Waiting on the NJ Sports Betting Decision

The future of legal sports betting in this country rests in the hands of three robed judges from the U.S. Court of Appeals for the Third Circuit. In a matter of weeks, perhaps even this week, the Third Circuit will decide the fate of New Jersey’s plan to legalize sports betting. This decision—regardless of the result—will have far-reaching consequences. If New Jersey prevails, sports betting could become a reality at the state’s licensed casinos and racetracks in time for the beginning of the 2015 NFL season. But the impact of the court's decision will extend far beyond New Jersey’s borders. Other states (most notably, Pennsylvania and Delaware) will likely follow New Jersey’s “court-blessed” blueprint and enact their own sports wagering laws, in reliance on the Third Circuit’s decision. Looking beyond the Third Circuit territory, we could see as many as 10 to 20 states pass sports wagering laws modeled after New Jersey’s version within a matter of just a few months following a New Jersey victory. Several states—Minnesota, Indiana, South Carolina, and New York, to name just a few—are not even waiting. The legislatures of those states have already proposed bills legalizing single-game sports wagering. While these bills are only in a preliminary stage at this juncture, expect them to be fast-tracked if New Jersey wins.

Further, a victory by New Jersey will undoubtedly—and perhaps quickly—lead to new federal legislation that would expand legalized sports betting beyond Nevada. This is because New Jersey’s version of legal sports betting would be “unregulated" (meaning no governmental oversight). While NBA Commissioner Adam Silver has come out in favor of legal sports betting, he maintains that it needs to be “regulated” in order to preserve the integrity of the league’s games. A New Jersey victory would open the door to “unregulated” sports betting, a prospect that the NBA, the other sports leagues, and Congress are desperate to avoid. But the leagues and Congress have offered no definitive timetable for federal legislative reform, or any guarantees. Most observers believe that there is little chance of any Congressional action before 2017 (especially with a Presidential election next year). A New Jersey victory would likely change all that, and accelerate the timetable for federal legalization to 2016 (or perhaps this year). But even if New Jersey were to lose the appeal, the eventual Third Circuit opinion will likely include language that provides New Jersey officials with some guidance for future legislative efforts. New Jersey would then be poised to follow such a “roadmap” and propose new legislation right away. Thus, regardless of the result, the Third Circuit’s decision will likely determine the “timing” of when sports wagering becomes legal in the United States.