Bookies Beware: New Jersey Fights For Legalized Sports Betting

Unless you’ve had the pleasure of living in Las Vegas like Steve, sports betting is relegated to the underground with wagers either made through shady overseas websites or with a local bookie. But New Jersey is the most recent state to try to bring sports gambling into the open and challenge the federal Professional and Amateur Sports Protection Act (PASPA), which prohibits states from enacting, licensing, or operating any kind of wagering scheme on sporting events. Delaware attempted to legalize sports betting in 2010 but failed to convince courts that PASPA is unconstitutional. Now the state only allows parlay wagers.

But New Jersey is attempting to hit the jackpot and tackled PASPA in an effort to boost the economy and revitalize Atlantic City. This month voters passed a referendum to amend the state’s constitution to allow sports wagering at casinos and racetracks. With a long legal battle ahead for the Garden State, we decided to call in an expert to discuss the chances that we get to place legal sports bets anytime soon.

Anthony G. Galasso, Jr.

Enter Anthony G. Galasso, Jr., the author of Betting Against the House (and Senate): The Case for Legal, State-Sponsored Sports Wagering in a Post-PASPA World in the Kentucky Law Journal. (Available at 99 Ky. L.J. 163). Galasso was born and raised in New Jersey, just a stone’s throw from the Meadowlands Racetrack and Monmouth Park. So he had a keen interest in the gaming industry. The 2011 University of Kentucky College of Law graduate and now subrogation attorney for the Rawlings Group in La Grange, KY took some time to discuss his Note about the last time New Jersey challenged PASPA and the future of legalizing sports betting.

What made you decide to pursue the Lesniak/Interactive Media Entertainment and Gaming Association (iMEGA) lawsuit as the topic of your note?

By the time of the lawsuit, I had already become very interested in public debates over the role of legalized gaming in society. Sports betting was especially interesting because it’s explicitly made illegal in 46 states by a Federal law. My thought process was roughly: “So many states have lotteries, and you can go to a casino in places like New Albany, IN, Deadwood, SD, and Tunica, MS these days—why is sports betting the last frontier?” You can do it overseas, and most people do it domestically anyway, either in office pools or through offshore casinos online. Betting lines are published in the sports page of every newspaper in the country, the New York Post even has a regular sports betting column. I figured there had to be more to the story, and figured it was worth looking into.

In your research what did you find were some of the main reasons why PASPA is still in existence when it seems like the general population supports legal sports betting?

First, I’m not 100% sure that the general population does. They might have in New Jersey, but New Jersey has a well-entrenched gambling culture. Since I’ve been in Kentucky I had the opportunity to look into the debates concerning the introduction of casinos into the Commonwealth, and one cannot underestimate the moral opposition to expanded gaming. It is a very, very easy line for politicians who want to reconnect with a base to take, because 1. since expanding gaming means changing the status quo, nothing actually has to change to keep a campaign promise and 2. people like sports, and if the Big Four sports leagues and the NCAA say that wagering threatens the games people enjoy, any politician worth his constituency would take the public stance of “defending them.” This is what happened in Oregon. The NCAA weaponized March Madness to prod the state legislature into giving up their sports lottery.

Second, it is extremely difficult to overturn a law like PASPA. As I elaborated on in my Note, the Constitutional arguments sound compelling but are completely shut off by caselaw. States that act in defiance of the law face immediate reprisal from the Attorney General and the Department of Justice, who support the law, and the Big Four sports leagues and the NCAA, whom PASPA deputized to enforce it. Look at what happened to Delaware—the law gave them permission to have sports wagering, and when they tried to implement it full scale, with all three branches of the state government giving their support, they lost in Federal court, and have to make do with a multi-game sports lottery. The power of the major sports organizations is immense, and PASPA galvanizes it. If PASPA can undercut sports wagering in states where it’s legal, imagine what’ll happen in a state that tries to defy it.

Now that New Jersey voters have approved a referendum to allow sports wagering, the state is going to face an uphill battle in federal courts. Is there any chance we actually see legal sports gambling in New Jersey?

Not unless Chris Christie either becomes President or becomes Nucky Thompson. The only way it will happen is with legislative change at the Federal level, or if New Jersey decides to open sportsbooks in defiance of the law (which, to put it mildly, is unlikely). The show of support by the voters means that the impulse is there, but the failure of the legislature to act within the one year grace period granted by PASPA at the time the law was enacted means the window has closed for the New Jersey State Legislature to control its own destiny. I do not think the law is on the side of those challenging it in court, because of the standing issues, the lack of an identifiable uniformity restraint under the Constitution, and that fact that state sovereignty is waived because of the need for an interpretation of a federal law.

Who has standing to challenge PASPA? Would it need to be a state’s Attorney General filing suit?

Most likely. It would have to be someone who represents the state as a whole. The problem is that this is a very hard case in terms of standing, because the ones who are arguing that people should be allowed to choose whether or not they want to have the opportunity of deciding whether they want to bet on sports are the ones being forced to meet the strict Lujan standards.

If New Jersey would succeed does that mean any state is free to legalize sports wagering or are there still other limitations in place?

Hopefully, it means the former. Whether you’re betting on blackjack, greyhounds, horses, or jai alai, the state where you live gets to decide if, how, and where you can do it. If it’s a football game, however, you’d better be in Las Vegas. The decision to make sports wagering an issue predicated on state lines is perhaps the most foolish aspect of a law enacted for foolish reasons, and if New Jersey forces the change, the rest of the country should benefit.

The pro sports leagues and NCAA are always actively trying to stop the spread of sports betting, do you think that has unfairly swayed courts in the past?

Absolutely. Courts and professional sports have always had an uneasy relationship with one another. Look at baseball’s antitrust history. Courts defended for decades the notion that baseball wasn’t interstate commerce, and they did so in opinions which were rife with reverence for the game. More broadly, beyond courts and into government in general, coming to the defense of the “integrity” of sports has always been a way for politicians to take a position few could argue with—we all want our sports to have intregrity. Sports scandals cause a large number of people to push for tighter oversight either from the leagues themselves or even Congress, because this idea is so widespread. Yet the most dangerous idea of all is conflating economic policy with a morality issue. Gambling is neither inherently good or bad. It is a business that will cause positive and negative effects in proportion to how well the business is run and regulated. Government has a responsibility to be those regulators, and make this economic opportunity work. Betting on a baseball game will no more tarnish baseball than betting on a horse race tarnishes horse racing, and if legalized betting does have destructive effects, the blame lies with the people who govern it, not with the activity itself.

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One Response to Bookies Beware: New Jersey Fights For Legalized Sports Betting

  1. Pingback: Non-Sequiturs: 11.23.11 | Ask Lawyer

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