[h=1]Despite Setback, Odds Still Favor National Sports Betting[/h]By Zachary Zagger
Law360, New York (August 25, 2015, 9:57 PM ET) -- The Third Circuit shut down New Jersey’s attempt to allow unregulated sports betting in a much-anticipated decision Tuesday, but experts say that while the move slows its momentum, legalized sports betting is still on the horizon.
The 2-1 decision by the Third Circuit found that a 2014 New Jersey law partially repealing its sports betting prohibition amounted to an “authorization” of sports betting in violation of the federal Professional and Amateur Sports Protection Act of 1992.
Experts say the opposite decision would have not only immediately opened up sports betting across the Third Circuit — including in Pennsylvania and Delaware — but would have provided a blueprint for states across the country to allow sports betting.
While the decision is a blow to the growing momentum toward legalizing sports betting in the U.S., experts say it hasn't put a stop to anything and may just force proponents to change tactics.
“It has gone from a boil to a simmer,” gaming and appellate law expert Daniel Wallach ofBecker & Poliakoff said. “A win by New Jersey would have accelerated congressional consideration of the issue. It would have become a priority item in the next year or two, because otherwise the alternative would have been legal and completely unregulated sports betting across the country.”
Legalized sports betting in the U.S. has been gaining traction in recent years as professional sports leagues, states and municipalities see the potential for big money to be made and further attention placed on professional sports. The American Gaming Association said Tuesday in response to the decision that underground, illegal sports betting is a behemoth $140 billion industry.
“I think it slows down the momentum, but I don’t think it stops it by any stretch," gaming law attorney David O. Klein, the managing partner at Klein Moynihan Turco LLP, said. "I think most segments of the gaming industry did not think that New Jersey was going to prevail here. … I think it will take more of a federal push to change things, and while that is a possibility, I don’t see it happening in the very near future.”
NBA Commissioner Adam Silver has already come out publicly in support of regulated sports betting, pointing to how sports betting is a thriving industry in Europe. MLB Commissioner Rob Manfred has also made statements in support of sports betting that, while more tempered than Silver’s, are still a stark departure from baseball’s long-held anti-betting stance.
“With the NBA and MLB commissioners coming out and saying they are all for it, with that momentum and those in the industry pushing for it, it has more prospects than certainly it did a few years ago," Klein said. "I don’t see [this decision] as the end of things.”
But Tuesday’s ruling comes as New Jersey took a second swing at allowing sports betting within the state after it lost in a prior Third Circuit suit, dubbed Christie I, challenging PASPA on constitutional grounds. This time the state, in an effort to revive its struggling casino industry, tried to thread the needle by enacting a partial repeal of sports betting prohibitions, thereby attempting to avoid sports betting as proscribed by PASPA.
But the court found that New Jersey's 2014 partial repeal law, which only allowed sports betting at casinos and racetracks and to people over 21 years old, was too selective. The court ruled that this made the law an "authorization" of sports betting in the state, as opposed to a repeal of the prohibition, despite the laws use of the word "repeal."
The court did leave the door open for a complete repeal of sports betting prohibitions, but experts say this is unrealistic and infeasible as it would allow for bookies to take bets everywhere from a sports bar to a gas station.
Further, widespread unregulated sports betting is exactly the kind the big North American sports leagues want to avoid. Wallach said that to the extent that the leagues support it, they want a system like in Europe, where betting is closely watched and regulated like a stock market and irregular betting patterns are identified, in order to maintain the integrity of the sports games.
“Aside from this decision there is a growing effort to try to get changes to the law to permit sports betting," Sheppard Mullin Richter & Hampton LLP partner James G. Gatto said. "In order for sports betting to happen, I think there are going to need to be some changes to the law.”
Professor I. Nelson Rose of Whittier Law School, a leading gambling law expert, said the Third Circuit in Christie I got it wrong and that PASPA is unconstitutional, noting that he believes another circuit may have ruled otherwise.
“It takes the power away from states to change their public policy towards gambling," Rose said. "It is the first and only federal law in the U.S. that tells states what they can or cannot do when it comes to gambling."
He said that in Tuesday’s decision, the Third Circuit made it clear there could not be a work-around to PASPA’s restrictions.
Some suggest that change may only be accomplished through legislation in Congress.
“We are getting to kind of the end of the line on the judicial part of this [debate],” said gaming law professor Keith Miller of Drake University Law School. “I don’t think courts want to be the one to change this. They are saying you are going to have to go to Congress.”
The NBA issued a statement Tuesday welcoming the decision, saying they “continue to support a federal legislative solution that would protect the integrity of the game,” echoing Silver’s comments from earlier in the year.
In the meantime, experts said the real winner from this hold-up is the burgeoning daily fantasy sports industry, as it can continue to entrench itself without competition from legalized sports betting.
“Daily fantasy sports really was developed and grew due to the absence of widespread legalized sports betting, and the more time they have to market themselves and grow without sports betting, the more likely they will stay,” Miller said.
While the daily fantasy sports industry has looked to separate itself from the pejorative connotations of gambling or betting, both involve a form of wagering on the outcome of sports games and performances of players. The big difference is that daily fantasy sports is legal, and it has already attracted major corporate sponsors in the sports world — including leagues like MLB — and has reached deals with teams across sports.
“The biggest threat to its long-term viability or profitability is the legalization of sports betting,” Wallach said. “Certainly both can exist because they serve different areas of the sports wagering market, but there is a lot of overlap.”
As for New Jersey’s sports betting push, Tuesday’s decision appears to be the end of the road unless it connects on a Hail Mary convincing the circuit to rehear the case. Regardless, this is not the end for overall push for widespread sports betting in the U.S.
“Everybody believes it will happen,” Wallach said. “We just are not in agreement of when or how. … It is coming, just not in the next couple years.”
--Editing by John Quinn and Chris Yates.
Law360, New York (August 25, 2015, 9:57 PM ET) -- The Third Circuit shut down New Jersey’s attempt to allow unregulated sports betting in a much-anticipated decision Tuesday, but experts say that while the move slows its momentum, legalized sports betting is still on the horizon.
The 2-1 decision by the Third Circuit found that a 2014 New Jersey law partially repealing its sports betting prohibition amounted to an “authorization” of sports betting in violation of the federal Professional and Amateur Sports Protection Act of 1992.
Experts say the opposite decision would have not only immediately opened up sports betting across the Third Circuit — including in Pennsylvania and Delaware — but would have provided a blueprint for states across the country to allow sports betting.
While the decision is a blow to the growing momentum toward legalizing sports betting in the U.S., experts say it hasn't put a stop to anything and may just force proponents to change tactics.
“It has gone from a boil to a simmer,” gaming and appellate law expert Daniel Wallach ofBecker & Poliakoff said. “A win by New Jersey would have accelerated congressional consideration of the issue. It would have become a priority item in the next year or two, because otherwise the alternative would have been legal and completely unregulated sports betting across the country.”
Legalized sports betting in the U.S. has been gaining traction in recent years as professional sports leagues, states and municipalities see the potential for big money to be made and further attention placed on professional sports. The American Gaming Association said Tuesday in response to the decision that underground, illegal sports betting is a behemoth $140 billion industry.
“I think it slows down the momentum, but I don’t think it stops it by any stretch," gaming law attorney David O. Klein, the managing partner at Klein Moynihan Turco LLP, said. "I think most segments of the gaming industry did not think that New Jersey was going to prevail here. … I think it will take more of a federal push to change things, and while that is a possibility, I don’t see it happening in the very near future.”
NBA Commissioner Adam Silver has already come out publicly in support of regulated sports betting, pointing to how sports betting is a thriving industry in Europe. MLB Commissioner Rob Manfred has also made statements in support of sports betting that, while more tempered than Silver’s, are still a stark departure from baseball’s long-held anti-betting stance.
“With the NBA and MLB commissioners coming out and saying they are all for it, with that momentum and those in the industry pushing for it, it has more prospects than certainly it did a few years ago," Klein said. "I don’t see [this decision] as the end of things.”
But Tuesday’s ruling comes as New Jersey took a second swing at allowing sports betting within the state after it lost in a prior Third Circuit suit, dubbed Christie I, challenging PASPA on constitutional grounds. This time the state, in an effort to revive its struggling casino industry, tried to thread the needle by enacting a partial repeal of sports betting prohibitions, thereby attempting to avoid sports betting as proscribed by PASPA.
But the court found that New Jersey's 2014 partial repeal law, which only allowed sports betting at casinos and racetracks and to people over 21 years old, was too selective. The court ruled that this made the law an "authorization" of sports betting in the state, as opposed to a repeal of the prohibition, despite the laws use of the word "repeal."
The court did leave the door open for a complete repeal of sports betting prohibitions, but experts say this is unrealistic and infeasible as it would allow for bookies to take bets everywhere from a sports bar to a gas station.
Further, widespread unregulated sports betting is exactly the kind the big North American sports leagues want to avoid. Wallach said that to the extent that the leagues support it, they want a system like in Europe, where betting is closely watched and regulated like a stock market and irregular betting patterns are identified, in order to maintain the integrity of the sports games.
“Aside from this decision there is a growing effort to try to get changes to the law to permit sports betting," Sheppard Mullin Richter & Hampton LLP partner James G. Gatto said. "In order for sports betting to happen, I think there are going to need to be some changes to the law.”
Professor I. Nelson Rose of Whittier Law School, a leading gambling law expert, said the Third Circuit in Christie I got it wrong and that PASPA is unconstitutional, noting that he believes another circuit may have ruled otherwise.
“It takes the power away from states to change their public policy towards gambling," Rose said. "It is the first and only federal law in the U.S. that tells states what they can or cannot do when it comes to gambling."
He said that in Tuesday’s decision, the Third Circuit made it clear there could not be a work-around to PASPA’s restrictions.
Some suggest that change may only be accomplished through legislation in Congress.
“We are getting to kind of the end of the line on the judicial part of this [debate],” said gaming law professor Keith Miller of Drake University Law School. “I don’t think courts want to be the one to change this. They are saying you are going to have to go to Congress.”
The NBA issued a statement Tuesday welcoming the decision, saying they “continue to support a federal legislative solution that would protect the integrity of the game,” echoing Silver’s comments from earlier in the year.
In the meantime, experts said the real winner from this hold-up is the burgeoning daily fantasy sports industry, as it can continue to entrench itself without competition from legalized sports betting.
“Daily fantasy sports really was developed and grew due to the absence of widespread legalized sports betting, and the more time they have to market themselves and grow without sports betting, the more likely they will stay,” Miller said.
While the daily fantasy sports industry has looked to separate itself from the pejorative connotations of gambling or betting, both involve a form of wagering on the outcome of sports games and performances of players. The big difference is that daily fantasy sports is legal, and it has already attracted major corporate sponsors in the sports world — including leagues like MLB — and has reached deals with teams across sports.
“The biggest threat to its long-term viability or profitability is the legalization of sports betting,” Wallach said. “Certainly both can exist because they serve different areas of the sports wagering market, but there is a lot of overlap.”
As for New Jersey’s sports betting push, Tuesday’s decision appears to be the end of the road unless it connects on a Hail Mary convincing the circuit to rehear the case. Regardless, this is not the end for overall push for widespread sports betting in the U.S.
“Everybody believes it will happen,” Wallach said. “We just are not in agreement of when or how. … It is coming, just not in the next couple years.”
--Editing by John Quinn and Chris Yates.
