New Jersey's Push To Legalize Sports Betting Could Pay Off For Ailing U.S. States
New Jersey State Sen. Raymond Lesniak (D) apparently likes to bet on the underdog. He compares his fight to legalize sports-wagering to David and Goliath. "We all know how that one turned out," he said.
Lesniak hopes to parlay the state's recent referendum approving gambling with a federal court rematch to repeal the U.S. ban on sports betting. And he's launching another slingshot round on Thursday: his committee plans to present a plan to the New Jersey Senate for how game wagering could pay off for the state.
A win for New Jersey would be profit-gushing good news for other revenue-starved states willing to put their money down on bookmaking. Americans bet $100 billion a year on sporting events, according to the UCLA Gambling Studies Program. Much of that now fills the coffers of illegal Internet sites and organized crime, Lesniak said. In a lingering economic slump, the temptation to grab a legal piece of the action could turn a few states into bona fide bookies.
Several states will be watching from the sidelines. Last year, the Missouri House of Representatives urged Congress to repeal the sports-gambling ban. In California, State Sen. Roderick Wright (D), chair of the state's gambling committee, had considered asking fellow lawmakers to join New Jersey's challenge. Thirty-seven states now have casinos, a natural outlet for sports betting.
The 1992 Professional and Amateur Sports Protection Act prohibits wagering on games in all but four states: Nevada, Delaware, Oregon and Montana. Those were grandfathered in because they had operated some form of sports gambling before the law's passage. And that's where Lesniak and other gaming advocates see an opening to declare the law unconstitutional: If them, why not us?
Nevada is currently where most of the action is. The state fields $2.6 billion in legal sports bets annually -- and around $90 million on the Super Bowl alone.
Lesniak and other advocates say that all they want is a level playing field. "On Super Bowl week or Final Four week, you can't get a room in Vegas, and Atlantic City is a ghost town," he said.
With football nearing its postseason and pro basketball ready to reboot, Americans typically accelerate their betting. But New Jersey will likely wait to lock horns with the Justice Department until next year, after the New Jersey state attorney general files an action in federal district court to try to overturn the law. Lesniak expects that to happen soon.
Attorney Stephen Schrier, head of the gaming practice at law firm Blank Rome and a former regulator for the New Jersey Division of Gaming Enforcement, said the state has more than a Hail Mary's chance. The Internet wasn't around when the law was enacted, and the proliferation of online gambling could force the court to rethink its stance, said Schrier, who is not involved with this legislation.
Schrier said a victory hinges on two keys: convincing the court that the Justice Department is out of bounds in enforcing the commerce clause that permits Congress to regulate activities between states; and that the congressional ban defies the 10th amendment, which says that states have a right to oversee their own revenue-raising. States approve their own casinos and
racetracks, Schrier pointed out. Why not sports gambling?
Major sports such as the National Football League vigorously testify against sports-betting when legal challenges arise. "We don't believe that more gambling on our players and games is healthy for the sport," NFL spokesman Brian McCarthy said. "Our interest is in not having our players, referees and games used as gambling vehicles."
Proponents say that gambling is happening anyway, so it might as well be legitimized. The NFL is hypocritical, Lesniak said, because much of its popularity derives from its appeal to gamblers. Newspapers and websites regularly publish the odds on games, and broadcasters openly discuss the point spreads. "The likelihood of some gambler trying to fix games is much greater when you're dealing with unregulated betting, which is what we have in the other 46 states," said New Jersey State Sen. Jim Whelan, chair of the state's Wagering committee.
Victory is far from a sure thing. A federal judge recently threw out a suit against the Justice Department brought by Lesniak and other lawmakers, saying the state itself had to file the action. But with his state facing a $10 billion deficit, Lesniak is determined to follow through on a venture that he says will generate hundreds of millions of dollars in revenue and create more jobs at casinos and racetracks. Republican Governor Chris Christie has said he would approve Lesniak's bill.
Delaware re-enacted sports betting on pro football in 2009 to help offset an $800 million deficit. The betting at the state's three racetracks raised $11 million in 2009 and $13 million in 2010, according to the Baltimore Sun.
The state recently sought to expand its sports-betting from parlay cards -- in which bettors must beat the point spread in at least three games -- to single-game bets in a bid to drastically increase revenue. The U.S. Supreme Court said no, citing the 1992 law.
Anti-gambling forces warn of the societal cost of betting in any form. Americans spent $92 billion gambling in 2007, according to Sam Skolnik, author of "High Stakes: The Rising Cost of America's Gambling Addiction." Legislators think gambling is a money-maker without consequences, Skolnik told AOL'sDailyFinance website, but they are actually creating a new class of addicts.
Any moral argument is moot, said Avery Cardoza, a well-known professional gambler, publisher and author of "Lost in Las Vegas." "Sports betting is here to stay. It's a fait accompli."