New Jerseyan Denied In Bid To Make Out-Of-State Online Horse Racing Bets

After two years of appeals to make an online bet on NJ horse racing from out of state, a ruling came down against the gambling expansion.
horse racing action

New Jersey is known as one of the most gambling-friendly states — and forever so, since the U.S. Supreme Court backed its bid to eliminate Nevada’s near-monopoly on sports betting in May 2018.

But in a case decided last week by the state’s Appellate Division, one gambler’s bid for more, later joined by horsemen in the state, came up short.

The case hinged on the details of the 21-year-old state law that opened the door for simulcast wagering on horse races from a variety of sites.

The Off-Track and Account Wagering Act clearly allowed for account holders age 18 or older to place wagers without being at a state racetrack or official off-track wagering site.

Lewis Stein, a New Jersey resident, was on vacation three years ago in Massachusetts when he tried to make a wager, only to be denied. In August 2016, Stein asked the state Racing Commission to permit such bets.

Frank Zanzuccki, the commission’s executive director, responded in a letter that “though the Act does not specifically prohibit New Jersey account holders from placing wagers while outside New Jersey … the Legislative intent was to create an intrastate wagering system.” The commission, Zanzuccki added, had consistently taken that stance. Still, a case was born.

It turns out that nearly a year before the letter was received, the commission had required that the state Sports and Exposition Authority — better known for its oversight of the Meadowlands Sports Complex — must install “advanced geolocation software and controls” to further ensure there is no out-of-state horse racing betting.

Here come the horsemen

Undeterred, Stein filed a petition with the commission in Feb. 2017. Five months later, Darby Development — the company run by Dennis Drazin to operate Monmouth Park for the state’s thoroughbred horsemen — filed a comment that stated that “to maintain this restriction made no sense legally or practically, and should be revisited as it [harms] the business interests of the account wagering system and interested industry participants.”

An executive for TVG, which operates the off-track wagering, wrote that the in-state restriction “causes consumer frustration, and has resulted in significant business losses for the system.”

A debate followed, with the commission asserting its previous stance and with Stein again insisting that no specific provision prevented his goal of placing an out-of-state bet on a horse race.

The commission denied the bid, and Stein appealed, with the horsemen granted an “amicus,” or friend of the court, status.

Judges won’t budge

Now we get to the three-judge appellate review, where the first sentence is the most important one: “We note initially that appellate review of a final decision of an administrative agency is limited.”

I have seen this observation many times over the years in New Jersey courts, where judges are loathe to question the perceived expertise of any agency.

The hurdle is to show that an agency’s decision rules “unless there is a clear showing that it is arbitrary, capricious, or unreasonable, or that it lacks fair support in the record.”

The judges added, “It is well-established that the court’s role in interpreting a statute is to ascertain the intent of the Legislature, and the best indicator of legislative intent is the language of the statute.”

Those judges found that the law twice contains the phrase “within this state” to describe these horse racing wagers. The fact that the commission had consistently acted in that vein also helped sway the court.

Darby Development attorneys countered that other language in the law allows for any account wager placed by an account holder while located outside of New Jersey “shall be deemed to have been ‘made to a place within the state.'”

But all three judges disagreed with the horsemen’s interpretation.

One last longshot

Additionally, the fabled Interstate Horseracing Act of 1978 comes into play. That allows for a legal wager to be placed in one state and accepted by another state if the wagering “is lawful in each state involved.”

That said, the judges found that New Jersey legislators chose instead to establish only an intrastate account wagering system.

“We accordingly conclude that the Commision did not err by denying Stein’s petition for rulemaking,” the judges wrote.

In a final bid, Stein alleged that if he could not make a wager while outside of state lines, that would violate the Commerce Clause of the United States Constitution. But the judges concluded that the state law is “not a protectionist measure, and is directed solely to legitimate local concerns.”

A few months ago, the obvious next step for Stein and the horsemen would have been to seek a new law expanding the reach of the off-track wagering law. But would that goal be dampened by last month’s opinion of the U.S. Department of Justice, which concluded that The Wire Act of 1961 restricts not just sports betting online but also other forms of interstate gambling?

For four decades, horse racing seems to have had an explicit, unique carveout. But as in other instances we have written about, any perceived confusion about the ruling by state lawmakers might muddy the waters for an attempt to expand the 1998 state law to permit horse racing bets beyond state lines.

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