Should the federal government be able to prohibit states from legalizing sports betting?
On June 26, 2017, the U.S. Supreme Court agreed to decide that question in its next term. The eventual answer could radically change the availability of sports betting platforms in the U.S. and force the four major U.S. professional sports leagues and the National Collegiate Athletic Association (NCAA) to reconsider the appropriate forum for wagering on their games.
The Supreme will review a 2016 decision issued by the Third Circuit Court of Appeals invalidating sports betting in New Jersey based on existing federal law. The controversy orginates with a law passed in New Jersey in 2014 that would enable New Jersey casinos and racetracks to offer sports wagering - just like casinos in Las Vegas. Those wagers would then be subject to New Jersey taxes, which New Jersey's Governor Christie maintains would generate millions of dollars in revenues for the Garden State.
The 2014 New Jersey law became the target of a lawsuit filed by the NCAA and the four major U.S. professional sports leagues (the NFL, NBA, MLB, and NHL) which collectively argued that: (i) the law is incompatible with the federal Professional and Amateur Sports Protection Act of 1992 (PASPA); and (ii) expanding legal sports betting would damage the integrity of their games and lead to more game fixing.
PASPA prohibits 46 states from licensing, sponsoring or authorizing sports betting. (Nevada, Delaware, Oregon and Montana were exempt from PASPA since they had already adopted sports betting practices in 1991.) The Justice Department later intervened in the lawsuit filed by the leagues and NCAA against New Jersey. The plaintiffs argued that expanding legal sports betting would damage the integrity of their games and lead to more game fixing.
New Jersey lost the battle before the Third Circuit in a 10-2 decision holding that sports betting is "clearly and completely legally prohibited" under PASPA. Had the Supreme Court refused to hear the case then New Jersey would have no further recourse.
If New Jersey persuades the Supreme Court to overturn the Third Circuit's decision it may open the flood gates for all states to enact similar sports betting laws.