New Jersey is on the precipice of becoming the second state in the nation to offer comprehensive sports wagering. However, the fate of its sports betting industry is currently tied up in the Supreme Court, which is expected to deliver a ruling on whether states outside of Nevada can offer single-game wagering sometime this spring.
In this guide, we take a in-depth look at the legislative fight for sports betting in the Garden State, and offer answers to commonly asked player questions regarding the prospective industry.
The latest on New Jersey sports betting
We’re still in “wait and see” mode regarding sports betting. Oral arguments were heard on December 4, 2017 in the landmark Christie v. NCAA US Supreme Court case, with most pundits foreseeing a favorable outcome for New Jersey. In a best case scenario, the standing federal ban on sports betting would be deemed unconstitutional. An outcome is expected this spring, no later than late June.
In the meantime NJ Division of Gaming Enforcement Director David Rebuck is encouraging potential sports betting license holders to get a move on, citing that the state is ready and willing to accept license applications. Conceivably, New Jersey casinos and racetracks could take their first sport wagers mere weeks after PASPA is repealed.
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 is PASPA?
PASPA, also known as the Bradley Act, was enacted in 1992 and prohibits state-sponsored sports betting outside of a handful of approved states. Only Nevada is allowed to offer a full menu of sports betting, including the type that generates the most betting interest – single-game, point-spread wagering. Delaware has 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 is 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 argued that PASPA is unconstitutional and should be struck down. The New Jersey Thoroughbred Horsemen’s Association, represented by accomplished local attorney Ron Riccio, was also a plaintiff. Riccio believes the state’s 2014 Sports Wagering Law complies with PASPA, and, therefore, Atlantic City casinos and racetracks should be able to offer legal sports betting.
Other proponents include:
- Eighteen states and the governors of Kentucky, Maryland and North Dakota have signed on in support of New Jersey. In addition to New Jersey, Connecticut, Mississippi, New York, and Pennsylvania have passed legislation that will allow sports betting if the federal ban is lifted. Dozens of additional states are expected to jump into the sports betting game, if made legal. Of these states, West Virginia is currently the closest to passing 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 defended PASPA and were represented by prominent attorney Paul Clement. For decades, the sports leagues have 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 reversing their 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. Books would be required to hand over 1% of 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 include:
- 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.
- If New Jersey wins, and PASPA is lifted, the state’s race tracks — Freehold Raceway, Meadowlands Racetrack and Monmouth Park — and Atlantic City casinos will be allowed to offer legal, Las Vegas-style sports betting. Several venues are already prepared to offer sports betting, and could have their operations up within weeks of a favorable decision from the Supreme Court.
- It’s plausible that PASPA will be partially repealed. In this scenario, PASPA is deemed constitutional but Altantic City casinos and NJ racetracks would still be permitted to offer sports wagering. However, the state could not tax, regulate and license sports betting, and other states wouldn’t be able to jump into the industry.
- If the leagues prevail and PASPA is upheld, New Jersey officials insist they’ll continue fighting for sports betting, and, with so many other states poised to get in the game, it doesn’t appear this issue will simply go away regardless of the Supreme Court decision.
While the Supreme Court reviews PASPA, a draft of federal legislation is being pushed by US Congressman Frank Pallone, a New Jersey Democrat and a ranking member of the House Energy and Commerce Committee. Pallone introduced a discussion draft of the Gaming Accountability and Modernization Enhancement Act of 2017 or GAME ACT in May. Additionally, there have been multiple calls for Congressional hearings on PASPA, including recently by multiple congressmen and another by Sen. John McCain in 2015.
New Jersey sports betting: FAQ
When will sports betting be legal in New Jersey?
Everything hinges on the Supreme Court ruling expected to be released in the first half of 2018. If the Supreme Court lifts the federal ban on state-sponsored sports betting, expect sports books to be up and running by the start of the 2018 football season, if not sooner.
Where will I be able to bet on sports if New Jersey wins?
New Jersey plans to allow sports betting at racetracks and Atlantic City casinos; the Supreme Court ruling will likely decide some of the specifics.
Will there be online sports betting?
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 should be expanded to include sports betting shortly after brick & mortar casinos launch their operations.
Will there be mobile sports betting apps?
Presumably yes. 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.
There’s little reason to suspect New Jersey books wouldn’t capitalize on this opportunity, although it’s far from a guarantee that the apps will be available when the industry first launches.
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. 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 sports books in Europe have recently introduced more exotic betting structures, including accumulators. Some of these innovations could find their way to New Jersey.
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 sports book 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 been dominated by the sports leagues, until now.