Despite setbacks, N.J. to press ahead on sports gambling

After suffering two setbacks in federal court, New Jersey officials are pressing ahead with a fight to give the state's struggling gambling industry a boost by introducing betting on sporting events.

U.S. District Judge Michael Shipp, in a suit brought by the NCAA and the four major pro sports leagues, on Thursday upheld a 21-year-old law barring sports gambling in all but four states where some form of wagering already existed: Delaware, Nevada, Oregon, and Montana.

New Jersey had argued that the Professional and Amateur Sports Protection Act violated the state's rights on a variety of constitutional grounds, including state sovereignty and equal protection.

The state's gambling industry could bump up revenues by as much as $500 million a year from sports betting, according to one estimate.

"Although some of the questions raised in this case are novel," Shipp wrote, "judicial intervention is generally unwarranted no matter how unwise a court considers a policy decision of the legislative branch."

Shipp suggested the state instead seek to repeal or amend the federal law, an effort that is under way but has uncertain prospects.

He also noted that the state failed to exercise an option in the 1992 law that would have allowed New Jersey to legalize sports gambling within one year.

Gov. Christie's office said the state would appeal. "We believe firmly in the principles of our position on sports betting and that the federal ban is inequitable, violates New Jersey's rights as a state, and is unconstitutional," said spokesman Michael Drewniak.

"Even the trial judge has noted that he was not likely the final arbiter in the matter," Drewniak said. "We are confident that the federal Court of Appeals will conclude that New Jersey should be treated equally with other states."

The challenge by the sports organizations grew out of voters' approval in 2011 of the New Jersey Sports Wagering Law.

New Jersey sought to block the suit, arguing that the NCAA, Major League Baseball, the NFL, the NBA, and the NHL did not have standing.

In handing the state its first setback in December, Shipp denied New Jersey's claim that the plaintiffs had not demonstrated that their products could suffer tangible harm if sports betting were allowed.

The New Jersey law would limit wagering on events to the state's casinos and racetracks, and would bar betting on games played by New Jersey colleges or any college games played in the state. The NCAA has moved several championship games out of New Jersey because of the law.

Legal history offers no clear picture of how an appeal might play out.

In 2009, when Delaware sought to expand its sports lottery to single-game wagering, the sports groups sued, and the U.S. Court of Appeals for the Third Circuit in Philadelphia upheld a lower-court ruling blocking the expansion. New Jersey also is covered by the Third Circuit.

But Stephen Schrier, a lawyer from the Blank Rome law firm and an adjunct professor at Rutgers Law School in Camden, said the Delaware case did not address the constitutional questions raised by New Jersey.

"The issue of constitutionality is significant here," he said. "The New Jersey case would require a different analysis by the Third Circuit than the Delaware case."

Key to New Jersey's arguments is the 10th Amendment: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the States respectively, or to the people."

In the meantime, U.S. Reps. Frank LoBiondo (R., N.J.) and Frank Pallone (D., N.J.) reintroduced two bills Feb. 13 that would amend the federal law.

One bill would add New Jersey to the list of states allowed to have sports wagering, while the other would open a four-year window during which any state could enact sports-betting legislation.

Both bills - H.R. 625 and 626 - have been referred to the Judiciary Committee. No hearings have been scheduled on them, according to committee staff.

Sports betting is seen as one way to bolster the casino industry, which has been battered by the spread of gambling to other states.

State Sen. Raymond Lesniak (D., Union), prime sponsor of the New Jersey bill, has said sports gambling could generate $500 million annually in gross revenues for the casinos and racetracks.

He called Thursday's court decision a "huge disappointment" and complained that the need to appeal "this patent misrepresentation of the U.S. Constitution" will delay at least for a year the introduction of sports wagering in New Jersey.

He urged New Jersey's congressional delegation to get behind the bills on Capitol Hill.

The latest legal setback came two days after Christie signed into law another measure aimed at propping up the casinos' sagging finances.

The new law will allow Atlantic City's gaming houses to offer betting on Internet versions of the slot machines and table games found on their traditional casino floors for a 10-year trial period. Actual Internet betting is months away.