At a time when many states are looking for ways to reverse sagging casino revenues, there’s a three-judge panel in New Jersey pondering a decision that could change the gambling playing field.
In the next week or two, the Third U.S. Circuit Court of Appeals is expected to rule on a New Jersey challenge of the Bradley Act, or PASPA, the federal law that bans state-sponsored sports betting. The outcome could open the door for a sports betting in some states before the end of the year.
“I characterize this case as “sleeping giant” that nobody is talking about,” Dan Wallach, a shareholder and gaming lawyer with Becker & Poliakoff in Fort Lauderdale, Fla., said last week at the Southern Gaming Summit in Biloxi.
At the heart of New Jersey’s argument is its plan to deregulate and decriminalize sports betting at race tracks and casinos, essentially turning unlicensed control of sports betting over to the casinos and tracks. New Jersey says the wording in PASPA, or the Professional and Amateur Sports Protection Act, does not prevent it from repealing its own sports betting law.
“The easy part is the decriminalizing; the hard part is to say they can do it only at casinos,” said Allen Godfrey, executive director of the Mississippi Gaming Association. “Now we know what it will take to legalize sports betting.”
If New Jersey provides the process, then it would be up to individual states to take similar steps. Whether or not Mississippi takes steps would likely hinge on the state’s definition of “expansion of gaming,” which has been opposed in recent legislative sessions when online gaming bills have been introduced.
“I don’t know that it would be an expansion of gaming because it would be something that would be contained at the current casinos,” said Godfrey. “The casinos don’t make a lot of money off the sports betting, but it will draw more players to the casinos, especially at times when there’s an event like the NCAA basketball tournament or World Cup. That would bring a lot more traffic to the casinos mid-week, which is when they’re hurting for players.
“With the casino sports betting, you also also don’t have problems with underage betting and compulsive gamblers, because casinos already have steps in place to take care of those issues.”
Last year, Godfrey’s office was asked by the Legislature to conduct a study on the impact and possibilities of sports betting and online gaming in Mississippi. Godfrey said the report was completed, but was never introduced during the session.
Sports betting was banned nationwide in 1992, with the exception of four states that had legal betting in place before PASPA. Nevada is open to all forms of sports betting, while Oregon and Delaware have laws in place that allow for parlay betting, although Oregon stopped the parlay betting in 2000 in an attempt to attract NCAA tournaments. Montana has a limited sports fantasy betting law.
New Jersey has been trying to legalize sports betting at racetracks and Atlantic City casinos since 2011, but has met opposition from professional sports leagues and the NCAA, contending the law violates PASPA.
On Nov. 13, in an opinion article in The New York Times, NBA commissioner Adam Silver wrote: “I believe that sports betting should be brought out of the underground and into the sunlight where it can be appropriately monitored and regulated.”
Silver and the NBA remain opposed to the tactics in New Jersey. They instead favor a national approach to sports betting instead of a hodgepodge of state laws.
“Conversations really ratcheted up when Silver wrote his editorial,” said Joe Asher, CEO of William Hill US, a sports betting operator in Nevada. “Following that, there’s been a discussion about legalizing sports betting, but it will be hard to get anything done in Congress. I don’t think anything will happen before 2017. When it happens, nobody knows, but there’s a growing momentum in that direction.”
“Since the arguments on March 17, there has been little said about the New Jersey case,” said Wallach. “I think there will be a major surprise in a couple of weeks. Either the court will rule in favor of New Jersey, which at that point, casinos and racetracks could have sports betting this calendar year, or New Jersey loses, in which case the court offers some kind of a road map for the state of New Jersey and other states – including Mississippi – because there’s a likelihood the courts will offer some guidance to react to a losing decision.
“Even if New Jersey loses, you’re going to see more legislation to try to thread that needle.
“I wouldn’t be surprised to see Pennsylvania and Delaware immediately pass identical legislation because they are in the same court district. Then other states will look at it, and that may force the federal government’s hand to do something about it nationally.
“A win by New Jersey will fast track federal legislation to 2017. A loss by New Jersey will make it take a little longer,” said Wallach.
“Mississippi has 28 commercial casinos, but I don’t see them entering into this debate, but each year revenues keep going down. Meanwhile, there are states to the left and right that have gambling, so what is Mississippi going to be able to do?
“It could be a way for states to get ahead of the curve, and I think there’s little risk involved.”
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