New Jersey's admittedly long-shot bid to legalize Las Vegas-style sports betting was rejected Tuesday by a federal appeals court.
In a 2-1 vote, the 3rd U.S. Circuit Court of Appeals in Philadelphia ruled that New Jersey's proposed law is illegal because it conflicts with a federal ban on sports betting in all but four states.
New Jersey voters overwhelmingly approved a referendum in 2011 to legalize sports betting at the Atlantic City casinos and state horse-racing tracks. However, the NCAA and the leagues representing professional football, baseball, basketball and hockey filed a lawsuit to block it. They claimed sports betting in New Jersey could lead to cheating scandals that would harm the integrity of college and professional sports.
The appeals ruling represented the second straight court decision against New Jersey. In March, a federal trial court stopped the state from implementing sports betting, saying that New Jersey should instead turn to Congress for legislation to legalize the activity.
Despite Tuesday's setback, one state lawmaker seized on the fact that one of the appeals judges seemed to favor sports betting.
"We will continue to fight this injustice by either appealing to the U.S. Supreme Court or to the entire court of appeals," said Sen. Raymond Lesniak, D-Union, an advocate for sports betting. "For the first time, a judge has ruled in our favor. That gives us hope that others, either Supreme Court justices or the entire court of appeals for our district, will allow New Jersey to enjoy the economic benefits of sports betting that are now reserved exclusively for Nevada."
Sen. Jim Whelan, D-Atlantic, who represents Atlantic City, agreed with Lesniak that the state should pursue another appeal. At the same time, Whelan acknowledged the difficulties of securing a favorable court ruling.
"It's disappointing, but not surprising. It was a long shot," he said of Tuesday's decision.
Whelan maintained that sports betting would not be a "panacea" for Atlantic City's casino industry. Even if New Jersey were to get it, sports betting likely would spread to other states, depriving Atlantic City of any true competitive advantage, he said.
"The reality is, if we get it, everybody else will get it. They're not going to change the law just for Atlantic City to have it," Whelan said. "It's better to have it than not to have it. But I don't think it's going to give us the tremendous advantage that some people are anticipating."
The courts have repeatedly cited the Professional and Amateur Sports Protection Act, or PASPA, to block New Jersey. The federal law bans all states except for Nevada, Delaware, Montana and Oregon from having sports betting. Those four states had a form of sports betting on the books before the ban took effect in 1992. The appeals court relied on PASPA to support its ruling that sports betting in New Jersey would be illegal.
"New Jersey's sports wagering law conflicts with PASPA and, under our Constitution, must yield," the court wrote in a majority opinion.
In a dissenting opinion, Judge Thomas I. Vanaskie disagreed with his two colleagues' conclusions on PASPA.
"I respectfully dissent from that part of the majority's opinion that upholds PASPA as a constitutional exercise of congressional authority," Vanaskie wrote.
New Jersey contends that PASPA essentially has driven sports betting underground, creating a $500 billion-per-year illegal enterprise except in the states where sports wagering is allowed. In court papers, New Jersey attorneys noted that even President Barack Obama filled out a "March Madness" bracket to bet on basketball games during the NCAA tournament.
New Jersey's law would allow the state to regulate and tax sports wagering instead of losing millions of dollars to criminal enterprise, the state had contended. Lesniak repeated that argument in response to Tuesday's appeals ruling.
"The only other beneficiaries of the court's ruling today are sports-betting rings run by organized crime and the off-shore Internet sites for sports betting," Lesniak said.
Atlantic City casino executives said they would like to have sports betting to give them another attraction for their customers. But they stopped short of characterizing the appeals ruling as a major setback for the city.
"I think it's disappointing for the citizens of New Jersey, who voted overwhelmingly for sports betting," said Tony Rodio, president and chief executive officer of Tropicana Casino and Resort. "But I don't think it dramatically changes anything."
Joe Lupo, senior vice president of operations for Borgata Hotel Casino & Spa, believes sports betting in New Jersey would be comparable to sports wagering in Las Vegas. Lupo said sports betting could have been a catalyst for even more tourism to the city, especially during major sports events.
"It would have created a lot of visitation on big weekends, like March Madness weekend and Super Bowl weekend," Lupo said. "That creates more restaurant business, taxis, rooms, beverage. It's more than just about sports wagering."
Rodio agreed with Lupo on the overall benefits of sports betting for Atlantic City.
"I think that was the thing we were all hoping for. It's all the incremental visitation stemming from sports betting," Rodio said.
Lesniak pointed to Las Vegas to illustrate how he believes sports betting could boost Atlantic City.
"Las Vegas is jammed for Super Bowl week and for the NCAA's Final Four weekend, while Atlantic City is a ghost town," he said.
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