The major sports leagues gained standing in their lawsuit against New Jersey sports betting in federal court over the weekend. The leagues convinced U.S. District Court Judge Michael Shipp that they would be damaged by sports betting on games involving their leagues. The sports leagues contend that sports betting would damage professional and amateur sports leagues by implying that the events may be fixed if legalized betting were allowed in New Jersey on these types of events.
Sports Betting Scandals
The sports leagues have used several public examples of insider betting that rocked the sports world. Major League Baseball was rocked by its all time hit leader, Pete Rose, getting caught in a betting scandal where he allegedly bet on his own games as a manager. Rose was banned from baseball for life. The 1919 World Series was another black eye for Major League Baseball. The Chicago White Sox were found to have intentionally lost the series to help inside bettors win money. Eight players were banned from Major League Baseball for life for participating in this scandal.
Tim Donaghy was an NBA referee that was accused by federal authorities and the NBA of throwing games as a referee. Donaghy was even accused of throwing playoff games to dig himself out of gambling debts. Donaghy was sentenced to 15 months in prison for fixing NBA games. All of these incidents have left the sports leagues concerned about the expansion of gambling on their sports.
While these were the most high profile cases involved in fixing games, there are far more stories of game fixing and point shaving.
Bradley Act
The Professional and Amateur Sports Protection Act, commonly referred to as the Bradley Act, forbids sports betting in 46 states. The states that are exempted are Delaware, Montana, Nevada and Oregon. All of these states had sports gambling in one form or another prior to the passage of the Bradley Act. The law also allowed states with 10 years of casino experience to legalize sports betting in the year following the enactment of the law. This was written into the law specifically for New Jersey, but the state failed to pass legalized sports betting in the prescribed time so they failed to receive an exemption.
Delaware offered sports betting for just one year prior to passage of the Bradley Act. This wagering came in the form of three or more team parlay cards. The state lottery managed the parlay cards, but stopped after one year due to a lack of interest in the state’s small population. In 2009, Delaware attempted to get back into the sports gambling industry by legalizing full scale sports betting on all professional and college sports through their state lottery. This included single game betting, something that was not allowed in 1976.
The major sports leagues took exception to this and sued Delaware in Federal Court. These are the same sports leagues challenging New Jersey’s right to offer sports betting. After Delaware prevailed in the lower courts, the United States Court of Appeals for the Third Circuit sided with the sports league’s argument that Delaware could only offer the same type of sports betting that was offered before passage of the Bradley Act. This meant that Delaware could only offer parlay cards on NFL games and not straight bets in any form or any wager on sports besides the NFL.
Sports Leagues Openly Endorse Fantasy Sports
While sports leagues are against the expansion of gambling on their games, the professional sports leagues openly endorse fantasy sports betting. The leagues lobbied heavily to exempt fantasy sports from the Unlawful Internet Gambling Enforcement Act in 2006 and were successful. This left fantasy sports betting leagues that involve cash wagers legal. The sports leagues even provide a platform for this type of wagering on their websites, although they do not facilitate actual payment processing on their league websites.
New Jersey Claims Bradley Act Violates 10th Amendment
New Jersey feels that a law that allows states like Nevada to allow sports gambling, but forbids New Jersey from offering it, violates states’ rights that are protected by the 10th amendment of the US constitution. Unlike Delaware, who fought on the grounds that they were exempted from the Bradley Act, New Jersey is challenging the constitutionality of the law.
Standing Does not Mean Winning
While the sports leagues won standing in their sports betting case against New Jersey, it does not mean that they will prevail. This ruling simply means that the sports leagues will be able to show their case in court instead of having it immediately thrown out.
Feds Staying Out
The federal government has yet to make a public comment or participate in this lawsuit in New Jersey. The federal government has until January 20, 2013 to join the lawsuit.
New Jersey Monopoly Would be Short Lived
New Jersey is fighting a fight for many other states. New Jersey wants a geographical monopoly on sports betting. Even if they prevail over the sports leagues there are still other issues to resolve. Some operators licensed in other states will not be willing to risk their license in other states where they hold a license unless the entire Bradley Act is ruled unconstitutional.
The monopoly would also be short lived. Delaware can be expected to expand into single game wagering and into other sports if New Jersey wins. Other states are also watching this closely.
Even if New Jersey wins what is expected to be a long court battle, they are fighting this battle for many states that would consider generating revenue from sports gambling. These are the same states that have expanded casino gambling that has devoured Atlantic City casino revenue over the past five years.
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