In what could be New Jersey’s last court battle in its six-year quest to legalize sports betting, a dozen federal appeals judges Wednesday grilled attorneys for the state about the ongoing effort to allow Garden State casinos and racetracks to offer wagering on sports games.
The oral arguments before the U.S. Third Circuit Court of Appeals were part of the state’s latest attempt to get Las Vegas-styled sports betting at the facilities to give a boost to ailing Atlantic City and the state’s struggling horse-racing industry.
The NCAA and four professional sports leagues — the NFL, NBA, MLB, and NHL — have repeatedly sued to stop the state, saying the move would violate a 1992 federal ban on sports betting in most states and threaten the integrity of their games.
The state has lost every step of the way, including two rejections from the Third Circuit. But the court agreed to a rare en-banc re-hearing of its latest decision against New Jersey, with 12 judges instead of the usual three considering the case.
In Wednesday’s arguments, Theodore Olson, the former U.S. solicitor general who is representing Gov. Chris Christie‘s administration, argued that New Jersey has found a loophole in the federal ban.
Olson explained that the ban prohibits the state only from authorizing the betting, and the newest law that Christie signed in 2014 skirts that stipulation by partially repealing the state’s old laws to allow casinos and tracks to offer wagering without any state regulation.
“Congress does not have the authority to force states to regulate,” Olson said. “What the (New Jersey) Legislature did not do was authorize anything. It repealed prohibitions.”
But some judges questioned if New Jersey really was sponsoring such betting by allowing it at casinos and tracks, two places already under heavy state regulation.
“It’s really just another way of authorizing,” Judge Kent Jordan said.
Judge Julio Fuentes also wondered how New Jerseyans can know “this is an honest operation” without state oversight.
Ronald Riccio, an attorney for Monmouth Park in Oceanport, noted that the racetrack’s sports betting operation would be run by the noted William Hill Agency and would be self-regulated.
“The doesn’t mean it will be the wild west of sports betting in New Jersey,” Riccio said.
Paul Clement, the former U.S. solicitor general representing the sports leagues, argued that New Jersey’s latest law is still in violation of the federal ban — but the state could decriminalize sports betting to allow anyone making a wager under $1,000 among personal friends.
“We’re really worried about commercial establishments,” Clement said. “No level of government is going to stop a couple of 14-year-olds having a friendly wager on the outcome of couple of games.”
Paul Fishman, the New Jersey U.S. attorney who is representing the federal Justice Department in the case, said there is a “variety of things New Jersey can do to tinker with its sports gambling” — such as the decriminalization Clement suggested.
The judges, however, wondered how that would help New Jersey accomplish its goal.
“It wouldn’t,” Fishman said. “Congress didn’t want a Good Housekeeping seal of approval on gambling operations.”
It may be three to six months before the judges rule in the case.
A New Jersey victory could have national implications. Experts say other states could follow with similar moves to legalize sports betting.
State Sen. Raymond Lesniak (D-Union), the lawmaker who has led the New Jersey’s fight, said he’s optimistic after Wednesday’s arguments that the state might finally win.
“I believe it’s going to be a squeaker, but I believe (a victory) is the end result,” said Lesniak, a likely Democratic candidate for governor next year.
Lesniak said if the state loses, he does not expect an appeal to the U.S. Supreme Court.
“I think this is the end of the line,” he said. “This is the whole ball of wax right here.”
Daniel Wallach, a sports gaming expert, said the fact that the Third Circuit agreed to the re-hearing was a good sign for sports betting proponents. But after hearing Wednesday’s arguments, he doesn’t think enough judges will side with New Jersey.
“You could just see it on the faces of some of the judges,” said Wallach, a gaming and sports law attorney with Becker & Poliakoff in Fort Lauderdale, Fla. “They were not buying what the state was selling.”
Of course, there is always the chance that Congress could repeal the ban. U.S. Reps. Frank LoBiondo (R-2nd Dist.) and Frank Pallone Jr. (D-6th Dist.), who have lobbied for such a move, released a statement Wednesday repeating that the ban is “unconstitutional and arbitrary.”
“We are hopeful that today’s hearing signals the start of a new era in our state, and we intend to see this fight through to the end,” the congressmen said in a joint statement.