New Jersey had another day in court as it tries to allow for unregulated sports betting in the state at casinos and racetracks.
The state has lost two previous cases to allow sports betting, including losing an appeal for their current plan. However, the U.S. Third Circuit Appellate Court vacated that previous loss—which was rendered by a three-judge panel—and allowed a hearing before the entire court.
Such grantings of full, or “en banc” hearing are extremely rare for the court and analysts felt it was a sign that the court feels the state has a strong argument, though it does not guarantee the state will ultimately win the appeal.
That meant lawyers for the state and the administration of Governor Chris Christie were able to make yet another plea to allow sports betting in the state. They were opposed, again, by the four U.S. professional sports leagues and the NCAA.
Both sides were represented by a former U.S. solicitor general with Theodore Olson arguing for New Jersey and Paul Clement for the sports leagues.
New Jersey maintains that the prohibition on sports betting is costing it millions that could help both its struggling Atlantic City casinos and its racetracks.
After losing a previous challenge to the Professional and Amateur Sports Protection Act of 1992, which bans sports betting in all but five states that were grandfathered in, the state reacted to those rulings and devised a strategy that it felt allowed sports betting despite the ban.
In essence the state repealed its prohibition on sports betting at casinos and racetracks, opening the way for those entities to offer their own, self-regulated sports books.
The state’s contention is that the federal ban prohibits state authorized and regulated sports betting, not private self-regulated gambling.
That law, however, was immediately challenged by the sports leagues, which maintain sports betting hurts the integrity of their games. Courts then struck down the new law, which the state is now appealing before this 12-judge panel.
According to the Associated Press, Paul Fishman, the U.S. Attorney for New Jersey, speaking against the state’s law, said the law effectively authorizes sports betting at casinos and racetracks by prohibiting it elsewhere, thus violating the ban.
Olson, however, argued that repealing part of the state’s ban is not the same as authorizing sports betting.
“New Jersey approached the problem saying gambling is taking place everywhere in New Jersey. We would like to regulate it. This court said it cannot be done under PAPSA,” Olson said. “What New Jersey is saying now is we’re not going to have anything to do with it. We’re not going to control it.
“Congress does not have the authority to force states to regulate,” Olson said. “What the legislature did not do was authorize anything. It repealed prohibitions.”
However, Judge Julio Fuentes asked how New Jerseyans can know “this is an honest operation” without state oversight.
Ronald Riccio, representing the New Jersey Thoroughbred Horsemen’s Association, which is also arguing for the state’s law, told the court that the state’s racing industry could police itself without the state becoming “the Wild West of sports betting.”
Chief Judge Thomas Ambro then joked that it might instead become “the Wild East.”
Riccio argued that the real estate, oil and even legal professions regulate themselves.
Judge Cheryl Ann Krause also asked why the plan didn’t amount to an expansion of the casino and racing licenses the state already issues, given that “the only premises permitted to conduct sports gambling are those that are licensed and regulated,” according to the AP.
Other judges also wondered if other states would follow suit and revoke their sports betting bans.
Some reports characterized the panel’s concerns as being focused more on the impact of allowing for sports betting across the country than simply the state’s right to repeal prohibitions on it.
In all, the hearing took 90 minutes with the judges asking numerous questions which led at least one analyst—Daniel Wallach, a sports gaming expert speaking to NJ.com—to conclude the hearing did not go well for the state.
“You could just see it on the faces of some of the judges,” said Wallach, a gaming and sports law attorney with Becker & Poliakoff in Fort Lauderdale, Fla. “They were not buying what the state was selling,” appeals panel reportedly
The judges are expected to take several months before issuing a decision. The state, if it loses, could appeal to the U.S. Supreme Court, but state Senator Raymond Lesniak, the state’s most vocal proponent of sports betting, told NJ.com he does not think the state will appeal if it loses.
“I think this is the end of the line,” he said. “This is the whole ball of wax right here.”
Though not at the hearing, the state also got support from two of its federal legislators, Congressmen Frank Pallone, Jr. (NJ-6) and Frank LoBiondo (NJ-2).
“The court’s decision to rehear New Jersey’s case points to the merits of our argument and is a promising step forward in our fight to finally bring legalized sports betting to our state,” the congressmen said in a press statement. “As we have reiterated time and time again—the existing federal law is unconstitutional and arbitrary; it picks winners and losers, while continuing to deny New Jerseyans the right to participate in this billion-dollar industry. We are hopeful that today’s hearing signals the start of a new era in our state, and we intend to see this fight through to the end.”
Many analysts feel that if New Jersey wins the challenge, it would prompt Congress to revisit sports betting laws.
