NEW JERSEY: IT’S NOT OVER UNTIL THE FAT LADY SINGS...


November’s referendum on sportsbetting proved the appetite of New Jersey’s people for legalised sportsbetting in the state


November’s referendum on sportsbetting proved the appetite of New Jersey’s people for legalised sportsbetting in the state. Frank Catania, Attorney and Partner at New Jersey law firm, Catania & Ehrlich PC, provides an overview of the fallout form the Garden State’s referendum on sportsbetting.

IN 1992 AFTER passage of the Professional and Amateur Sports Protection Act of 1992 (PASPA), New Jersey was given the opportunity to pass legislation that would have allowed it to have sports betting at its casinos in Atlantic City. I was serving as the Deputy Speaker of the New Jersey General Assembly at that time. The sportsbetting legislation was introduced, however, the then Speaker of the General Assembly, Chuck Haytaian, was lobbied heavily by New Jersey’s own US Senator Bill Bradley the sponsor of the PASPA, representatives from the National Football League (NFL), other sports leagues and many professional players pressuring the Speaker not to allow the bill to advance. On the opposing side, representatives from the casino industry were doing all they could to have the bill voted out of committee and posted for a vote before the full general Assembly. At that time, the casino industry in Atlantic City was flourishing with new casino openings and no competition from surrounding states (and sportsbetting was not viewed as a necessary economic boost).

Lesniak's bill

Fast forward to 2010 and New Jersey’s casino industry is in a tailspin, facing competition it never previously had and New Jersey’s horseracing industry is increasingly losing money. In an effort to help the race tracks and the casino industry, State Senator Raymond Lesniak (D-Union), himself an attorney, institutes a suit to allow sportsbetting at New Jersey race tracks and in the Atlantic City casinos. The initial suit was dismissed by the Court on grounds that the plaintiff did not have standing to bring the action. Senator Lesniak did not throw his hands up in defeat. He introduced a bill that passed both the New Jersey Senate and General Assembly to have the sportsbetting issue placed as a question on the ballot for the November 2011 General Election.

Polling before the election indicated that a majority of New Jersey voters supported sportsbetting and Governor Christie, himself a former United States Attorney for the District of New Jersey, also announced his support for passage of the ballot question. On November 8, 2011 New Jersey voters state-wide overwhelmingly approved an amendment to New Jersey’s Constitution to allow sportsbetting in Atlantic City casinos and two racetracks.

Lesniak said he planned to immediately draft legislation starting the process to bring sportsbetting to New Jersey and introduce it for fast track the week of November 21, 2011. The current legislative session ends on January 10, 2012; however, that is more than enough time in a Democratic controlled legislature to get Lesniak’s bill approved by both houses and to the Governor for his signature.

The Atlantic City casino industry association and leaders of the state’s thoroughbred and standard bred horseracing industries have endorsed the proposal as a way for each struggling sector to attract more patrons.

Pallone's support

Congressman Frank Pallone, Jr (D-NJ-) also made a press statement, after the ballot question was approved, that he plans to introduce a bill in Congress to help New Jersey. Congressman Pallone said he will introduce legislation in Congress that would lift the federal ban on professional sportsbetting at Atlantic City casinos and New Jersey racetracks. He followed by saying, “New Jersey voted for, and deserves a bite of the apple in terms of sportsbetting.” Pallone also said, “Any delay in making this possible is a loss of profits for local businesses which is unacceptable.” Pallone’s introduction of such a bill is more for his political benefit amongst his constituents since the proposed bill would have no chance of a committee vote - much less passage in the Republican controlled House of Representatives. Congress cannot grant just one state to engage in a form of commerce that others, except Nevada, cannot. Because of the economy, many states will be looking for an exception to allow sportsbetting to increase their declining revenues.

The hardest part

All of this has been positive, however, now comes the hard part. Once a law is enacted then New Jersey has standing to return to court. However, convincing a judge that the PAS PA should be set aside so that New Jersey has the opportunity to allow sportsbetting in the casinos of Atlantic City and the state’s race tracks will be challenging, to say the least.

The Department of Justice (DOJ) will be defending the matter on behalf of the federal government and Lesniak’s team will,
I am sure, consider using some of the same arguments presented by the Department of Justice in their opposition to the passage of the PAS PA in 1991. Decisions on how to raise taxes have been left to the individual states without Congressional interference. There was an issue of federalism and the DOJ was troubled by permitting not only the United States Attorney General, but also amateur and professional sports organisations, to seek enforcement of PASPA.

New Jersey will most likely raise the issue of states’ rights. Since gambling is not mentioned in the United States Constitution, why shouldn’t it be a matter left to the individual states? I can’t bet on whether Senator Lesniak and Governor Christie come out as winners, however, if they do succeed, the big winners will be the citizens of New Jersey, the Atlantic City casinos and New Jersey’s horse race tracks.

Many legal scholars believe New Jersey will not be successful, however, remember the saying, “it’s not over until the fat lady sings”.
 
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