Goodwin Gaming
November 18, 2016

After String of Bad Beats, New Jersey Contemplates Going All In On Sports Betting

Lawmakers in Trenton are desperate to allow sports betting in Atlantic City.  The American Gaming Association estimates that $149 billion is illegally wagered on sports in the United States each year. New Jersey hopes that getting a piece of this action can give the flagging economy of Atlantic City a much-needed shot in the arm.

The state has twice passed laws attempting to allow single-sport wagering at casinos and racetracks. Both laws were struck down by the Third Circuit Court of Appeals for violating the Professional and Amateur Sports Protection Act of 1992 (PASPA). Despite these losses, New Jersey is keeping up the fight in both the legislature and the courts. The state has appealed the Third Circuit’s decision to the Supreme Court, and lawmakers have introduced a new bill intended to bring sports wagering to the Garden State.

Proposed Legislation (The So-Called “Nuclear Option”):

Assemblymen Ralph Caputo and John Burzichelli recently introduced A 4303—a relatively simple piece of legislation that would “remove and repeal all State laws and regulations prohibiting and regulating the placement and acceptance of wagers on professional, collegiate, or amateur sport contests or athletic events.” That’s right—New Jersey lawmakers have proposed what some have called the “nuclear option”: a wholesale legalization and deregulation of sports betting in the state.

The proposed law is a clear response to National Collegiate Athletic Association v. Governor of New Jersey, the recent decision in which the Third Circuit held that (1) New Jersey’s limited repeal of its prohibition on sports betting—a repeal that allows casinos and racetracks to operate sports betting facilities—amounted to an “authorization” of sports gambling and therefore violated PASPA and (2) because PASPA does not require New Jersey to “take any affirmative steps,”[1] it does not unconstitutionally commandeer the State by making it an instrumentality of the federal government. Prevented from selectively repealing sports wagering prohibitions, Caputo and Burzichelli have instead crafted a blunt instrument.

If A 4303 becomes law, it won’t run afoul of PASPA. In an attached statement, the bill notes that the Third Circuit has declared that it does “not read PASPA to prohibit New Jersey from (fully) repealing its ban on sports wagering.” Though A 4303 is on firm legal footing, its passage is a longshot. A total repeal of the prohibition on sports wagering would allow anyone to open a sports book free from regulation, which raises the specter of organized crime. And while the image of sports books on every corner might be politically unpalatable, there is another more practical issue: a full repeal won’t cure Atlantic City’s ails. If anyone, anywhere can open a sports book, the benefit to Atlantic City will be marginal at best. Perhaps that is why State Sen. Raymond Lesniak, a long-time proponent of legalizing sports wagering, has not endorsed the bill, which would return New Jersey to the old days where anyone “could place bets at [the] local grocery store.”

The SCOTUS Appeal:

New Jersey petitioned the Supreme Court in October to review the Third Circuit’s decision. Because A 4303 won’t accomplish the objectives of the partial repeal—the subject of this cert. petition—one has to wonder if Caputo and Burzichelli introduced the bill to encourage the Supreme Court to hear the case. But if A 4303 is a bluff, then the Supreme Court invalidating PASPA would be like New Jersey hitting an inside straight flush on the river. The Third Circuit is the only appeals court that has weighed in on this question; it’s unlikely that SCOTUS will take the case in the absence of a circuit split.

Recently, however, New Jersey’s petition has been joined by the attorneys general of five other states. And Ryan Rodenberg, a professor of sports law at Florida State University, filed an amicus brief arguing that the Court should hear the case. New Jersey’s appeal focuses on the Tenth Amendment commandeering issue, but Rodenberg raises several novel arguments. First, he contends that PASPA violates the Private Nondelegation Doctrine by empowering the professional sports leagues to sue states and individuals for violating PASPA, thereby “shap[ing] sports gambling laws nationwide.” Second, Rodenberg argues that PASPA’s enforcement provision, which allows the sports leagues to seek injunctive relief, violates the Constitution’s standing requirements. For example, Rodenberg argues that the NHL could obtain a blanket injunction prohibiting sports wagering that would prevent betting on the outcome of a NASCAR race, even if NASCAR wasn’t a party to the suit. This, Rodenberg contends, violates Article III’s requirement that there be an actual “case” or “controversy” for the litigant to have standing.


[1] The court also noted that PASPA does not commandeer New Jersey by requiring the state to make a coercive “binary choice between total repeal and keeping a complete ban on their books.” For example, the court suggested, without deciding, that a “partial repeal of a sports wagering ban to allow de minimis wagers between friends and family” would not be an “authorization” prohibited by PASPA. Such a narrow repeal, however, would not further the state’s economic goals.


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