Federal court denies New Jersey's bid for legalized sports betting

A U.S. federal appeals court ruled in favor of the NCAA, NFL and other major sports leagues Tuesday, denying New Jersey's latest bid to bring legalized sports betting to the state's struggling casinos and racetracks.

The Third Circuit Court of Appeals in Philadelphia denied New Jersey's appeal by a 2-1 majority decision, ruling that the state's efforts violate the Professional and Amateur Sports Protection Act of 1992.

Last summer, after the U.S. Supreme Court declined to review an earlier appeal by New Jersey, the state partially repealed its existing prohibitions on sports betting but restricted the activity to only racetracks and casinos. Third Circuit judges Maryanne Trump Barry and Marjorie Rendell said they believed that by restricting sports betting to the tracks and casinos, New Jersey was authorizing sports betting.

Judge Julio Fuentes, who ruled against New Jersey earlier in the case, was the dissenting voice this time.

"There is simply no conceivable reading of PASPA that could preclude a state from restricting sports wagering," Fuentes wrote in his opinion.

But this three-year legal battle isn't over yet. New Jersey state Sen. Ray Lesniak said he would appeal for a hearing in front of the entire Third Circuit.

"En banc is 'extraordinary' and completely discretionary," said Christopher Soriano, an attorney for Duane Morris, who has been following the case closely. "[The] case must have a conflict with a prior decision or must involve exceptional importance. The question will be whether Judge Fuentes' dissent creates a conflict with the prior decision."

New Jersey is not the only entity pushing for the legalization of sports betting. In a November op-ed in The New York Times, NBA commissioner Adam Silver called on Congress to create a federal framework that would allow states to offer legalized sports betting. Indiana, Minnesota, New York, South Carolina and Texas were among the states that introduced sports betting legislation this year.

Currently, Nevada, Delaware, Oregon and Montana are the only states allowed to offer forms of sports betting. Nevada is the only state that can offer single-game wagering.

"We agree with the Third Circuit's decision reaffirming that the appropriate path to legal sports betting is through Congress," NBA spokesman Mike Bass said. "We continue to support a federal legislative solution that would protect the integrity of the game while allowing those who engage in sports betting to do so in a legal manner."

Major League Baseball, through spokesman Pat Courtney, said it is "pleased that the Third Circuit adopted the position of the sports leagues and the NCAA."

The NCAA, through chief legal officer Donald Remy, said: "We are pleased that the Third Circuit agreed that New Jersey's newest attempt to legalize sports wagering violates federal law. The NCAA maintains that the spread of legalized sports wagering is a threat to student-athlete well-being and the integrity of athletic competition."

The NFL said it had no comment on the decision.

Federal sports betting bills, introduced by U.S. Congressmen Frank LoBiondo and Frank Pallone from New Jersey, currently are sitting in the judiciary committee. Sen. John McCain (R-Ariz.) has called for Congress to have hearing on sports betting, as well.

"I still firmly believe that the sports leagues are wrong with this," LoBiondo told ESPN in a Tuesday phone interview. "They want us to believe that there is no illegal betting going on. Depending on whose estimate you're taking, it's somewhere between $150 or $300 or $400 billion. We're continuing to try to build, even if it's slowly, momentum and understanding of why this make sense, why this is a good idea and why it's good policy to be able have [sports betting] regulated."

The American Gaming Association responded to Tuesday's ruling by calling for "deeper examination about the best path forward in this issue."

"With Americans betting at least $140 billion on sports illegally each year, it's clear that current law is not achieving its intended result," AGA president Geoff Freeman said. "As the AGA leads an industry-wide task force to study sports betting, we will assess the implications of the court's decision as the gaming industry continues to develop innovative ways to provide products and experiences that meet consumers' demands."

MLB commissioner Rob Manfred and NHL counterpart Gary Bettman have said fresh consideration on legalizing sports betting is needed. The NHL is currently in the final stages of putting a franchise in Las Vegas.

But the NFL and NCAA remain firmly against sports betting.

Last week, at a gambling conference in New York, Freeman said the AGA had sat down with representatives of the NFL, NBA and MLB and said he believed that "there is more common cause than [there] ever has been for taking a different approach to sports betting," according to trade publication Gambling Compliance.

In October, New Jersey was poised to move forward with sports betting at thoroughbred track Monmouth Park, before a district court granted the leagues an injunction and eventually ruled against the state in November. New Jersey quickly appealed to the Third Circuit, where oral arguments were heard in mid-March. It took five months for the Third Circuit to rule.

Silver, the NBA commissioner, has repeatedly said expanded legalized sports betting in the U.S. is inevitable. The U.S. branch of bookmaker William Hill, which has committed to running sports betting at Monmouth Park, if it is legalized, agrees with Silver.

"It's pretty clear to me that this matter is far from over. I remain convinced that legal sports betting will come to New Jersey. It's a matter of when, not if," William Hill U.S. CEO Joe Asher said in a statement. "There's a massive illegal sports betting market that exists, not only in New Jersey, but all across the country. That serves to benefit only the criminals who operate it. The sooner that market comes out of the shadows and into the sunlight, the better off we will be."

Some estimate that sports betting in the U.S. is a $400 billion market, only a small percentage of which is wagered legally.