On May 14 of 2018 the Supreme Court of the United States announced its decision in Murphy (nee Christie) v NCAA. The court ruled that the Professional and Amateur Sports Protection Act (PASPA) of 1992 violated the “anti-commandeering” principle of the 10th Amendment and was thus overturned as unconstitutional.
This decision allowed New Jersey to become the second state in the nation to offer comprehensive sports wagering, and paved the way for other states to follow (pending their own legislation).
In this guide, we take a in-depth look at the New Jersey’s ultimately successful legislative fight for sports betting in the Garden State, and offer answers to commonly asked player questions regarding the new sports betting industry.
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The latest on New Jersey sports betting
With the official ruling complete PASPA has been struck down, removing it as an obstacle for single-game wagering. The state still needs to put finishing legislative touches on the exact regulations, such as resolving the requested “integrity fees” for major sports leagues and determining the exact licensing procedure for sportsbook operators.
Recent proposed legislation will allow for mobile and internet betting for operators that are licensed with a physical sportsbook, much in the same way that online casino licenses are only available to established brick & mortar casinos. There will also likely be an integrity fee based on revenue, and one much smaller than the handle-based request by the leagues.
NJ Division of Gaming Enforcement Director David Rebuck had prior to the decision encouraged potential sports betting license holders to be prepared, citing that the state was ready and willing to accept license applications, however the must recent updated bill included language warning potential sportsbooks not to progress too far before the regulations are final. As such many of New Jersey’s casinos and racetracks that already have begun developing sports betting operations will be able to launch in early June at the most optimistic estimate.
New Jersey sports betting: The Supreme Court case
On December 4, 2017 an hour-long oral argument between two former US Solicitor Generals took place in Washington, D.C. The case—Gov. Christopher J. Christie, Governor of New Jersey, et al vs. National Collegiate Athletic Association, et al–is centered on the Professional and Amateur Sports Protection Act of 1992 (PASPA), the federal ban on legal sports betting.
What was PASPA?
PASPA, also known as the Bradley Act, was enacted in 1992 and prohibited state-sponsored sports betting outside of a handful of approved states. Only Nevada was allowed to offer a full menu of sports betting, including the type that generates the most betting interest – single-game, point-spread wagering. Delaware had the only other meaningful state-sponsored sports betting market in the nation, an NFL parlay scheme operated by the state lottery that handled $24 million in wagers in 2016.
Two other state-level sports betting operations were allowed to keep their existing sports lotteries under PASPA. Montana was essentially limited to betting squares contests at licensed taverns and bars, and Oregon offered parlay sports betting until 2007 through the lottery.
Interestingly, PASPA allowed states which had operated licensed casino gaming for a period of ten-years prior with a grace period to pass sports betting legislation. This caveat was baked in specifically with New Jersey in mind. New Jersey didn’t capitalize on the opportunity at the time, only to take up arms against PASPA in 2009.
The two sides
Leading the charge for the repeal of PASPA was New Jersey lead attorney Ted Olson, who rightfully argued that PASPA was unconstitutional and needed to be struck down. The New Jersey Thoroughbred Horsemen’s Association, represented by accomplished local attorney Ron Riccio, was also a plaintiff. Riccio believed the state’s 2014 Sports Wagering Law complied with PASPA, and, therefore, Atlantic City casinos and racetracks should have been able to offer legal sports betting.
Other proponents included:
- Eighteen states and the governors of Kentucky, Maryland and North Dakota had signed on in support of New Jersey. In addition to New Jersey, Connecticut, Mississippi, New York, and Pennsylvania all passed legislation that would allow sports betting when the federal ban was lifted. Dozens of additional states are still expected to jump into the sports betting game, now that it has been made legal. Of these states, West Virginia and Delaware currently the closest to passing the necessary final legislation.
- Pacific Legal Foundation, researcher John Holden, the American Gaming Association, Constitutional Law Scholars, the European Sports Security Association and U.S. Congressman Frank Pallone filed amicus briefs in favor of New Jersey.
On the opposition side, the NCAA, NFL, NBA, NHL and Major League Baseball all defended PASPA and were represented by prominent attorney Paul Clement. For decades, the sports leagues had expressed concern about expanded legal sports betting being a threat to the character and integrity of their games. Critics question the sincerity behind that stance and point to the NFL and NHL’s decisions to put franchises in Las Vegas. The Vegas Golden Knights, in 2017, became the first franchise from a major professional sports league to call Las Vegas home. The Oakland Raiders have been cleared by the NFL to move to Las Vegas beginning in 2020, if not sooner.
Then there’s the so-called “integrity fees.” Of late the NBA and MLB appear to be hypocritically reversing their previous position on sports betting, but only if they can get their piece of the pie. The concept of an integrity fee first emerged in an Indiana sports betting bill. In the proposed scheme sportsbooks would be required to hand over 1% of their handle (~20% of profit) on a league’s sporting events. The leagues have only vaguely explained what the integrity fees would be used for, and have taken the weak position that because sports betting wouldn’t exist without the games they put on, it’s their right to claim a percentage of wagers.
Other pro-PASPA parties included:
- U.S. Solicitor General Noel Francisco, representing the Trump administration, and multiple groups opposed to gambling expansion filed briefs in support of the sports leagues. Francisco was granted permission by the Supreme Court to participate in the oral argument.
- Stop Predatory Gambling and Eagle Forum Education & Legal Defense, two groups who oppose the expansion of state-sponsored gambling, each filed amicus briefs in support of the sports leagues.
The immediate aftermath
The majority of justices appeared to side with New Jersey, according to former SCOTUSblog editor and reporter Amy Howe and other mainstream outlets. Key takeaways from Howe’s analysis include:
- During the oral arguments, Olson argued that PASPA commandeers states to enforce federal sports betting prohibition. Justices Kagan and Sotomayor expressed skepticism that PASPA requires states to act. However, Justices Kennedy, Roberts, Alito, Gorsuch and Breyer all appeared more receptive to this argument, noting that the federal government chose not to impose a ban on sports gambling, even though it could have.
- Deputy Solicitor General Jeffrey Wall, representing the United States (which sides with the sports leagues), said he’d be fine with the state repealing all of its existing state laws, rather than only certain ones such as the laws on the books in NJ prior to 2014. Justice Roberts responded by asking if that meant Wall was fine with NJ repealing age restrictions for Atlantic City casinos, allowing 12-year-olds to gamble, and Wall was caught in a trap, ultimately answering that he was indeed fine with that.
Deliberations in the case took the next five months.
The current bill
New Jersey State Senator Stephen Sweeney introduced state bill S2602 on May 14, which calls for oversight of sports betting to fall under the authority of the NJ Division of Gaming Enforcement. The bill also stipulates an 8% gross revenue tax on bets made in-person and 12.5% for those made online. An additional 1.25% is intended for local municipalities and counties.
The state’s race tracks — Freehold Raceway, Meadowlands Racetrack and Monmouth Park — and Atlantic City casinos will soon be allowed to offer legal, Las Vegas-style sports betting. Several venues are already prepared to offer sports betting, and may have their operations up by June.
New Jersey sports betting: FAQ
When will sports betting be fully legal in New Jersey?
With the recent Supreme Court ruling complete New Jersey needs only to finalize its own specific regulations. Expect sportsbooks to be up and running by the start of the 2018 football season.
Where will I be able to bet on sports games?
New Jersey plans to allow sports betting at racetracks and Atlantic City casinos; following the Supreme Court ruling it is now up to the state legislature to decide the final specifics.
Will there be online sports betting?
Wagering through internet terminals and websites is planned.
New Jersey is well-positioned for online sports betting, as a framework for online wagering is already in place. It is currently only one of three states, with Pennsylvania about to become the fourth, to offer at least some form of regulated online gambling.
Under existing law, any Atlantic City casino authorized to offer a game can offer the same game online, in so long as it possesses an iGaming license. Borgata, Caesars casinos, Golden Nugget, Resorts, and Tropicana already have an online gambling license, with yet to be opened casinos Hard Rock Casino and Ocean Resort Casino expected to launch their own legal operations in summer 2018.
It follows that existing online gambling sites will be expanded to include sports betting shortly after brick & mortar casinos launch their operations. The racetracks as well will be licensed to launch online betting operations, though they lack the head-start in digital infrastructure that the casinos enjoy.
Will there be mobile sports betting apps?
Yes, mobile apps are also a part of the progressing legislation.
The majority of Las Vegas sportsbooks have been offering mobile sports betting apps for the past several years, with big names MGM and Caesars finally releasing their own apps in 2016 and 2017, respectively.
Since the legislation will allow it and the medium has been proven in other markets, there’s little-to-no reason to suspect New Jersey books wouldn’t capitalize on this opportunity, although it’s far from a guarantee that the apps will be immediately available as soon as the industry shortly launches. Final licensing requirements and stipulations are still being determined.
Who will be eligible to place sports bets in New Jersey?
Anyone 21 years of age or older can place a sports betting wager at an Atlantic City casino. Same goes for online with the additional conditions that players must first successfully register an online sportsbook account prior to betting, and be physically located in the state of NJ when they place a wager.
It is presumed that players who already have an online gambling account for a site will not have to repeat the registration process if the site merely expands to offer sports betting.
How will online sportsbooks know that I’m actually inside NJ when I place a wager?
Online sportsbooks will use sophisticated third-party geolocation software to track a player’s location with pinpoint accuracy via the same methods as New Jersey’s regulated online casinos. The features necessary to enable geolocation will be baked into Android and iOS powered books, but desktop users may have to install a small web browser extension (geolocation plugin) which verifies to the book if the player is located within state lines.
What types of sports betting will New Jersey support?
A whole slew of single-game wagering and other variants should be available, across a bevy of professional and college sports. We don’t know the particulars yet, but can say with some clarity that the following formats will be supported:
- Money line
- Point spreads
- Over/under totals
- Teasers; two outcomes or more
- Parlays; two outcomes or more
- In-game via mobile apps and online books
Online sportsbooks in Europe have recently introduced more exotic betting structures, including accumulators. Some of these innovations could find their way to New Jersey.
New Jersey has recently indicated that betting on college sporting events that take place within the state may not be allowed, nor will betting on college teams from NJ playing out of state. The same will be true of high school sports if those should ever be implemented for wagering.
How much revenue will sports betting generate for New Jersey?
Estimates vary widely, although the general consensus is “a lot.”
In Nevada, sports betting is on the upswing, having generated a record-breaking $248.8 million in 2017. $4.89 billion worth of wagers were placed, eclipsing 2016’s then record by nearly $360 million. Annual handle has nearly doubled in the past decade.
The New Jersey market stands to be much bigger, as the state boasts a far larger population (8.9 million for NJ v. 2.94 million for NV), and will offer online, which will account for the bulk of industry revenue. Gambling Compliance places the industry’s near-term forecast at $297.8 million, with what appears to be nearly $250 million coming from online.
For perspective, online casinos and online poker only made $245.6 million collectively in 2017, and that was the industry’s (very successful) fourth full year.
Industry research group Eilers & Krejcik Gaming sees the industry generating $502 million in gaming revenue at maturity.
New Jersey sports betting: How did we get here?
The federal prohibition on state-sponsored sports betting was put in place on Oct. 28, 1992, when President George H.W. Bush signed the Professional and Amateur Sports Protection Act into law.
Nevada, Delaware, Montana and Oregon, states that already had sports betting schemes in place, were exempted from the prohibitions, and New Jersey was given a one-year window to pass legislation. Politics derailed the Garden State’s efforts, despite support from then-New Jersey casino owner Donald Trump.
New Jersey launches challenge: Christie I
Nearly three decades later, as the Great Recession was taking hold and the New Jersey gaming industry was in decline, lobbying group iMEGA filed a suit challenging PASPA. The suit was ultimately dismissed in district court due to lack of standing, but along the way iMEGA teamed with New Jersey State Sen. Raymond Lesniak, who went on to spearhead the state’s sports betting efforts.
Lesniak first introduced a sports betting bill in 2009 and eventually passed a referendum to put the question of legalizing sports betting to voters. At the same time, Christie was attempting to bring a Super Bowl to New Jersey.
On Nov. 9, 2011, New Jersey voters supported the sports betting referendum by a two-to-one margin. Two months later, on Jan. 17, 2012, Christie signed legislation legalizing sports betting at the state’s race tracks and casinos.
In July of 2012, the New Jersey Division of Gaming Enforcement published sports betting regulations on its website. Shortly after the regulations were posted, on Aug. 7, 2012, the NCAA, NFL, NBA, NHL and Major League Baseball filed suit against New Jersey and Christie, the start of what turned into a five-year legal battle that has reached the Supreme Court, but not before many twists and turns.
On Dec. 7, 2012, NFL Commissioner Roger Goodell was deposed in the case. Then-commissioners David Stern of the NBA, Bud Selig of MLB and Gary Bettman of the NHL each gave deposition testimony on the case, outlining the leagues opposition to expanding sports betting in the U.S.
The sports leagues won in district court and appeals court and then appeared to have ended the case when the Supreme Court declined to accept New Jersey’s appeal on June 23, 2014. But Lesniak and the Garden State did not give up.
Christie II kicks off
Within days of the Supreme Court passing to hear New Jersey’s appeal, Lesniak introduced new legislation, the 2014 Sports Wagering Law, which attempted to comply with PASPA by repealing chunks of the state’s sports betting prohibitions, while also limiting the activity to casinos, racetracks and former sites of race tracks. The bill was quickly passed through the legislature and sent to Christie’s desk. Christie initially vetoed the bill, before reversing course in the fall.
On Oct. 17, 2014, the office of the New Jersey Attorney General issued a law enforcement directive effectively instructing authorities to stand down when it comes to sports betting at casinos and racetracks. The directive states, “[S]ports pools operated by casinos or racetracks continue to be exempted from criminal liability under New Jersey law, so long as no wagering occurs on a college sports or athletic event that takes place in New Jersey or in which any New Jersey college team participates, regardless of where the event takes place.”
With the new law in place, Monmouth Park was within days of opening up its sportsbook when the sports leagues again filed suit and ultimately were granted an injunction, the beginning of the current edition of the case, commonly referred to as Christie II.
On Feb. 2, 2014, Super Bowl XLVIII between the Seattle Seahawks and Denver Broncos was played at MetLife Stadium in East Rutherford, N.J. The Seahawks won 43-8. At the same time, some of the professional sports leagues were beginning to pivot their stance on legal sports betting, while also embracing daily fantasy sports.
On Nov. 13, 2014, NBA commissioner Adam Silver wrote an op-ed in the New York Times, calling on Congress to create a federal framework and allow states to opt-in and offer regulated sports betting.
Despite the apparent softening stances, the sports leagues maintained a leg up in the case. In Christie II, they again won in district and appeals courts, forcing New Jersey to attempt another Hail Mary and ask the Supreme Court to hear a case they declined to take three years earlier.
On June 28, 2017, the Supreme Court granted cert to the New Jersey case, tossing a curveball into the ongoing legal saga that had previously been dominated by the sports leagues.
On Dec. 4, 2017, then Governor Christopher J. Christie presented the state’s argument before the Supreme court. Responsibility for the case then passed to Phil Murphy when he was sworn in as Governor on Jan. 16, 2018.
On May 14, 2018 SCOTUS announced its ruling that the law violated the 10th Amendment in a 7-2 decision, and declaring it completely unconstitutional by 6-3. Justices Ginsburg, Sotomayor, and (in part) Breyer dissented.