What happens next? The future of legalized sports betting can go four different ways

Mar 27, 2018 |
What happens next? The future of legalized sports betting can go four different ways
There are a few ways the Supreme Court could rule in the New Jersey sports betting case: narrow, broad, and of course in favor of the sports leagues once again.
There are a few ways the Supreme Court could rule in the New Jersey sports betting case: narrow, broad, and of course in favor of the sports leagues once again.

Any day now, or any week – or at least by sometime in June – the Supreme Court will rule on the Christie/Murphy vs. NCAA case, more commonly known as the New Jersey sports betting case.

There are a few different ways this ruling could be structured: from something tailored very narrowly only for New Jersey, to something very broad that could bring states across the country into the legal, regulated sports betting realm.

And of course, there could be a decision that upholds all rulings that came prior to this case being accepted by the Supreme Court: siding with the NCAA and other major sports leagues, denying New Jersey – and other states – the ability to move forward with legal sports betting, and keeping in place the antiquated and utterly toothless Professional and Amateur Sports Protection Act of 1992.

Covers discussed four possible decisions with highly-regarded sports law attorney Daniel Wallach, who provided insights on what’s next for sports betting in the United States, depending on each of those potential outcomes.

NEW JERSEY NARROW, PART I

What New Jersey state lawmakers did prior to this case winding through the courts was pass legislation in 2014 that decriminalized sports gaming at casinos and racetracks. The bill did not explicitly call for legalized, regulated sports betting. Rather, the bill repealed the state’s prohibitions on sports betting at those locations.

Wallach said the Supreme Court, in a narrowly tailored decision, could rule that as a matter of statutory interpretation, the New Jersey law doesn’t rise to the level of a PASPA violation, and therefore the law could stand, because “it doesn’t authorize sports gaming. It’s just a decriminalization of sports gaming.”

In that event, here’s what would likely come next:

• “Almost immediately, Monmouth Park will have sports gambling – within two to three weeks of a court decision,” Wallach said. The horse race venue has been one of the biggest proponents of expanding licensed, regulated, single-game sports wagering beyond Nevada’s borders and is in position for a very quick turnaround.

• Other independent operators could potentially start taking wagers, as well, though not nearly as soon as Monmouth.

• With such a narrow ruling, casino operators – specifically ones that have properties in multiple state jurisdictions – likely would not jump in right away, as doing so could create regulatory issues in those other jurisdictions. “They may take a more cautious approach than Monmouth Park or other independent operators,” Wallach said.

NEW JERSEY NARROW, PART II

Instead of a statutory ruling, the Supreme Court could find PASPA unconstitutional, but only insofar as it denies states the ability to repeal sports gaming prohibitions – prohibitions Wallach said are in place in almost every state.

“It’s a limited constitutional ruling, but you end up in the same place” as the first narrow ruling, Wallach said. So the “What’s Next” is similar:

• Monmouth Park could be off and running, taking sports wagers within a couple of weeks, and other independent operators could follow suit.

• Casino operators with interests in other states would be inclined to lay low for now.

However, with upwards of two dozen states considering sports betting legislation right now, there’s an important third piece to both of the narrowly tailored decisions:

• “The impact in other states would not be as positive,” Wallach explained. “All those sports gaming bills in other states are expressly conditioned on the Supreme Court determining that PASPA is unconstitutional. If that doesn’t happen, none of those other bills would ever take effect.” Therefore, to have sports gaming under a narrow ruling, in all likelihood states would have to follow the New Jersey blueprint and enact a similar repeal law decriminalizing (rather than authorizing) sports gaming either completely or in part – perhaps mimicking New Jersey’s law by lifting state-law prohibitions at racetracks and casinos. “With that limited option, which is devoid of any state oversight, I am skeptical that there would be many other states willing to emulate New Jersey’s approach.”

NEW JERSEY BROAD RULING

Wallach liked to term this the “New Jersey wins, so does every other state” ruling. Or perhaps to put it in Oprah-like terms: “You get sports betting, and you get sports betting, and you get sports betting …”

In this event, the Supreme Court determines PASPA to be facially unconstitutional on the basis that it impermissibly infringes upon state sovereignty, in violation of the Tenth Amendment, which in part reads: “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.”

This ruling could declare that PASPA violates the Tenth Amendment’s anti-commandeering principle, which notes that the federal government cannot commandeer a state legislative process.

What’s next if the Supreme Court takes this broadest possible tack?

• As in the previous cases, New Jersey gets sports betting, and Monmouth Park would be taking wagers within weeks.

• Furthermore, Wallach said, “That decision opens up the floodgates on all those state bills. It clears the way for states to authorize, license and regulate sports gaming.” Again, there are 20 to 22 state legislatures working on advancing sports gaming bills. “They would be free to move forward without any federal interference.”

• West Virginia has already passed such legislation, so it would be on a fast track to offering sports betting, though not as soon as Monmouth Park or other independent New Jersey operators.

In any of the aforementioned decisions, New Jersey comes out a winner – perhaps an even bigger winner if the decision is narrowly tailored, because the Garden State would stand alone on the East Coast as a single-game sports betting provider (Delaware has a parlay-based sports betting lottery). But even a broad decision, especially within the next few weeks, would at least be a huge short-term boon for New Jersey.

“Monmouth Park racing season opens in May. This would be a huge windfall for them – racing season opens, and now they’re getting sports betting at the same time. Monmouth Park will enjoy the most successful racing season in its history, because it will have a virtual East Coast monopoly on sports betting — at least in the short term — because bettors will have to physically go there in person if they want to bet on sporting events,” Wallach said, pointing out there won’t yet be any Internet or mobile-betting application. “Monmouth Park is going to draw customers from all over the Northeastern corridor.”

Since December 4, when the Supreme Court heard this case, Wallach has predicted a 75 percent chance of a positive decision – 50 percent on a broad ruling, and 25 percent covering the two narrow rulings. But that leaves one more possibility.

THE LEAGUES WIN

Wallach left the final 25 percent for the Supreme Court deciding in favor of the major sports leagues. And it’s with good reason that he allows such a chance for the leagues to win outright.

“Every court decision rendered in this case, all six, have gone in favor of the leagues,” Wallach said. “I was in the courtroom December 4, and that day didn’t go well for the leagues. But the leagues do have the possibility of prevailing.”

Wallach explained what’s next in his least-likely, but certainly possible scenario:

• No sports betting of any kind for New Jersey or any other state besides Nevada, Delaware and Oregon, which were exempted from PASPA because those states already had sports betting laws on the books. “All the other state bills become moot,” Wallach said.

• Congress becomes the only viable avenue to bring sports gaming to the rest of the U.S. “Congress could repeal PASPA and leave it to the states, or enact a comprehensive federal solution to replace PASPA.”

That might seem like something that would take an inordinate amount of time, or perhaps never happen, given the often tortoise-like pace of the federal government. But Wallach believes a ruling for the leagues is hardly a death knell for sports betting expansion.

“Even if New Jersey loses, the litigation could still prove to be a catalyst for a change in the federal law,” Wallach declared. He said that the New Jersey case has sparked a great deal of national discussion on the issue of sports gambling and is the reason why more than 20 states have enacted legislation or introduced bills to legalize sports betting — including a whopping 16 since the December 4 oral argument.

“None of this occurs without the momentum created by the New Jersey case,” Wallach added. “With all the discussion now going on and all the bills pending in other states, there seems to be an irreversible momentum for sports gambling to become more broadly legal. It’s now a matter of when, not if. Even with an outright loss for New Jersey, the discussion has intensified to such a high level that a comprehensive solution probably does come within the next two to three years.

“The debate will certainly not end with a loss in the Supreme Court. It will just shift to Congress.”

Patrick Everson is a Las Vegas-based senior writer for Covers. Follow him on Twitter: @Covers_Vegas.


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