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Federal court says no to Del. sports betting
Delaware's attempt to offer sports gambling, starting next week, hit a wall yesterday when a federal appeals court ruled that the state's plans violated federal law.
Although Delaware is one of four states exempt from a 1992 federal ban on sports betting, the three-judge panel decided that the state's plan to pursue single-game betting, a lucrative form currently permitted only in Nevada, was illegal.
The decision was a victory for professional and college sports leagues, which argued that expanded wagering could jeopardize the integrity of their games.
"We're very pleased with the result," said Kenneth J. Nachbar, a lawyer representing the leagues. "We were hoping that they would get to the merits of the case, because we thought we had a very strong case."
Delaware Gov. Jack Markell pitched the plan as a way to plug a deficit of nearly $800 million. Yesterday, he said the state would go forward with a more limited scheme it tried 33 years ago: multiple-game parlay bets on football.
"Obviously I am disappointed with the court's decision, and will be meeting with the state's attorneys to evaluate our legal options," Markell said in a statement. "Nevertheless, the state still has the legal authority to offer a sports lottery of parlays involving professional football games, which is a competitive advantage for our three racinos."
Those parlay bets were largely unsuccessful in raising revenue when first tried in 1976.
Single-game bets make up more than 75 percent of sports betting, lawyer Andre G. Bouchard, who represented Delaware, argued in court. Markell had said he expected sports betting to bring in an estimated $55 million in revenue this fiscal year.
The panel of judges from the U.S. Court of Appeals for the Third Circuit made its decision after a hearing that lasted nearly two hours. The professional leagues had appealed for an emergency injunction to halt the betting until the matter went to a trial scheduled for December in a federal district court.
But the panel decided to judge the case on its merits, directly addressing whether the law Delaware passed in May to allow sports betting violated a federal statute on sports betting.
Delaware can appeal to the full Third Circuit court or to the Supreme Court, said Lawrence A. Hamermesh, a professor of business and corporate law at Widener University. But he said that approach would likely fail because the panel's ruling was unanimous.
"If I were in the state's position, I would be looking around for another way to raise revenue," he said.
Delaware is one of four states that permitted sports gambling before a 1992 federal ban. Congress provided exceptions for these states - the others are Nevada, Oregon and Montana - so they could continue with the sports betting already in place.
Delaware passed a law in May to expand sports gaming to single-game bets on major-league and college games. The NFL, NBA, NHL, Major League Baseball, and the NCAA sued Delaware in June.
The leagues maintained that single-game betting could lead fans to question whether games are fixed. A missed field goal, for example, could cause a fan to think the game was fixed for someone with money on it, Nachbar said.
"The closer you get to single-game betting, the more you affect the integrity of what happens on the field," he said in court.
Bouchard noted that bettors already wager on single games in Las Vegas and said the leagues had been unable to show this had hurt them.
The judges seemed particularly concerned that the state would go forward with sports betting before the lower court had a chance to determine whether single-game bets would be legal. If the court ruled at trial in December that Delaware broke the law, asked Theodore A. McKee, the panel's presiding judge, would the state be required to return money to those who lost their wagers?
"[If] Delaware knows it was taking my money in an illegal scheme, I want my money back," McKee said.
Nachbar said in his argument that Congress passed the 1992 ban to limit sports betting and that Delaware therefore should not seek to expand beyond its original exemption.
The panel agreed, ruling that Delaware's plans were "not covered by the exemption" under federal law.
Meanwhile, New Jersey is still fighting to add sports gambling to its casinos.
State Sen. Raymond J. Lesniak (D., Union) filed a federal lawsuit in March against the U.S. Justice Department to overturn the ban on sports betting. Gov. Corzine supports the measure.
Contact staff writer Joelle Farrell at 610-627-0352 or jfarrell@phillynews.com.
