Legal History of Online Betting in New Jersey

New JerseyWhen one thinks of sports gambling, sports books, and wagering, Las Vegas comes to mind first and foremost. However, there is now an east coast rival to the sports wagering capital in Nevada—welcome to the world of sports betting, New Jersey!

Live Online Sportsbooks

1. DraftKings Sportsbook - Mobile App and website is live! You can bet now.
2. Sugarhouse Sportsbook - Mobile App and website is live! You can bet now.
3. FanDuel Sportsbook - Mobile App and website is live! You can bet now.

Land Based Sportsbooks: Online & Mobile Apps

4. Borgata: sportsbook has launched with beta Mobile App
5. Bally’s: sportsbook available but the online sports betting is not yet live
6. Golden Nugget: sportsbook available but the online sports betting is not yet live
7. Harrah’s: sportsbook has launched but the online sports betting has not yet live
8. Monmouth Park: sportsbook has launched but the online sports betting is not yet live
9. Ocean Resort Casino: sportsbook available, William Hill is beta mobile app
10. Resorts AC: sportsbook DraftKings Sportsbook is the online website and mobile app arm.
11. The Meadowlands: sportsbook has launched, FanDuel Sportsbook is the online website and mobile app arm.

New Jersey's Long History with Gambling

The state of New Jersey has had a long history of gambling and housing casinos since the late 1970s, primarily in Atlantic City. However, it was not until 2012 that former New Jersey Governor Chris Christie signed legislation that would allow the casinos in New Jersey to offer sports gambling on professional and collegiate sporting events. This legislation was challenged by all of the major sporting association including the National Basketball Association (NBA), Major League Baseball (MLB), the National Football League (NFL), the National Hockey League (NHL), and the National Collegiate Athletic Association (NCAA). So on what grounds did these organizations challenge the New Jersey legislation? The Professional and Amateur Sports Protection Act of 1992 (PASPA). A quick background on PASPA—it was passed by the US Senate on June 2, 1992, and then by the House of Representatives on October 6, 1992. It was signed into law on October 28, 1992, by President George Bush and then went into effect on January 1, 1993. So how did Nevada find itself exempt from PASPA? Well, it wasn’t only Nevada that was exempt. The states of Delaware, Oregon, and Montana were also all exempt as they were grandfathered into PASPA since they already had sports betting laws on the books. The only thing that sets Nevada apart from these other three states is the ability to wager and bet on the outcome of single-game sports. The three other states allowed sports gambling through parlay betting or other various types of sports betting formats. Alright, back to New Jersey sports betting. In an effort to enjoin the legislation, the NCAA and four other professional sports leagues sued under PASPA, 28 USC section 3702 (1), which prohibits states from authorizing or licensing sports gambling. In 2012, the district court held that PASPA was constitutional and did not violate the anti-commandeering doctrine under the Tenth Amendment. This decision was affirmed by the Third Circuit and the Supreme Court (SCOTUS) later denied Governor Christie’s petition for writ of certiorari (basically, asking SCOTUS to review the decision of the lower court). The Third Circuit held this decision by drawing distinction between “repeals” and “affirmative authorizations.” This is an important distinction for the basis on which New Jersey passes their newest bill. This brings us to the year 2014. New Jersey has now passed SB 2460. This bill repealed several longstanding state prohibitions on sports gambling rather than affirmatively authorizing sports gambling, i.e. theoretically finding a loophole and work-around from the basis of denial from the original Third Circuit decision. Once again, after review the Third Circuit came to the same conclusion as back in 2012. However, this time around, SCOTUS did grant certiorari and agreed to hear the case. It was argued that the commandeering of requiring States to keep bans on their books was a violation of the Tenth Amendment. In a 6-3 decision, SCOTUS reversed the Third Circuit’s decision stating that: “The legalization of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not. PASPA ‘regulates state governments’ regulations’ of their citizens. The Constitution gives Congress no such power.”

This excerpt was taken from the majority decision that was authored by Justice Alito (ironically, or not-so-ironically is a New Jersey native). Dissenting from the majority were Justices Ginsburg, Breyer, and Sotomayor stating that “the court wields an ax…instead of using a scalpel to trim the statute” referring to the comprehensive reversal and declaration of the law’s unconstitutionality. The law was signed into law by Phil Murphy who also had the privilege of placing the first sports bets in the state. What did he bet on you ask? He put a few bucks down on Germany to win the World Cup and for the New Jersey to win the 2019 Stanley Cup. He’s 0-1 but only time will tell if the Devils, who made the playoffs this last year as a wild card team but fell to the Tampa Bay Lightning, will be able to get the Governor a nice cash out next summer.

With this decision, the sports-betting floodgates have opened in New Jersey and are on the brink of bursting in a number of other states including California, Washington, Idaho, Arizona, Wyoming, North Dakota, Oklahoma, Louisiana, Iowa, Missouri, Illinois, Maine, Vermont, Kentucky, North Carolina, Mississippi, Rhode Island, and Washington D.C. As I am an avid sports fan, unfortunately my home state of Texas is not ANYWHERE close to legalizing sports gambling. FanDuel still doesn’t operate paid contests in Texas so legalizing any type of sports gambling is nowhere near being on the horizon. However, New Jersey is developing mobile applications that allow online sports gambling to their sportsbooks and casinos. So, can I be relaxing in my living room on a Sunday in Dallas watching the Cowboys go 8-8 again, miss the playoffs, and still be able to use my phone to place bets online to a New Jersey sportsbook? Good question. Let’s dive into it.

Who Can Gamble Under New Jersey Betting Laws?

In order to use the applications to bet online, you must be physically present in the state of New Jersey. These betting apps will use sophisticated geolocation that will only allow betting from within New Jersey state lines. Of course, we are going to have those select people that attempt to “jailbreak” the app in order to place bets, but for us law-abiding citizens outside of New Jersey—we are going to have to book a weekend trip to Atlantic City to enjoy the benefits of the sports betting applications. Oh, before you ask, if you aren’t 21 years of age, you cannot bet or gamble using these applications even if you are within New Jersey state lines. You’re going to want that money in your account anyway once you start making payments on those student loans, anyway.

So let’s say you’re an avid sports fan and book a trip to New Jersey for the weekend and want to place some bets. Where do you go? Which sportsbook or casino do you choose? I’ll do a run through of the casinos currently offering sports betting as of August 2018. These are sure to be rapidly changing as some of the large casino and entertainment companies begin opening sportsbooks or moving some business from Nevada to New Jersey. According to the Legal Sports Report, here is the current state of the operating sportsbooks in New Jersey.

There are several other casinos and companies getting in on the sports betting landscape in New Jersey and should be making giant leaps towards that over the next year.

Who Benefits from the Sports Betting Laws

So just how much money has New Jersey made since it legalized sports betting? According to Wayne Parry of the Associated Press, two casinos and a race track took in $16.4 million in sports bet during the first two weeks that wagering has been legal in New Jersey. That $16.4 million produced a gross revenue for those three venues (Monmouth Park, Ocean Resort Casino, and Borgata) of about $3.5 million. Not bad for a two-week period. It wasn’t bad for the state of New Jersey either. Since the winnings in New Jersey are taxed, the state made almost $300,000. Where those dollars go has yet to be seen but I would be surprised if a large percentage were to go to schools and public education in order to try to off-set any negative opinion or viewpoint that usually accompany sports betting. It does look like both the state and the citizens of New Jersey both stand to benefit from the new sports betting laws.
Finally, the future of sports betting in New Jersey looks strong as evidenced by the quick adaptation and implementation following the SCOTUS decision. Possibly more importantly, the strides made by New Jersey will also influence and provide an illustrative path for sports betting implementation in other states.

References:
https://www.usatoday.com/story/news/politics/2018/05/14/supreme-court-strikes-down-ban-sports-betting-new-jersey/1053022001/
https://www.supremecourt.gov/opinions/17pdf/16-476_dbfi.pdf

  
Native Texan and graduate of Texas Tech University School of Law, and Harvard Business School. Quezada is currently an Associate Attorney with a law firm in Dallas, Texas, where he practices corporate immigration and represents some of the largest technology companies in Silicon Valley. Aside from participating in multiple fantasy football leagues, he is a regular DraftKings DFS player and also wagers on NFL, NCAA, NBA, and PGA Tour events. Beyond sports, Quezada also writes in the arenas of law, politics, and economics.