Court Ruling is Set Back in Effort to Stop Illegal Gaming

Efforts to open legal sports books outside Nevada suffered a major setback Tuesday when a federal appeals court denied New Jersey’s attempt to bring betting on athletics to its casinos and racetracks.

Still, the possibility remains that sports books will eventually spread to other states — just on a longer timeline than if New Jersey had been victorious this week.

The 3rd U.S. Circuit Court of Appeals held that New Jersey violated the Professional and Amateur Sports Protection Act in its latest stab at allowing sports books within its borders. The law restricts sports betting to a handful of states, and although limited forms of wagering are allowed elsewhere, Nevada is the only one where patrons can bet on individual games.

Daniel Wallach, a Florida-based attorney who has closely followed the case, said the court’s decision hampered the nationwide expansion of sports betting, which was gaining traction lately.

“It slows down the momentum considerably,” he said. “It goes from a boil to a simmer.”

Wallach predicted that if New Jersey had won, sports betting would have become legal across the nation in less than two years. States within the 3rd Circuit’s jurisdiction would have passed laws to allow sports betting, he said, and others would have likely followed New Jersey’s lead as well.

The major sports leagues — which faced off against New Jersey in the case — also would have been motivated to push Congress for federal regulation of sports betting, Wallach said. That’s because New Jersey was trying to partially repeal its prohibitions on sports betting without actively regulating the industry. Leagues would not want to see legal wagering spread unregulated, he said.

Now, sports books will probably remain confined to Nevada until and unless Congress takes action. Wallach does not see that happening until the leagues themselves agree to make it a priority — and they’re in no rush to do so after this week’s decision.

Tuesday’s decision was decided by a 2-1 majority of a three-judge panel, so New Jersey can still try appealing the case to the full appellate court or possibly even the Supreme Court. While Wallach thinks the state has a chance, he said it would face an “uphill climb” getting the court to grant such a rare hearing.

Nonetheless, William Hill U.S. CEO Joe Asher, whose company has more than 100 sports betting locations in Nevada, remains confident that sports books are on their way to other states. Asher said in a statement that “this matter is far from over” and that he is sure sports betting will launch in New Jersey.

“It’s a matter of when, not if,” he said in the statement. “There’s a massive illegal sports betting market that exists, not only in New Jersey, but all across the country. That serves to benefit only the criminals who operate it. The sooner that market comes out of the shadows and into the sunlight, the better off we will be.”

William Hill has planned to offer sports betting at New Jersey’s Monmouth Park racetrack if such wagers become legal there. Asher has also previously said that the industry’s expansion to other states would not seriously harm it in Nevada.

Like Asher, American Gaming Association President Geoff Freeman pointed to the dangers of illegal sports wagering. Responding to the New Jersey decision in a statement Tuesday, Freeman said the court’s ruling “encourages deeper examination about the best path forward on this issue.”

“With Americans betting at least $140 billion on sports illegally each year, it’s clear that current law is not achieving its intended result,” Freeman said in the statement. “As the AGA leads an industry-wide task force to study sports betting, we will assess the implications of the court’s decision as the gaming industry continues to develop innovative ways to provide products and experiences that meet consumers’ demands.”

The gaming association’s task force may also have something to say about daily fantasy sports, which has become popular across the country amid debate about whether it constitutes gambling. Daily fantasy providers offer cash prizes but the website of DraftKings, for example, contends that “Daily fantasy sports is a skill game and is not considered gambling.”

Wallach said the daily fantasy sports industry is a “major winner” of the New Jersey decision because it is “the only game in town,” legally speaking, for people who live in states without sports books.

“It has a monopoly on legal sports wagering outside Nevada,” he said.

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