic City has the Atlantic Ocean and at least four golf courses that have hosted LPGA/PGA tournaments within a 10-minute drive of the city.  In the end, it evens out somewhat.  If anything, casino gaming in New Jersey has lined the pockets of politicians and those who conduct the endless “Master Plan” studies with little getting done.

In conclusion, this writer sees about a 5% chance of the United States Supreme Court taking this case and that is under the best of conditions.  Personally, I would like to know how much of my tax money was wasted on this effort on behalf of the state.  If the casinos in New Jersey believe that sports betting will be a panacea, then they should offer to help offset the costs.  The better tactic in the end would be a repeal or amending of the 1992 federal law through the legislative process.  Realizing there is little political support to do so, New Jersey is acting like your average LGBT activist and trying to achieve through judicial fiat what they cannot achieve through the legislative process.