New Jersey Sports-Betting Law Goes Before Appeals Court

New Jersey argued for its latest sports betting law before a federal appeals court in a lively exchange with a three-judge panel. The state is trying to get around a federal ban on sports betting by repealing state laws against such bets and allowing for a self-regulated system at racetracks and casinos. The major professional sports leagues, including the NFL, are opposing the move.

New Jersey was back in court arguing for a law to allow sports betting in the state despite a federal prohibition against it.

This time, however, the state says it has learned from its failed efforts in the past and has devised a law that meets conditions set down by previous appeals courts.

Namely, the state says previous appeals court argued when rejecting the state’s 2012 law to enact sports betting that the state could simply repeal laws against sports betting and allow unsanctioned, self-regulated betting to take place.

Michael Griffinger, representing the New Jersey Legislature, told the three-judge panel that the state had followed the federal appeals court’s guidance by repealing portions of a pre-existing ban on sports wagering.

“I said to my team, I want to channel Dr. Seuss,” Griffinger told the court. “You said what you said, and you meant what you meant, and we followed your guidance 100 percent.”

The federal ban prohibits an “authorization” of sports betting, which quickly became a point of contention for the judges.

“What does authorize mean?” Judge Marjorie Rendell asked. “Does it mean to permit, to allow, does it mean to sanction?”

State attorneys argued that by allowing casinos and racetracks to self-regulate sports betting, the state was not actively authorizing it.

The state’s move is being challenged by familiar foes—the National Collegiate Athletic Association and all four major professional sports leagues. The leagues argue that since the state’s law confines the betting the racetracks and casinos—which are licensed by the state—they are in fact authorizing sports betting.

A federal court ruled in the league’s favor in November, leading to this appeal before the 3rd Circuit Court of Appeals.

New Jersey contends that simply limiting where sports betting can happen is not the same as authorizing it.

“This is an Orwellian concept that a repeal in certain locations is somehow an authorization, and that a statute that was enacted to prohibit the spread of sports betting is constitutional only if you allow it to take place everywhere else,” Theodore Olsen, representing the state, said.

Paul Clement, representing the NCAA, argued that the state is selecting venues as exceptions in the repeal that already allow authorized gambling.

“If there’s a partial repeal of prohibition and the only way you can do it is at the Kiwanis Club or some other club, then there is authorization,” Clement said.

Clement also noted that the state’s law limit bets to people over 21 and prohibits bets on in-state teams.

“A partial repeal that selects the favored venues and dictates who is going to engage in sports gambling and on what games they’re going to bet on amounts to state authorization,” Clement said.

Judge Julio Fuentes also expressed concerns about the state playing no role in regulating the industry.

“Laissez faire, no licensing whatsoever,” Fuentes said. “I guess it’s not for us to say if that’s good or bad.”

Fuentes also asked opposition lawyers whether a sports betting operation would be functioning under a casino’s license if it hadn’t had to apply or pay a fee. The judge compared it to driving a car with someone else’s drivers license.

 “Isn’t a casino license not transferable? I can’t imagine it would cover somebody else’s sports betting operation,” Fuentes said.

Attorney Ron Riccio, representing the state’s thoroughbred horsemen, argued that real estate, law and other professions already privately regulate themselves and racetracks could also do so successfully.

“This doesn’t mean that Monmouth Park will be the wild, wild west of sports betting,” he said.

Monmouth Park racetrack is likely to be the first in the state to go live with sports betting if the appeal is successful and has already constructed a sports betting facility.

Riccio said the betting would be regulated by an independent group.

“It will also be under all state and federal consumer protection laws,” he said. “The only thing regulated is sports betting itself. The regulation is entirely up to the private sector as it sees fit.”

The state is hoping that sports betting will supply a needed shot in the arm to its horseracing and casino industry.

The court will deliberate and issue a ruling. That ruling is expected by May.