The New Jersey referendum has opened the door for the state to revisit the unconstitutionality of PASPA in court.

NEW JERSEY IS taking centre stage in the fight for legalised sports wagering. On November 8, 2011, New Jersey voters approved, by referendum, to allow sports wagering at Atlantic City casinos and racetracks in New Jersey by nearly a two to one margin. The next step is for New Jersey to continue its fight with the federal government over the restrictions of the Professional and Amateur Sports Protection Act (PASPA). The National Football League (NFL) and the NCAA may undertake their traditional lobbying efforts aimed at thwarting the proliferation of sportsbetting. However, timing is perfect for supporters of sportsbetting to convince otherwise.

Sportsbetting in the United States remains a very controversial topic. It seems that many professional sports teams and the general public are concerned about corruption in the outcome of sports events because of sports wagering. Recently, while reading The Drunkard’s Walk,1 it became obvious to me that gambling was and continues to be a major influence in the field of statistical analysis. The book cites research conducted by Justin Wolfers at The University of Pennsylvania about the prevalence of ‘point shaving’ in college basketball (Wolfers, 2006). Wolfers sampled 44,120 NCAA Division 1 games from 1989 to 2005 and after intense statistical analysis, concluded, “Given that around one-fifth of all games involve a team favoured to win by at least 12 points, this suggests that around one percent of all games (or nearly 500 games through my 16-year sample) involve gambling related corruption.

Although later research (Borghesi, Paul, & Weinbach, 2009) disputed Wolfers’ claims of corruption in point shaving, the amount of attention now focused on corruption in sports due to sports wagering is alarming. It is alarming because a majority of the sports wagering action in the United States is illegal and attempts to regulate and control the activity are thwarted by the NCAA, professional sports teams, and heavily lobbied politicians.

Nevada, and to some extent, Delaware (parlay sports wagering), are taking the bulk of legal wagers on sports in the United States although Montana and Oregon are also able to accept sports wagers.

Nevada sportsbooks account for only one to three percent of all sports gambling conducted in the country. That means that between 97 and 99 percent of sports wagering in the United States is conducted illegally.

In addition, the final report from the National Gambling Impact Study Commission (NGIC) in 1999 (1999, P- 2-14) reported,
“Estimates of the scope of illegal sports wagering in the United States range anywhere from $80 billion to $380 billion annually, making sports wagering the most widespread and popular form of gambling in America.”

The amount of illegal sports wagers annually in the United States is jaw- dropping. Legalised and regulated sports wagering could be a significant revenue generator and could reduce the potential for corruption in game-fixing.

New Jersey is taking the odds again this year with the favourable referendum vote on sports wagering on November 8. But despite the positive referendum vote, the issue must be fought in federal court. New Jersey filed a federal lawsuit indicating that the ban on New Jersey conducting sports wagering is unconstitutional. In March 2011, Federal District Judge, Garrett Brown, rejected the lawsuit noting that it “puts the cart before the horse” because New Jersey would still have a ban on sportsbetting even if he declared PASPA unconstitutional.

Now that New Jersey voters approved sports wagering by referendum, it opens the door to re-visit the federal court to determine if PASPA is unconstitutional. I am not a pessimist like many in the gaming sector, and so I believe that New Jersey will prevail in federal court. Sports wagering in the United States (although mostly illegal) is more popular than ever. Even New Jersey’s Governor, who is critical about online gaming, supports sports wagering in New Jersey. I also see other states following the trail blazed by New Jersey. 2012 should prove an exciting year for sports wagering as well as online gaming. I see some serious potential in the future with online sports wagering. I guess I am putting the cart before the horse.
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