Headline Sports Law

New Jersey Making A Push For Legalized Sports Betting

In May 2010, my article, The Plight of PASPA: It’s Time to Pull the Plug on the Prohibition was published in the Gaming Law Review and Economics.  The article focuses on the Professional and Amateur Sports Protection Act (PASPA), which has completely denied forty-six states from adopting any type of state-sponsored sports betting scheme.  The Act, which became law in 1992, exempted four states (Nevada, Delaware, Oregon, and Montana), allowing those states to continue to operate the state-sponsored sports betting schemes that had been in place prior to the Act’s adoption.  One of those non-exempt states is New Jersey, which would love to have the ability to operate state-sponsored sports betting schemes in order to have a new source of revenue.  The article argues that PASPA’s original purpose is outdated and that the Act is in violation of the Tenth Amendment and Commerce Clause within the United States Constitution.

I focused an entire section on the State of New Jersey.  Here are pieces of that section:

State Senator Raymond Lesniak believes that through the implementation of legalized state-sponsored sports betting, the state of New Jersey would generate billions of dollars in sports betting, rake in roughly $100 million per year through the taxation of prize money, and rejuvenate the suffering state casinos and horseracing facilities.  Senator Lesniak made a valid point when he asked, “How can Congress say to the people of the state of New Jersey, ‘You do not have this right that the people in Nevada do?’”

In March 2009, the Interactive Media Entertainment & Gaming Association (iMEGA) and the aforementioned Senator Lesniak, filed a complaint and demand for declaratory relief with the United States District Court for the District of New Jersey.  As discussed in the Introduction, if New Jersey had decided to implement sports wagering exclusively in its existing casinos at any point within a one-year window after PASPA’s adoption, New Jersey would have been granted the same legal exemption as Delaware, Nevada, Montana, and Oregon, under PASPA.  Because of New Jersey’s inability to pass legislation allowing state-sponsored sports betting in the extremely restrictive one-year window, the state will not be able to implement any type of sports-betting scheme as long as PASPA remains on the books.

Senator Lesniak and iMEGA are not the first plaintiffs to file a complaint about PASPA’s unconstitutionality within the state of New Jersey.  In 2007, James Flager, a citizen of New Jersey, filed a complaint claiming that PASPA violates the Tenth Amendment of the United States Constitution and is not within the powers of Congress under the Commerce Clause.  While Mr. Flager never received a full trial due to the Court accepting a summary judgment motion by the defendants based on Mr. Flager’s lack of subject matter jurisdiction, the plaintiff’s actual claim had merit.  Mr. Flager’s valid arguments; however, were never heard.

With this background, I found it rather interesting that on December 13, 2010, the New Jersey legislature decided to put a referendum on the November ballot, which will ask its citizens whether they want to legalize sports betting within the state.  It is expected to easily get the requisite votes to pass.  But with PASPA still in place, is this nothing more than a symbolic measure?  Perhaps it provides ripeness for a case against PASPA and may add further proof that PASPA violates the Tenth Amendment.  It shows that sports betting is not only something requested by New Jersey’s state government, but that the state’s constituents are also in favor of legalized sports betting.