The latest point of interest in the state’s attempt to legalise sports betting was in the Third Circuit Court of Appeals in Philadelphia, where 12 justices reheard the case en banc, following a 2-1 vote against New Jersey in August.
The fact that the state had been granted an en banc hearing was what New Jersey Division of Gaming Enforcement director David Rebuck called the first small victory the state had claimed in the case, an argument which is boosted by the fact that only one en banc hearing was granted in the Third Circuit last year.
Injunctions have twice been placed against allowing New Jersey to offer sports betting due to opposition from the four major US sports leagues and National Collegiate Athletic Association (NCAA). This occurred in separate cases in 2012 and 2014, with the 2014 law allowing for racetracks and casinos to offer sports betting.
Two previous appellate decisions, Christie I and Christie II, have gone against the state. Judge Rendell, who wrote the panel opinion in Christie II, said that Christie I was also “in-play” at Wednesday’s hearing.
The hearing lasted for just over one hour. You can listen to an audio recording of the hearing here:
For a summary of events, here are the highlights of the hearing:
Confusion over PASPA – repeal or authorisation?
One of the grey areas of the case is how the court will interpret exactly how New Jersey’s actions can alter from the 1992 Professional and Amateur Sports Protection Act (PASPA) without violating it. PASPA allowed for single-game sports betting in Nevada only and limited sports betting in Montana, Delaware and Oregon. Theodore Olson, arguing on behalf of the state, kicked off the hearing by saying that nothing from PASPA requires any states to keep any law in place and that the same court held the view that PASPA is in no way constitutional.
A point of argument is whether legalising sports betting would be an authorisation of sports-betting law or a repeal of sports-betting law. When questioned on this, Olson claimed that “when the state is taking laws off the books and not taking a position one way or the other with respect to whether an activity can occur, that is not authorisation”. In the state’s view, it has not attempted to authorise anything, but has simply tried to repeal prohibitions. A debate ensued as to whether there is a clear difference between the terms “authorisation” and “repeal” and whether the state was going down the route of artistic wording, when in reality the two terms could mean the same thing.
To regulate or not to regulate
One thing you may not expect a state to claim when it wants legal sports betting is that the market would not be regulated, which is what Olson put forward. Rather than be licensed to offer sports betting, casinos and racetracks would not be penalised for doing so.
It was put to Olson by one judge that this would lead to similarities to the daily fantasy sports market, a market facing legal scrutiny in a number of US states. Olson did not wish to be drawn in on that argument, but said that issues such as fraud and underage gambling would be addressed by the state one at a time.
Olson admitted that legalising sports betting at racetracks and casinos would violate PASPA but said that not penalising already-licensed operators offering sports betting would not violate PASPA.
The racetrack view
Next up to speak to the bench was Ronald Riccio on behalf of the New Jersey Thoroughbred Horsemen’s Association, the operators of Monmouth Park racetrack, who provided a little more clarity on the regulatory issue. Riccio said if the 2014 law was upheld, this would lead to private self-regulation as exists in many industries and the state could hypothetically step in if there were problems with self-regulation. Monmouth Park formed the Independent Sports Wagering Association in 2014 and could promulgate rules and regulations if an operator wanted to join the association.
The sports leagues and NCAA view
Paul Clement, arguing on behalf of the leagues and NCAA, did not want to dispute that a partial repeal could be made to PASPA, but only if residents played against each other rather than against a house. A partial repeal with what Clement called “a sea of prohibitions” would violate PASPA. Clement’s definition of licence is “permission for somebody to do something that almost everybody else is prohibited from”. Clement said it would be difficult to say allowing selected racetracks and casinos to offer sports betting would not be licensing them, as they would be in a minority.
Is a partial repeal acceptable?
Then there was US Department of Justice attorney Paul Fishman, who thinks that partial repeals under PASPA can happen, but that it is not an issue that should be up for discussion. Fishman thinks the issue is whether PASPA is violated by the law.
Gambling Insider verdict
If this was a question purely on the legality of sports betting, it would be far simpler to comprehend, but the state seems to be relying on the judges being willing to make a very specific allowance in order for it carry out its aims. The issue of not regulating the market in particular appeared to be met with some hostility. Establishing a clear view that there is a separation between not penalising racetracks and casinos for offering sports betting and authorising them to offer sports betting is another stumbling block.
New Jersey only needs the approval of seven of the 12 justices however and its chances of succeeding are very much up-in-the-air at this point. A decision from the court is reportedly expected in late spring/early summer.
Given that five of the judges have given prior votes and/or reasoning with the opinions being fairly split, it could come down to the views of the seven remaining judges in deciding the case.