After election victory, sports-betting backers push ahead

John Reilly, 49, of Woodbury Heights, N.J., inside the Long Bar at the Borgata on Saturday. (Credit: Tom Briglia)
John Reilly, 49, of Woodbury Heights, N.J., inside the Long Bar at the Borgata on Saturday. (Credit: Tom Briglia)
Posted: November 14, 2011

ATLANTIC CITY - Even though it's been a frustrating season for the Eagles, Justin Hardwick always puts his money on them on game day.

So far, he's done it figuratively.

But "if Atlantic City gets sports betting, I'll be placing a bet on them for sure," said Hardwick, 26, a salesman from Smithfield, Va., who spent the weekend here at the Tropicana for a bachelor party. "As a sports fan, it gives you another incentive to watch the game . . . by having a stake in it."

A referendum question that passed Tuesday to amend New Jersey's constitution to allow wagering on sports at the state's casinos and racetracks is just the first step of a potentially long legal fight before Hardwick's wish is fulfilled.

Legal experts on gaming agree, however, that it's a significant step, and if the Garden State prevails in overturning a federal law standing in its way, it also could open the door for other states.

New Jersey's biggest obstacle is the Professional and Amateur Sports Protection Act, which bars sports betting in all but four states: Nevada, Oregon, Montana, and Delaware. Those four had some form of sports wagering before Congress passed PASPA in 1992. Only Nevada has a true sports book.

Other states were given 18 months to enact sports-betting legislation and have it grandfathered.

New Jersey failed to do so when a bill never made it out of committee in 1993 under then-Republican Assembly Speaker Chuck Haytaian. Republicans feared having sports betting on the ballot during the governor's race that year would increase turnout among Democrats.

I. Nelson Rose, a national authority on gambling law, says a lot has changed since PASPA was enacted.

In 1992, there were eight states with commercial casinos. Today, there are 22, and all but two states - Utah and Hawaii - have some form of gambling or a lottery.

"There has been an explosion in other forms of legal gambling, what I call the Third Wave, since this is the third time it's swept America," said Rose, a professor at Whittier Law School in Costa Mesa, Calif., who publishes a legal blog.

Rose said Alaska, North Dakota, Wyoming, New Mexico, and Washington also offer some form of sports betting, ranging from sports pools to pari-mutuel wagering on bicycle races, after they grandfathered it in in 1992.

"That alone makes it difficult to argue PASPA is rationally related to any legitimate public purpose," he said. "I do think if . . . the courts rule the federal PASPA unconstitutional, that Michigan and other states will follow" New Jersey.

Attorney Lloyd D. Levenson, chief executive officer of Cooper Levenson in Atlantic City, said New Jersey's chances of prevailing were "excellent."

"It's not going to be tomorrow, but it's going to come," he said. "Now that gaming is everywhere, the concept that a variation of gaming - sports betting - can only take place in four states . . . is relatively ludicrous."

For this ailing casino town, sports betting is about survival and bringing business to the Shore resort on weekends beyond the summer months.

"Sports wagering could act as a catalyst for Atlantic City by broadening the tourist base," said Las Vegas-based gaming analyst Jacob Oberman of CBRE. "Las Vegas has some of its highest room rates and gaming revenue of the year during Super Bowl weekend and the first weekend of March Madness."

But changing a federal law can be daunting, said lawyer Stephen Schrier, head of the gaming practice at Blank Rome L.L.P. in Princeton.

"I see many months and perhaps years, before sports betting will be legalized in New Jersey," said Schrier, a former deputy attorney general at the state Division of Gaming Enforcement. "A concentrated, sophisticated legal argument needs to be pursued to overturn existing law."

Supporters of New Jersey's bid argue that PASPA is not only outdated but discriminatory. They say it unduly restricts New Jersey and other states from enjoying the economic benefits of sports betting, thus violating the commerce clause of the U.S. Constitution, states' rights to raise revenue under the 10th Amendment, and the 14th Amendment's guarantee of equal protection.

But an alphabet soup of powerful groups - the NFL, MLB, NHL, NBA, and NCAA - stands ready to oppose any expansion of sports wagering beyond the four states allowed under PASPA.

"The NCAA has a long-standing opposition to sports wagering for two reasons," said Stacey Osburn, spokeswoman for the National Collegiate Athletic Association. "First, it compromises the integrity of the games, and second, it threatens the well-being of student athletes."

The sports leagues and courts quashed Delaware's effort to offer more than parlay betting on NFL games two years ago. Parlay is not as popular because a bettor must be right on at least three games to win a wager.

State Sen. Ray Lesniak (D., Union) said the ballot question and legislation he introduced last week - Senate Bill 3113 - with Sen. Jeff Van Drew (D., Cape May) authorizing the New Jersey Casino Control Commission to issue sports-betting licenses to casinos and racetracks give the state what it lacked two years ago: legal standing.

Lesniak filed a federal lawsuit against the U.S. Justice Department in March 2009 to overturn PASPA. His case was dismissed by U.S. District Judge Garrett Brown earlier this year.

"I was told we didn't have standing to sue because New Jersey's constitution does not permit sports betting. That was taken care of on Election Day," Lesniak said. "As soon as we can get S. 3113 . . . signed by Gov. Christie, the [state] attorney general can go into federal court . . . and get the federal ban lifted."

Supporters say sports betting could generate at least $225 million in annual revenue for Atlantic City's casinos and the horse tracks in Mays Landing, Freehold, Monmouth, and the Meadowlands and would boost Christie's plan to revitalize both industries.

Some casino operators already have picked out areas they feel would be ideal for patrons to bet on sports - should that day come.

"It's definitely on our minds," said Tropicana CEO Tony Rodio, who favors an area with high ceilings near the North Tower hotel at his casino. "It's the additional revenue we want. We'll have more people buying drinks, eating meals, and playing slots and table games."

Atlantic City last week reported its 37th straight month of revenue decline.

"It can bring the crowds," said John Reilly, 49, of Woodbury Heights, of the sports-betting referendum as he watched Saturday's Penn State-Nebraska matchup in a bar at the Borgata with his wife, Maureen. Each had voted for it.

"I have buddies who bet illegally with a bookie now, and they're always nervous about getting their money," he said. "If it were made legal, that wouldn't be an issue and New Jersey would reap the benefits."


Contact staff writer Suzette Parmley at 215-854-2594 or sparmley@phillynews.com.

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