How New Jersey's Big Gamble On Legalized Sports Betting Could Change Everything

jersey shore

Atlantic City was quiet this Saturday.

Plenty of day-tripping gamblers were huddled around low-stakes blackjack tables at the Tropicana.

But the boardwalk was empty, and the casino bars showing some of the biggest college football games of the season were more-or-less dead.

This time next year, that might not be the case.

If New Jersey succeeds in its daring push to legalise sports betting, A.C. casinos will be filled with the same giddy, anxious atmosphere of a Las Vegas sportsbook on Saturday’s like these.

A guide to New Jersey’s big gamble on sports betting >>
This month, New Jersey voters passed a statewide referendum that allowed the state to legalise sports betting.

Over the next year, the state will continue its push for legalization by passing a bill into law and ultimately challenging the federal ban on betting in court.

New Jersey’s reasons for legalizing betting are two-fold: they need any additional revenue they can get to close the state’s budget gap, and they want to jumpstart the steadily declining Atlantic City tourism industry.

But the road to legalization is, and has been, long.

For the stigmatised, frowned-upon practice of sports betting to achieve legalization, it requires a perfect storm of public support, legislative support, gubernatorial support, and judicial support.

As it stands, three elements of the perfect storm are in place — the public passed the referendum, the legislature plans to pass a legalization bill by January, and governor Chris Christie vowed to sign it once it lands on his desk.

The major obstacle that remains?

The state has to defeat  the federal government and the lobbying efforts of the NFL to convince a federal court that the 1992 law which outlawed sports betting in all but four states is unconstitutional.

The New Jersey state senator behind the push for legalization placed the odds of this at around 50-50 last week, and even that might be wishful thinking.

But if it works, and New Jersey defeats the federal ban on sports betting, it will be one of the most significant moments in American gambling history.

THE BAN: The U.S. Government outlawed sports betting in 1992, with a few exceptions

The Professional and Amateur Sports Protection Act (PAPSA) banned sports betting in states where it wasn't already allowed in 1992.

Therefore Nevada was allowed to keep its robust sports betting industry. In addition, Montana, Oregon, and Delaware were exempt because they once held limit sports lotteries.

Remarkably, the law gave states with preexisting casinos a one-year window to make sports betting legal. But due to political in-fighting, New Jersey wasn't able to get a bill through its state legislature in that window.

To legalise sports betting, New Jersey will have to convince a federal judge to declare PAPSA unconstitutional under the 10th amendment.

THE CHAMPION: Ray Lesniak is the state senator who's dedicated himself to legalizing betting

Lesniak and his law firm spent $300,000 on a failed attempt to sue the federal government last year.

He's the driving force behind this push.

It will be his bill that gets signed into law, and he'll figure prominently in a potential court battle between New Jersey and the justice department.

THE REFERENDUM: New Jersey approved the non-binding referendum to legalise sports betting by an overwhelming margin

Voters approved the referendum 64-36.

With public approve in hand, the next step is to draft a bill and sign it into law.

THE LAW: By January the NJ state legislature should have a legalization bill signed and ready for Chris Christie

The bill would allow full, single-game betting in licensed casinos and racetracks.

Unlike Delaware, which only allows limited lottery betting on pro football games, New Jersey would offer the same betting options that you'd get if you went to Las Vegas

THE GOVERNOR: Chris Christie is fully behind the push for legalization

Christie was originally against pushing for legalization.

In fact, he hurt the lawsuit against the federal government brought by Lesniak and other NJ legislators by not supporting it.

But amid the wave of public support, Christie recently announced that he will stand behind Lesniak and fight for legalization against the federal government.

THE COURT BATTLE: Is PAPSA unconstitutional?

That's the $10 billion question that will decide if Americans are allowed to bet on sports in Jersey.

On the one hand, proponents of state's rights will say that the federal government has no right to regulate something like gambling on the state level.

There's also the issue of whether states are being treated equally if Nevada can have full sports betting but New Jersey can't have anything.

But it's tough to get a two-decade-old law declared unconstitutional -- and no one, not even Lesniak, really knows how a federal court will rule.

THE LOBBYIST: The NFL is going to spend every last penny to kill this

The NFL and the other major professional sports leagues will lobby against legalized sport betting as hard as they can.

These leagues have long held the belief that the existence of regulated sports betting is a potential threat to the integrity of the game.

Sports leagues across the world, including the Premiership, have given up this ideology long ago.

But regardless of whether they are right or wrong, the NFL has a barrel of cash, and they'll spend a boatload of it to fight legalized betting.

THE EFFECT ON JERSEY: Tons of cash for casinos, and tons of tax revenue for Jersey

No one really knows how much tax revenue it will generate because a number of questions are hard to answer:

How big is the current illegal and offshore sports betting industry?

How many people will actually come into Atlantic City with the sole purpose of betting?

How will competition from Delaware affect betting in New Jersey?

One UPenn estimate says the industry will generate $10 billion in revenue, $800 million of which would go to the state in taxes.

THE EFFECT ON THE REST OF US: Gambling is normalized in American society

The stigma is dead if PAPSA is declared unconstitutional.

While other countries have ingrained betting as part of the sports culture, America has superficially kept those two separate.

If PAPSA dies, all 50 states can choose to allow sports betting.

So with one ruling, what was once an unspoken, nefarious tributary of professional sports becomes mainstream.

THE LONE CAVEAT: You can't bet on New Jersey college teams

If that's the only catch, you've got to love this bill.

No, you can't bet on Rutgers.

But you will have the same betting options in Atlantic City that you do in Vegas.

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