Appeals court rejects New Jersey's bid to legalize sports betting

A U.S. appeals court ruled in favor of the four major professional sports leagues and the NCAA on Tuesday, denying New Jersey's quest to legalize sports betting.

The U.S. Third Circuit Court of Appeals in Philadelphia found that New Jersey's most recent attempt to bring Las Vegas-style sports betting to its casinos and horse racing tracks violated the Professional and Amateur Sports Protection Act (PASPA), the 24-year-old federal prohibition on state-sponsored sports betting.

The court battle between New Jersey and the sports leagues has been ongoing for years. In January 2012, New Jersey Gov. Chris Christie signed legislation that authorized the state to offer legal sports betting. The state got as far as posting sports betting regulations on the gaming enforcement's website in the spring of 2012, before the leagues filed suit.

A spokesman for Gov. Christie's office said they are reviewing the opinion and considering their options.

The sports leagues won every step of the way during a legal battle that featured an appeal to the U.S. Supreme Court and deposition testimony by the commissioners for the NFL, NBA, NHL and Major League Baseball.

After the Supreme Court declined to take the case, New Jersey passed a new version of its sports betting law that was once again contested by the leagues. This phase of the battle earned a rare en banc rehearing in the Third Circuit. All 12 judges heard oral arguments in February.

Ten of the judges ruled in favor of the sports leagues. Judges Julio Fuentes and Thomas Vanaskie offered dissenting opinions.

"We now hold that the District Court correctly ruled that because PASPA, by its terms, prohibits states from authorizing by law sports gambling and because the 2014 Law does exactly that, the 2014 Law violates federal law," Judge Marjorie Rendell wrote in the court's 12-page opinion.

"The Third Circuit reaffirmed that the appropriate path to legal sports betting is through Congress," NBA spokesman Mike Bass told ESPN. "We remain supportive of a federal legislative framework that would protect the integrity of the game and allow those who bet on sports to do so in a legal and safe manner."

The NCAA said in a statement: "We are pleased the 3rd U.S. Circuit Court of Appeals has denied New Jersey's latest attempt to allow sports wagering in the state. As other courts have acknowledged, federal law does not permit New Jersey's actions. The NCAA continues to believe that PASPA is an important law that appropriately protects the integrity of sport in America."

The American Gaming Association said in a statement, "Washington has a responsibility to fix a failed law that it created nearly 25 years ago. A federal government prohibition has driven an illegal, and occasionally dangerous, sports betting market of at least $150 billion annually.

"Law enforcement, mayors, leaders in sports, fans and many others agree that it's time for a regulated sports betting marketplace that protects consumers, communities and the integrity of sports we enjoy. AGA is building a broad coalition of stakeholders that will achieve a practical, modern day solution."

New Jersey is not done fighting, though. State Sen. Raymond Lesniak, who has spearheaded the sports betting effort, says he will ask the U.S. Supreme Court to hear the case and examine additional opportunities within the state.

"It's a long shot, but at least we have two dissenting votes on our side," Lesniak said Tuesday morning, after reviewing the Third Circuit's opinion.

"Second, I'm going to test the public's, legislature's and the governor's temperature on repealing all our laws on sports betting and using the extensive police powers of the state to restrict the locations where sports betting can take place, for instance, like we do with gentlemen's clubs. I'll also beef up our office of consumer affairs to closely oversee the operations to protect the consumer."

Strongly supported by the sports leagues, PASPA was intended to stop the spread of legal sports betting in the U.S. and limited the activity to four states: Delaware, Montana, Nevada and Oregon. Only Nevada is allowed to offer a full menu, including wagering on single games. But sports betting has thrived throughout the country, with the vast majority of it taking place illegally with offshore sportsbooks and local bookmakers.

In 2015, $4.2 billion was wagered at Nevada's regulated sportsbooks. In comparison, the American Gaming Association estimates that more than $150 billion was wagered illegally on sports in 2015.

"The decision of the Third Circuit was expected, but is nonetheless disappointing," said Joe Asher, CEO of William Hill's U.S. bookmaking operations. "It will be celebrated by illegal bookies all across New Jersey and the rest of America, as it keeps sports betting underground and on the black market for now. PASPA is clearly a failed law and more challenges to it are inevitable, both in the courts and in Congress."

For decades, the sports leagues have fought expanded legalization in fear that it would threaten the integrity of their games. But the leagues' opposition appears to be slowly eroding. The NBA has completely changed its position, with commissioner Adam Silver calling on Congress to create federal framework of regulations to allow states to offer sports betting.

"[I] believe that sports betting should be brought out of the underground and into the sunlight where it can be appropriately monitored and regulated," Silver wrote in a 2014 op-ed in the New York Times.

The NFL, which once scoffed at the idea of playing even an exhibition game in Las Vegas, is open to allowing the Oakland Raiders to relocate to Las Vegas. Commissioner Roger Goodell has said the league's view on gambling has "evolved," and, at a July conference on problem gambling, NFL senior labor relations counsel Brook Gardiner said a "strong contingent in the league" is examining sports betting, "but it's not unanimous. It's not a rush to legalization."

The NFL declined comment on Tuesday's ruling.

An NHL franchise in Las Vegas will begin play in 2017.