N.J. sports betting case will go before U.S. appeals court again
TRENTON — New Jersey's years-long battle to legalize sports betting will get another day in court — and officials say the outlook for the state is suddenly bright.
Nearly two months after a three-judge U.S. Third Circuit Court of Appeals panel rejected the state's latest bid to legalize sports wagering at casinos and racetracks, the full Third Circuit on Wednesday granted a request by Gov. Chris Christie's administration to re-hear the case.
That means August's 2-1 decision is vacated and a larger panel of judges will now consider the the matter. A date for the hearing has not been set.
It marks the first time that New Jersey has won a legal victory in the four-year, multimillion-dollar saga. And state Sen. Raymond Lesniak (D-Union), the lawmaker who has driven the fight, is hopeful the full Third Circuit will side with the state in the end.
"I think it's unlikely the court would have vacated the previous ruling only to reinstate it," Lesniak said. "I'm very optimistic my Super Bowl will have sports betting in Atlantic City and at Monmouth Racetrack."
"I'm encouraging people to reserve rooms in Atlantic now," he added.
Daniel Wallach, a sports gaming expert, said the state is "not there yet."
But this is a major, significant step for New Jersey," said Wallach, a gaming and sports law attorney with Becker & Poliakoff in Fort Lauderdale, Fla. "The pendulum has swung the other way. New Jersey needs only to win once. I believe they are on the path to victory."
New Jersey has been trying to legalize sports betting to give a boost to Atlantic City and the state's horse-racing industry, both of which have been struggling financially.
But the state has been challenged every step of the way by the NCAA and four professional sports leagues — the NFL, NBA, MLB, and NHL — who say New Jersey's effort threatens to damage the integrity of their games and violates a 1992 federal ban on sports betting in all but four states.
Federal courts have sided with the leagues and against the state on every occasion, including two decisions by Third Circuit panels.
New Jersey has spent millions of dollars in legal fees on the case, but state officials argue the Garden State loses millions each year to illegal sports betting operations.
Tuesday's victory comes as a number of other states push for legal sports betting. Indiana, Minnesota, New York, South Carolina, and Texas have all introduced measures this year to legalize such wagering.
Wallach said a New Jersey victory "will potentially open the floodgates to nationwide sports betting."
He said he experts neighboring Pennsylvania and Delaware would likely act "swiftly" to pass similar legislation — and that it could also force Congress' hand to lift the national ban.
Wednesday's news also comes as Christie fights off low poll numbers in the race for the 2016 Republican nomination for president.
"We're gratified that the court will consider our challenge to this incorrect and unconstitutional application of federal law, and we hope the court will eventually agree with what the people of New Jersey already know: It makes no sense to keep the sports wagering industry in the shadows, where it already goes on each and every day," Brian Murray, a spokesman for Christie's office, said in a statement.
State Senate President Stephen Sweeney (D-Gloucester) said sports betting "could be an economic boost for New Jersey, creating jobs and generating economic activity for years to come."
"It could also position New Jersey to be a leader in a new sector of the gaming industry and be an important part of the state's future," Sweeney said in a statement.
New Jersey's battle began in 2001, when residents voted to legalizing sports betting. Christie signed it into law a year later.
But the leagues sued, and both a federal court and the Third Circuit appeals court sided with them in 2013. The U.S. Supreme Court declined to hear the state's case.
Still, Lesniak believed he discovered a loophole to get around the ban: allowing private casinos and racetracks to offer sports betting as long as the state didn't sponsor or regulate it. He introduced the bill last year, the state Legislature fast-tracked it, and Christie signed it into law in October.
But the leagues sued again, saying New Jersey was still breaking the ban. In November, a federal judge ruled in favor of the leagues again. The Third Circuit followed suit last month, voting 2-1 that the state can't use "clever drafting" to get around the ban.
Still, Judge Julio Fuentes — who ruled against New Jersey in 2013 — was the only member of the panel to favor the state this time, saying that nothing in the ban prevents private companies from setting up sports wagering.
Christie's administration, the state Legislature, and the New Jersey Thoroughbred Horsemen's Association responded by asking for an "en banc" review — in which at least 12 judges in the Third Circuit would re-hear the case.
Experts say en banc reviews are rare, but New Jersey had a strong case.
State Sen. Joe Kyrillos (R-Monmouth) — whose district includes Oceanport, home to Monmouth Park horse-racing track — said Wednesday's news puts New Jersey "back on the right course to create opportunities here, improve the quality of life, and enhance the state's economy and job creation and retention at Monmouth Park and Atlantic City."
Two members of New Jersey's congressional delegation who ave fought for sports betting — U.S. Reps. Frank LoBiondo (R-2nd Dist.) and Frank Pallone (D-6th Dist.) — issued a joint statement Wednesday.
"Not only do the citizens of New Jersey overwhelmingly support legalized sports betting and the revenue that would come to the state with it, but existing federal law picks winners and losers, and is unconstitutional and arbitrary," the congressmen said.
If it loses in the re-hearing, the state could petition the U.S. Supreme Court to hear the matter. But Lesniak said such a petition would unlikely be granted.
"This is really the last hurrah for us," the state senator said. "I expect it to be a big hurrah."