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How The New Jersey Sports Betting Decision Affects Other States

The Supreme Court’s decision to reverse PASPA has opened the door for every state to offer legal sports betting.

New Jersey engaged in a near-seven-year long quest to legalize sports betting within its borders that culminated on May 14, 2018. On that date, the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) of 1992 in Murphy vs. NCAA, making it possible for New Jersey and any other state to legalize and regulate all manner of sports betting, including single-game wagering.

Overturning PASPA required extensive legislative effort

The road to what now has the potential to be nationwide legalized sports betting was long and arduous. What follows is a timeline of the legal steps the Garden State undertook prior to their Supreme Court victory:

  • New Jersey residents first approve a referendum to legalize sports betting in the state in November 2011.
  • The resulting Sports Wagering Act of 2012 is signed into law by Governor Chris Christie.
  • The leagues successfully obtain an injunction in federal district court barring New Jersey from officially enacting the law. They also subsequently prevail in the U.S. Third Circuit Court of Appeals. However, the Appeals Court ruling states that PASPA would not stop New Jersey from repealing its own ban on sports betting and allow it to operate unregulated.
  • New Jersey makes an appeal to have its case heard by U.S. Supreme Court in February 2014. The state is denied in June 2014.
  • Christie signs new measure (SB2460) in October 2014 based on the Appeals Court’s conclusion that New Jersey may repeal its ban on sports betting.
  • The NFL immediately seeks – and is granted — an injunction by the U.S. District Court later that month. It also subsequently prevails in the U.S Third Circuit Court of Appeals in August 2015.
  • In response, New Jersey requests and is subsequently granted an en banc hearing in October 2015.
  • New Jersey loses en banc hearing by a 9-3 margin in August 2016.
  • New Jersey files second appeal to U.S. Supreme Court in October 2016.
  • New Jersey is granted a Supreme Court hearing in June 2017.
  • Oral arguments – which appear to go in favor of New Jersey – are heard in front of the Supreme Court on December 4, 2017.

Oral hearings in front of SCOTUS proved to be turning point

The final event on that list – the oral hearing session – is widely considered the true pivot point of the case.

The perception of New Jersey’s chances for a victory seemed to increase tenfold from that date forward. Legal experts present for arguments almost universally concluded that the plaintiffs fared much better than the professional sports leagues (i.e. the defendants).

The resulting momentum led to a relative flurry of legislative action around the country. Multiple states sprung into action, spurred by the prospect of potential tax revenue from sports betting and the incentive to keep up with neighboring jurisdictions in setting up regulatory frameworks.

A total of 17 states have already introduced or reintroduced sports-betting legislation in 2018.  Many of these bills may now pick up significant momentum in light of the Supreme Court Decision:

  • California
  • Connecticut
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maryland
  • Massachusetts
  • Michigan
  • Mississippi
  • Missouri
  • New Jersey
  • New York
  • Rhode Island
  • South Carolina

Special circumstances in New Jersey and Oregon

New Jersey might appear like a rather unlikely entry in that list.

However, it’s important to note that the current sports betting framework the striking down of PASPA leaves in place in the state is actually an unregulated one; the action by New Jersey that prompted Murphy vs. NCAA was a partial repeal of its prohibition on sports betting, which technically allows casinos and racetracks to operate a sportsbook without the state’s oversight.

Therefore, Garden State regulators, like their counterparts elsewhere, are currently considering a bill that would set a regulatory framework in place under the purview of the Division of Gaming Enforcement.

Conversely, Oregon is one state not on the list that nevertheless merits further conversation. The Beaver State was one of three – Delaware and Montana being the others – that already had some form of sports wagering in place before PASPA’s passage, which grandfathered them in.

Oregon had begun offering a parlay card system for the NFL, Sports Action, through its State Lottery in 1989. Dissatisfaction on the part of both the NFL and NCAA led to the discontinuation of Sports Action altogether in 2007.

However, as recently as April 2018, the State Lottery discussed the possibility of bringing Sports Action back. Additionally, it asserted that it also had the authority to add options such as single-game wagering – through both brick-and-mortar locations and via mobile devices – without the need for any further legislative action.

Three other states stand to benefit from proactive approach

Meanwhile, the following three states were proactive over the last year-plus, putting legislation in place in the event of an eventual eradication of PASPA:

  • West Virginia- Legalized sports betting become official in West Virginia on March 9, 2018 when Governor Jim Justice allowed the pending bill to become law by procedural means, i.e. without his signature. The bill calls for the state’s Lottery to promulgate all sports betting regulations. There are several moving parts in the state despite the law already being on the books; integrity fees, which are not in the present version of the bill, are still the subject of intense discussion.
  • Mississippi- A modification of the state’s Gaming Control Act regulating daily fantasy sports (DFS) that was signed into law by Governor Phil Bryant in March 2017 cleared the path to legalized sports betting in the state’s 32 casinos upon a PASPA repeal. The updated version of the law eliminated wording that prohibited wagering on any aspect of an athletic event. The state’s Gaming Commission will be responsible for promulgating a regulated sports betting framework.
  • Pennsylvania- An omnibus gaming bill signed into law by Governor Tom Wolf on Oct. 30, 2017 included provisions for legalized sports betting on professional and amateur events– including online wagering – upon a PASPA repeal. As currently written, the law contains an initial licensing fee of $10 million for establishments that want to offer sports betting, along with a 36 percent tax on sports wagering revenue. Both of those amounts could potentially be amended before that portion of the law goes into effect.

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