Supporters of sports betting legislation nationwide should hold off on sending New Jersey Governor Chris Christie a thank-you note.
Governor Christie has lost another legal battle with the five most powerful U.S. sports leagues. In a long-awaited decision released Tuesday, the NCAA, NBA, NFL, NHL and MLB earned a narrow legal victory in their effort to prevent casinos and racetracks in the Garden State from offering Vegas-style sports betting. As a result of the ruling, the Professional and Amateur Sports Protection Act (PASPA) remains the law of the land, limiting the spread of expanded sports gambling.
"PASPA, by its terms, prohibits states from authorizing by law sports gambling," declared a divided United States Court of Appeals for the Third Circuit. "[New Jersey's] 2014 Law does exactly that.
"We conclude that the 2014 Law violates PASPA because it authorizes by law sports gambling."
The 31-page decision's implications for the future of expanded legalized sports wagering in the U.S. are profound. ESPN Chalk spoke with a number of experts about the key resulting questions from Tuesday's decision.
What this means for New Jersey
New Jersey may give up on its sports betting ambitions following the ruling. However, if the state opts to continue the legal case, it has two options.
First, Governor Christie can petition the same Philadelphia-based federal appeals court for a rehearing "en banc." Requests for such en banc rehearings -- proceedings with a larger number of judges than just the three that ruled on the current case -- are seldom granted, but this case has a better chance than most because the most recent decision differs somewhat from the court's previous ruling in the same case.
New Jersey can also request review by the U.S. Supreme Court, although only about 1 percent of all Supreme Court petitions are accepted for review. The nation's highest court turned down New Jersey's application for review in the previous version of the case last year.
The state's limited legal options will probably only add to its frustrations.
PASPA "is an Orwellian concept," said lead New Jersey attorney Ted Olson during a March 17 hearing. "A statute that was enacted to prohibit the spread, or limit the spread, of sports betting is somehow constitutional only if you allow it to take place everywhere in the state."
Gaming experts agree that PASPA has caused some head-scratching results.
"The U.S. prohibition model doesn't work," said Chris Celestino, a sports integrity analyst based in Switzerland.
"It is ridiculous to follow a prohibition model where four states are permitted to have sports wagering and 46 are not," said Marisa Lankester, author of "Dangerous Odds: My Life Inside an Illegal Billion Dollar Sports Betting Operation." "Expanded legalized gambling is still inevitable [though], there is too much money at stake.
"Some other state will challenge the federal ban."
A decision in New Jersey's favor would likely have had an immediate effect on tourism and tax revenue.
"Removing barriers allowing for more fluid gambling on sporting events would have, in the short run, increased fan activity, increased sporting event viewership, and thus increased sporting industry values and revenues," said Ryan Brewer, a finance professor at Indiana University-Columbus.
What this means for Nevada
PASPA was enacted in 1992 to stop the spread of state-sponsored sports gambling, but it included a number of exemptions. The most notable is the one that grandfathered in Nevada and a small number of other states (including Delaware, Montana and Oregon) as exceptions to the law's prohibition. Despite a 1999 U.S. Supreme Court decision describing some of PASPA's exemptions as stemming from "obscured congressional purposes," the carve-out for Nevada has never been challenged.
"There would not have been much impact on Nevada," said Kate Lowenhar-Fisher, a gaming industry attorney at Dickinson Wright in Las Vegas. "But it would [have been] a net positive for those Nevada gaming operators who also operate in New Jersey."
As a result of Tuesday's decision, the status quo remains in place for Nevada. With a near monopoly on legalized sports betting in the U.S., Nevada operators will likely continue to see an increased volume of sports bets, especially given their embrace of mobile wagering and in-game betting, and the recent adoption of entity betting laws statewide.
What this means for national sports betting legalization
Paul Clement, lead attorney for the NCAA, NBA, NFL, NHL and MLB in the New Jersey case, had an eye on the future when representing the leagues during a March 17 hearing.
"On behalf of my clients, I'm really trying to prohibit, you know, prevent there from being a Christie III," said Clement in reference to the possibility of a third version of the case coming before the court.
Tuesday's decision did not grant Clement's wish. In section three of the 2-1 majority opinion, the court provided a blueprint of sorts for how a state could comply with PASPA while simultaneously offering sports betting options to its residents and visitors. Indeed, during March 17 oral arguments, one of the judges on the three-judge panel, when questioning a Department of Justice attorney who appeared in the case, openly wondered: "I'm trying to figure out how far the state has to go to satisfy PASPA."
Now we know.
"We agree that, had [New Jersey's] 2014 Law repealed all prohibitions on sports gambling, we would be hard-pressed, given [our prior decision], to find an 'authorizing by law' in violation of PASPA," declared the court. "But that is not what occurred here."
Translated, if New Jersey had moved to repeal all its prohibitions on sports gambling -- instead of just the bans applicable to casinos and racetracks -- the Garden State would likely have prevailed.
Other states will almost certainly take note of this apparent PASPA loophole.
Factors other than the New Jersey case are also at work when it comes to nationwide sports gaming, say experts.
"Perhaps the biggest driver towards the inevitability of sports gambling are the advances in technology within the global gaming sector," said Brendan Poots, CEO of Priomha Capital, a global sports trading fund. "In regulated markets where the gaming companies work with the sporting bodies, officials and lawmakers, the regulation of sports gambling is more akin to the financial markets. Every bet made has an electronic fingerprint -- the bet can be traced to a computer and ultimately an individual."
"The New Jersey case was an opportunity to accelerate the development of sports betting in the U.S.," said Alex Inglot, head of communications for Sportradar AG, a global data firm. "But it is not the only opportunity. The various players and organizations will just evaluate the other strategies and opportunities available to them."
A courtroom win for New Jersey probably would have accelerated the move towards potential Congressional hearings on sports betting -- a prospect Senator John McCain and NBA commissioner Adam Silver have alluded to in recent months. But now the timetable for any such hearings will likely be drawn out.
There are no other current lawsuits challenging PASPA.
What happens to PASPA now
When Congress passed PASPA in 1992, it did so over the objections of the Department of Justice.
"The Department [of Justice] opposes enactment of S. 474 as drafted," wrote then-Assistant Attorney General W. Lee Rawls in a September 24, 1991, letter to then-Senator Joe Biden. "The Department is concerned that, to the extent the bill can be read as anything more than a clarification of current law, it raises federalism issues."
But PASPA had ample support during 1991 Congressional hearings in the House and Senate. Bud Selig, David Stern and Paul Tagliabue -- commissioners of MLB, the NBA and the NFL -- all testified in support of the proposed law. Former U.S. Senator and New York Knicks player Bill Bradley was PASPA's main sponsor.
"Athletes are not roulette chips, but sports gambling treats them as such," wrote Senator Bradley in a 1992 Seton Hall Journal of Sport Law article. "If the dangers of state sponsored sports betting are not confronted, the character of sports and youngsters' view of them could be seriously threatened."
After 23 years, PASPA is now viewed quite differently. Tuesday's court ruling has experts re-evaluating PASPA's continuing legacy.
"I don't feel that PASPA will ever be repealed, nor should it be," said Sue Schneider, who has testified before Congress on gaming issues and is the founder of eGaming Brokerage. "However, it could be amended to take it out of that 'moment in time' when a state had a chance to legalize sports gambling 'now or never.'
"Providing a mechanism for a state to legalize this doesn't have to be rocket science."
The Washington, D.C.-based American Gaming Association has taken interest too.
"We expect to complete our study by November 2015," said Sara Rayme, AGA senior vice president of public affairs. "While it will cover all facets of the sports wagering issue, we will specifically look at PASPA, analyzing whether the status quo should be preserved, whether there should be more regulation, whether there should be more of a crackdown on illegal sports betting, or whether PASPA should be revised legislatively."
Rayme told ESPN Chalk that the growing mainstream acceptance of wagering has altered thinking on the issue.
"We've seen a clear shift from NBA commissioner Adam Silver," said Rayme. "The only holdout is the NFL.
"We are not sure how the NFL could avoid looking at the issue, especially given the large number of NFL teams who have inked sponsorship deals in the DFS [daily fantasy sports] space."
What this means for international sports betting
The legal victory for the five sports leagues is unlikely to have any effect on the global sports wagering industry, according to several experts.
"The changes would have been minimal [if New Jersey had prevailed]," explained Poots, the sports trading executive. "One state will not increase the global turnover, although it might have meant a few more visits from New Yorkers wanting to gamble."
One expert saw the resolution of the case as good news to certain operators in the vast grey market that is sports wagering in the U.S.
"There was a gasp of relief from Antigua, Costa Rica and Curacao offshore operators," said Celestino, the sports integrity analyst. "An opposite result could have impacted their profitability."