HomePublicationsNewsletter ArchiveNewslettersVolume 20Issue 33Court Rejects New Jersey Sports Wagering Law

On Friday, November 21, 2014, the U.S. District Court for the District of New Jersey (“District Court”) held that the recent New Jersey law that partially repealed the state’s sports wagering ban was preempted by the Professional and Amateur Sports Protection Act (“PASPA”), the federal law banning sports wagering. In its opinion, the District Court stated that “[w]hile novel, the recent legislation conflicts with PASPA and thus must yield to federal law,” held that the New Jersey law was therefore invalid, and granted a permanent injunction to giving effect to the New Jersey law. The state has appealed the decision to the U.S. Third Circuit Court.

The New Jersey statute, signed into law on October 17, 2014 by New Jersey Governor Chris Christie, would have allowed for sports wagering to occur in the state’s casinos and horse racetracks. It would have done so by repealing the state’s gaming licensing and authorization laws as it relates to sports wagers placed in a casino or horse racetrack by individuals who are 21 years or older.

The law was premised on the language of PASPA itself, which makes it illegal for a government entity “to sponsor, operate, advertise, promote, license, or authorize by law or compact” gambling based on sporting events or for individuals to do the same in accordance with a state law or compact. (28 USC §3702). The state claimed that since its law merely decriminalizes sports wagering in specific instances, there is no government authorization or regulation of the activity and thus no violation of PASPA. In addition to the statute, the state attorney general issued a Law Enforcement Directive and Formal Opinion on September 8, 2104 directing law enforcement officials to allow sports wagering in accordance with the law.

The law did, however, limit sports wagering to specific locations and prohibited some forms of sports wagering. For instance, sports wagering would not be prohibited in casinos and horse racetracks (including former tracks that were in operation within 15 years of the law’s effective date), but would remain illegal in nearly all other locations. In addition, wagers could not be placed on college sporting events occurring in New Jersey or involving a New Jersey college team, regardless of the location of the event.

Shortly after passage of the New Jersey law, the NCAA, NHL, NBA, MLB, and NFL filed a complaint in the District Court seeking a declaratory ruling that the law was in violation of PASPA and seeking an injunction against its implementation. The leagues argued that that

“[w]hile styled as a “repeal,” [the New Jersey law] is nothing more than a de facto authorization of sports gambling” and that New Jersey’s “attempts to authorize sports gambling is just as unlawful as its previous attempts.” (National Collegiate Athletic Association, et. al. v. Christopher J. Christie, et. al., Case No: 14-6450, Complaint, Par. 5, 9). Furthermore, the leagues claimed that by only allowing sports wagering in licensed and regulated gaming establishments, the law in fact regulates gambling activity despite claiming the opposite.

The District Court largely agreed with the leagues’ arguments, holding that

In this Court’s view,…PASPA preempts the type of partial repeal New Jersey is attempting to accomplish in the 2014 Law, by allowing some, but not all, types of sports wagering in New Jersey, thus creating a label of legitimacy for sports wagering pursuant to a state scheme….New Jersey’s attempt to allow sport wagering in only a limited number of places, most of which currently house some type of highly regulated gambling by the State, coupled with New Jersey’s history of attempts to circumvent PASPA, leads to the conclusion that the 2014 Law is in direct conflict with the purpose and goal of PASPA and is therefore preempted.

(National Collegiate, supra, Opinion, p.24, 26 (November 21, 2014) (emphasis in original)). Importantly, the District Court Opinion noted that the Congressional intent in passing PASPA was to prevent a widespread authorization of sports wagering at the state-level and that New Jersey’s law violated the spirit of PASPA despite the state’s claims that there was no specific authorization of the activity.

On November 21, 2014, the date of the District Court’s Opinion, New Jersey filed a Notice of Appeal noting that the it would be appealing the case to the US Third Circuit Court. The Third Circuit has yet to schedule oral arguments for the case.

 

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