The Fight Over Legalized Sports Betting Begins

In 1992, Congress passed the Professional and Amateur Sports Protection Act, 26 USC 3701, to ban sports gambling outside states where it was already established (Nevada, and to much lesser extents, Delaware, Montana and Oregon) as of the time of the statute. In 2012, the New Jersey State Legislature passed a law allowing for wagering on the outcome of sporting events at racetracks and at Atlantic City casinos, and Governor Chris Christie signed that into law. The four major North American sports leagues, plus the NCAA, sued in August to block implementation of the law, and the case, National Collegiate Athletic Association v. Christie, 12-4947, U.S. District Court, District of New Jersey (Trenton), is now before District Court Judge Michael Shipp. A ruling is expected within two weeks.

Lawyers for the state have argued that the law encroaches on state sovereignty, and violates the equal protection clause. Former U.S. Solicitor General Theodore Olson, representing New Jersey, told Shipp that Congress could have prohibited all sports gambling but instead washed its hands of the responsibility of enforcing a ban. “The government, through PASPA, has chosen to thrust the unwelcome burden of regulating sports gambling on the states,” he said.

If it isn’t going to do so, it can’t instruct the states not to do it or else abandon it to Nevada or organized crime.

The Justice Department has countered that the commerce clause gives the federal government the right to regulate an interstate commercial activity such as gambling. For the most part, the Justice Department’s strategy has focused solely on whether PASPA was constitutional, rather than arguing whether the law still represents good policy. Said US Attorney Paul Fishman, “the question is not whether gambling is a good policy choice for New Jersey or that the legislature didn’t act in good faith, it’s that Congress and the president decided 20 years ago that the spread of legal gambling on college and professional sports is a bad idea and bad for the country.”

NCAA v. Christie will likely decide the future of sports gambling in the United States. This case will likely go to the Third Circuit Court of Appeals, and then the Supreme Court, so Judge Shipp’s decision is unlikely to be the final say. More and more states are looking for additional revenue streams, and it is estimated that the New Jersey law could generate $100 million in new revenue for the state in its first year, so a number of states will be watching this decision closely; with billions of dollars wagered on sports illegally, the opportunity to turn that activity into legitimate revenue will be difficult to pass up for cash-strapped state governments.

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