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TGS SPECIAL REPORT....HIP HIP HOORAY FOR NEW JERSEY!

by Bruce Marshall, Goldsheet.com Editor


Walking around the sports books in Las Vegas, and interacting with those involved in various aspects of sports gaming, since the repeal of PASPA in May of 2018, one gets the feeling that the Nevada folk are taking credit for the boom in the industry that has followed. If one didn’t know any better, and spent all of their time in Vegas, it would be easy to assume that the sports betting explosion, which seems to reverberate more and more across the country each week, is Nevada’s doing.

Except that it’s not, at least beyond the extent that some of the sports gaming operations that are based overseas (like William Hill) have become part of the Nevada landscape in recent years, and therefore had a vested interest in the overturn of PASPA. The truth is that Nevada had very little to do with the repeal of PASPA or any other sports betting legislation from outside its own borders. Were it up to Nevada, the PASPA repeal, as championed by New Jersey, would never have seen the light of day. Hard as it is today to imagine a sports gaming marketplace living in the shadows as it did before the PASPA repeal, that would still be the case had New Jersey not picked up the baton over a decade ago and begun its long and tortured march to the eventual repeal.

Indeed, it’s well known that a major opponent of Nevada-style sports gaming taking root anywhere else was none other than former US Senator Harry Reid (D-Nv), who as the senate majority leader was going to be protective of his state’s exclusivity in the old sports gaming marketplace and reluctant at best to ever get his chamber to push forward any sort of legislation that might have changed the PASPA dynamics. Which is one reason why Congress was never able to offer any hint of sports gaming reform. For a short while, after Reid retired and the GOP took back control of the senate behind its leader, Mitch McConnell (R-Ky), it was thought that sports gaming reform might actually have a bit of a chance to make progress in Congress. Only that New Jersey was already well into its battle in the courts that would eventually result in the PASPA repeal.

The tale of New Jersey’s long and painful journey is going to be told soon in new book entitled “Hip Hip Hooray for Jersey!,” which will chronicle the Garden State’s quest as reported on these pages of TGS across the past decade. It was a fascinating journey, reported in great detail by TGS, and one that has continued in new phases and storylines since the repeal. But we think it’s important that the consumer base gains a bit of context on a bold process that was hardly guaranteed of success.

New Jersey, and New Jersey alone, took the fight to repeal PASPA and hit all sorts of opposition, first and foremost from the pro sports leagues and the NCAA (we’ll talk of their interesting about-face on the industry in a moment) as it tried to slalom its way through district and federal court. The challenge kept hitting the gates as rejection after rejection piled up, but the Garden State continued reimagining and reformulating its strategy and its challenge...and kept coming back with different angles and proposals that might get PASPA repealed and open up the sports gaming marketplace once and for all.

Of course, New Jersey expected that the beneficiaries of its labor would be all of the other states that followed its lead, but was glad to play the role of the spear-tip with other states following behind. As the West Virginias and Mississippis and others lined up in back of New Jersey, and many joined in the amicus brief, the momentum of the movement became hard to deny. But the fact is that no other state ever pushed the envelope as did New Jersey, which simply wasn’t going to take no as an answer until it got its argument all of the way to the Supreme Court. Which in itself was a minor miracle.

It has been a fitting tribute to the Garden State that since the PASPA repeal it has mostly overtaken Nevada as the flagship of this burgeoning industry, with its handle in most recent months now surpassing the Silver State. Simply put, New Jersey has done almost everything right every step of the way, first from its courageous court challenges, to its fair and progressive licensing, to its quick adaption of mobile betting. New Jersey not only lead the way, but is showing every other state that wants to join how it should be done properly.

And what of the sports leagues and the NCAA that battled New Jersey all of the way to the Supreme Court, opposing the repeal? You’d never know that now, as most of the leagues are in the process of embracing the sports gaming marketplace, almost embarrassingly so. The NFL recently announced sponsorship deals with four different sports books, and the other leagues are following suit. It hardly seems the same universe as it was during most of our lifetimes, when MLB Commissioner Bowie Kuhn would force Mickey Mantle and Willie Mays to cease their promotional roles with Atlantic City casinos or face a ban from all MLB activites. Mantle and Mays refused; Kuhn was indignant, however, stating that a casino was “no place for a baseball hero and Hall of Famer.” The Mantle and Mays bans from baseball lasted until Kuhn stepped down as commissioner, and successor Peter Ueberroth reinstated both.

Meanwhile, the national and local media, which often went to great lengths to shy away from any discussion of pointspreads and anything to do with sports betting, was even quicker to change its tune. Though never faced with the restrictions that the actual sports betting industry had to overcome, it took a long while for the national media to get on board with anything other than running the weekly odds in small type, buried at the bottom of one of the inside pages of the sports sections. Now, many sports pages (at least those still in existence on the print side) devote significant space to the sports betting world, while TV has followed suit. ESPN has so embraced the industry that we expect the “sports leader” to introduce its own "ESPN Sports Gaming" Channel in the near future. (Check back with us in a couple of years to see if we’re right!).

We could fill the pages of TGS all season long with stories of how almost all sports commissioners of the past seventy years have at one time or another railed of the evils of sports betting. As noted in our kickoff issue two weeks ago, TGS founder Mort Olshan wrote of many of these objections across numerous years of publishing. Even the NBA, whose modern commissioner Adam Silver would sound a conciliatory and hopeful tone about the future of sports betting, joined in the action against New Jersey, all of the way to the Supreme Court. When, at the 2018 Sports Betting USA Conference in New York City, we asked NBA counsel Dan Spillane about why the league took such a hard-line stance against New Jersey, at the same time its commissioner seemed to be offering tacit support for sports gaming, Spillane said that the NBA was merely supporting the federal laws as they were written. To which we replied, since when is it the NBA’s duty to worry about anything other than basketball, especially upholding federal law? That’s what the Department of Justice and US attorneys are for. And if the league really did see potential for nationwide sports gaming, why did it see fit to join the opposition to New Jersey rather than just sit and watch the proceedings?  (We might do a deeper dive on this matter in upcoming issues.)

By us, New Jersey has been the George Washington of sports gaming in the states. Without its determination and creativity, the marketplace today would look like it did pre-2018. We cannot think of a state that would have had the same sort of fortitude, not to mention foresight, as did New Jersey to get the federal sports gaming laws repealed.

It certainly wouldn’t have been Nevada.

Following is an excerpt of a featured piece that ran in TGS from December of 2017, after New Jersey and its case to repeal PASPA had its day in front of SCOTUS. Former US Solicitor General Ted Olson, who would be the keynote speaker almost 12 months later at the aforementioned 2018 Sports Betting USA Conference in New York, and whose comments at that gathering will soon be featured in another TGS piece, was the pivot point of our December 2017 feature. Olson was the lead attorney for New Jersey in a heavyweight battle of legal minds, as his successor as Solicitor General in the George W Bush administration, Paul Clement, headed the opposition that represented the pro sports leagues and the NCAA in front of the Supreme Court. By us, Olson, former New Jersey Governor Chris Christie, and former New Jersey State Senator and NJ Democratic Chairman Raymond Lesniak, who spearheaded the sports gaming legislation, should have their pictures framed and hanging in every non-Nevada, brick-and-mortar sports book in the country, just as President Biden’s picture is now featured in every federal office.

Olson’s commentary was informative and enlightening, and anyone who is enjoying the new freedoms of the sports gaming marketplace should take a moment to appreciate the work done by Olson and his legal cohorts in New Jersey. As noted, in a coming issue, we will recall some of Olson’s presentation six months after the PASPA repeal, at the 2018 Sports Betting USA Conference. For now, however, we turn back the clock 12 months before. In what was probably the most important couple of hours in sports gaming history in the United States, Olson made his case in front of the Supreme Court in early December, 2017, as we recounted in this editorial feature (which ran in TGS Hoops) that week. Required reading, we believe, for all sports bettors!


So, how did New Jersey fare in its day with SCOTUS? State Senator Raymond Lesniak, though admittedly a bit biased since he sponsored the bill in Trenton that would eventually be the basis for this appeal, thought proceedings went so well that he was feeling positively bullish about the Garden State’s chances for victory.

Lesniak said after listening to Monday’s arguments in Washington that he thinks the court will rule 7-2 or 6-3 in New Jersey’s favor. “It’s not quite a slam dunk, but it’s about Tiger Woods and a 5-foot putt,” said Lesniak, careful not to draw an analogy to Tiger’s recent track record off of the tee, which has not been as good as his short game.

Lesniak was not the only one who thought things went well for New Jersey on Monday. Following arguments, several sports legal experts said that they expected the court would rule in favor of New Jersey in its bid to allow sports betting at its casinos and horse tracks. The nine justices on the high court appeared split by their questions to lawyers in the case, but a majority seemed skeptical of a federal “commandeering” of state policy on sports wagering.

“That’s what this is about, telling states what to do,” said Justice Stephen Breyer, who appeared sympathetic to the argument of federal overreach.

The justices gave a mostly-friendly hearing to New Jersey’s claim that states are free to control their own laws, including in the area of gambling, unless Congress has adopted a federal regulatory policy to prohibit it.

New Jersey maintains that Congress failed to do that when it passed the 1992 PASPA law. The federal law did not actually ban sports wagering, but instead said states may not “authorize by law” such gaming.

That type of command from Washington violates the Constitution’s 10th Amendment, which reserves to the states the power to make and enforce their own laws in areas where the federal government has not exerted authority, said former Solicitor General Ted Olson, representing New Jersey.

“This is a direct command to the states,” Olson said of PASPA. “Congress said we want to put the burden and the expense and the accountability on the states. The federal government is doing nothing,” Olson added.

Justice Breyer picked up on Olson’s argument, saying Congress has the right to prohibit state activities that conflict with federal law—such as preventing states from passing rules governing airlines after federal lawmakers deregulated the industry—but not to require states to enact rules to enforce federal law.

“I wish I had said that,” Olson said.

“Is that your argument,?” Breyer asked.

“That is my argument,” Olson responded.

In their comments and questions, most of the justices sounded the same states’ rights theme. Justice Anthony Kennedy grilled Paul Clement, a former U.S. solicitor general and lawyer for the NCAA and the leagues, about federal laws that appeared to “commandeer” states to act on the federal government’s behalf. Clement said the federal government, in laws it passed, did not want states operating gambling schemes over concern of interstate commerce.

Clement claimed that New Jersey is allowed to repeal its prohibitions on sports betting and therefore is not commandeered by the federal government. But Clement’s arguments came under scrutiny from not only Kennedy and Breyer, but Chief Justice John Roberts, and Justices Samuel Alito and Neil Gorsuch. (Justice Clarence Thomas, a conservative member on the court, did not speak.)

Clement said the law (PASPA) was clear. “It tells the states they may not operate sports betting,” Clement said. Justice Alito, however, asked Clement why the federal government didn’t simply ban sports betting itself. Clement responded that the law gives states the flexibility to decide how they want to enforce the ban “rather than a one-size-fits-all federal felony.”

Chief Justice Roberts then asked Clement whether the federal government could tell states they couldn’t levy an income tax higher than 6 percent or must limit public employee pensions. Clement said the law was addressed to state and local governments because they were the ones who pass laws that can be rejected because they contradict federal policy. “You’re already telling the states they can’t do something,” he said.

Justices Sonia Sotomayor, Elena Kagen and Ruth Bader Ginsburg quizzed Olson on federal laws on sports wagering and a New Jersey law passed by the state legislature. Sotomayor, to the likely dismay of Lesniak and other Garden State supporters, said there was nothing in federal law that appeared unconstitutional, telling Olson that the federal government has the right to regulate commercial activity. Olson agreed, but noted, “Congress has not chosen to do that in this case.”

Justice Kennedy, sounding a sympathetic tone toward New Jersey, added that having the federal government tell states what to do “blurs political accountability,” and adding that the existing law “leaves in place a state law that the state does not want.”

Geoff Freeman, AGA president, interpreted the high court’s questions in the oral arguments as a positive for “millions of Americans seeking to legally wager on sporting events.”

Freeman would not predict the Supreme Court’s intentions, but he did predict the demise of PASPA. “I heard a court that is suspicious of the federal government’s overreach in this case,” Freeman said.

Meanwhile, Daniel Wallach, a gaming and sports law attorney with Becker & Poliakoff in Fort Lauderdale, Fla., said the high court clearly questioned the NCAA and sports league’s case. He said he could see a 6-3 ruling in favor of New Jersey, even if the court stays away from the constitutionality of the law.

Mark Hichar, a partner at Hinckley Allen, told The New York Post that “what went on today didn’t have much to do with gambling. It was more about states’ rights.

“The federal government could have had a ban on sports betting. But that’s not what the PASPA law does. There’s no accountability. You’re making the states follow a federal policy contrary to the wishes, perhaps, of the voters in the states,” Hichar added.

Justices could also issue a partial ruling that would allow sports gaming in New Jersey without addressing the state’s claim that the law is unconstitutional. This possibility was among the many scenarios outlined in our TGS Football cover story in the recent No. 15 issue.

Twenty states have signed on in support of New Jersey in the case, and Connecticut, Mississippi, New York and Pennsylvania have already passed legislation that would allow them to get in the game if the federal ban is lifted.

However, not every state that has enlisted with New Jersey is going to rush into the sports gaming business. Texas, for example, joined the amicus brief siding with the Garden State, even though the Lone Star State’s leaders haven’t shown much interest in legalizing sports betting.

Instead, Texas Attorney General Ken Paxton signed on to the brief to keep the federal government out of state decisions. “PASPA is unconstitutional and tramples on state sovereignty,” Paxton told the American Sports Betting Coalition. “By ending PASPA, states can rightfully decide whether they want regulated sports betting or not.”

Still, the count is now up to 13 states that would apparently be willing to follow right behind New Jersey and begin taking sports bets quickly after any PASPA repeal.

On Monday, a packed courtroom watched Olson argue that PASPA commandeers the state to maintain its prohibition on sports betting.

“This is the fear of every governor, that we’ll be at the mercy of the federal government and that they’ll make us pay for it,” outgoing New Jersey Gov. Chris Christie, for whom the New Jersey challenge is named, said after the hearing. “It’s not right.

“The idea that the federal government could nullify laws of the state was debated when the Constitution was being debated. It was defeated,” Christie continued. “This is not some thing we’re unsure of what the founders thought. We know what the founders thought.”

Along with Clement, current U.S. Deputy Solicitor General Jeff Wall represented the Department of Justice on the side of the sports leagues and said states could comply with PASPA by complete repeal of their statutes on sports betting.

Chief Justice Roberts asked Wall if, in that scenario, a child could enter a casino and gamble. “Well, is that serious?,” Roberts said. “You have no problem if there’s no prohibition at all and anybody can engage in any kind of gambling they want, a 12-year-old can come into the casino and — you’re not serious about that.”

The sports leagues have long maintained that expanding legal sports betting in the U.S. would threaten the integrity of their games. Though, since the initial suit, NBA commissioner Adam Silver has come out in support of regulating sports betting, and the NFL and NHL have approved the expansion and relocation of franchises to Las Vegas, where sports betting is legal.

“I’ve always been willing to talk to the sports leagues [about sports betting],” Christie said. “The sports leagues never have been willing to talk to me. They thought they were going to get rid of us a long time ago. They never met me. They have now.”

The New Jersey challenge to PASPA, however, could have implications far beyond being able to place a wager on the Cincinnati Bengals or Cleveland Browns at a local sportsbook.

A ruling by the Supreme Court to uphold New Jersey’s challenge that the law is unconstitutional could have an impact on other state regulations, “like those on medical marijuana, immigration and gun control and occupational licensing,” said Elbert Lin, a former West Virginia solicitor general who is also among those filing a brief supporting New Jersey.

Leave it to Gov. Christie, however, to sum up New Jersey’s day in court and what might come next. “We’re going to do well,” Christie predicted, adding that within two weeks of a favorable ruling, New Jersey would be taking sports bets. “We’re like Boy Scouts. We’re prepared.”


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