NJ Loses Another Battle on Sports Betting Front: Supreme Court Unlikely to Take Case

More bad news for the state of New Jersey and its efforts to legalize sports betting as a Third Circuit Court of Appeals denied a bid for a full rehearing.

The Court ruled Friday:

“The petition for rehearing filed by the Governor of the State of New Jersey, David L. Rebuck, Frank Zanzuccki, New Jersey Thoroughbred Horsemen’s Association, Inc., and Sheila Y. Oliver and Stephen M. Sweeney, appellants in the above-entitled cases having been submitted to the judges who participated in the decision of this Court and to all the other available circuit judges of the circuit in regular active service, and no judge who concurred in the decision having asked for rehearing, and a majority of the judges of the circuit in regular service not having voted for rehearing, the petitions for rehearing by the panel and the Court en banc, is denied.”

In September, a federal appeals court ruled that the state's betting law conflicts with federal law and shouldn't be implemented.  The case was heard by a three-judge panel at the 3rd U.S. Circuit Court of Appeals in Philadelphia.

Supporters of the measure, including New Jersey Governor Chris Christie, argue that current federal legislation has resulted in an unfair playing field whereby only a handful of US states, most notably Nevada, can offer legalized sports wagering.

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Christie’s office issued a statement following the September decision:

"In the dissent, the judge agrees with New Jersey's central argument -- that the law is unconstitutional since it prevents sports betting in New Jersey against the wishes of its own elected officials and citizens," spokesman Colin Reed said in an email. "This makes the issue all the more appropriate to be decided by the U.S. Supreme Court.

"Two years ago, the people of New Jersey voted overwhelmingly to bring sports betting to New Jersey, and the governor agrees with his constituents. There's no reason it should be limited to only a handful of states. It's a fundamental issue of fairness."

Voters passed a sports betting referendum in 2011, and last year New Jersey enacted a law that limited bets to the Atlantic City casinos and the state's horse racing tracks.

The September appellate ruling was by a 2-1 majority:

"We are cognizant that certain questions related to this case -- whether gambling on sporting events is harmful to the games' integrity and whether states should be permitted to license and profit from the activity -- engender strong views," judges wrote. "But we are not asked to judge the wisdom of PASPA or of New Jersey's law, or of the desirability of the activities they seek to regulate. We speak only to the legality of these measures as a matter of constitutional law ... New Jersey's sports wagering law conflicts with PASPA and, under our Constitution, must yield."

Daniel L. Wallach of the law firm Becker & Poliakoff predicts the case has an uphill battle making it to the Supreme Court. (Update:  Mr. Wallach has advised Gambling911.com that he adjusted his pessimism so please be sure to read his blog in its entirety)

(But) we need to be realistic here. Despite the appeal of many of these arguments, New Jersey's chances for success have taken a big hit with the Third Circuit's denial of rehearing.  There's no getting around that fact. New Jersey's best hopes for success always lied with the Third Circuit (the first time). But now it's a steep uphill climb. A litigant pinning its hopes on Supreme Court review -- in the absence of a direct circuit conflict -- stands about as much of a chance of success before the high court as I have in getting a date with Kate Winslet. While I was originally very optimistic about the prospects for Supreme Court review (and, perhaps, that was my enthusiasm for the subject getting the best of me), I am much less so now. Less than two percent of all certiorari petitions are granted by the Supreme Court, and even filtering out all of the pro se petitions and only counting "paid" petitions, the percentage increases to only slightly less than 5%. These are sobering numbers, which do not bode well for New Jersey. But what about Judge Vanaskie's dissenting opinion, you ask? As Justice Harlan observed, "such differences of view are deemed an intramural matter to be resolved by the Court of Appeals itself."

The Supreme Court denies certiorari. A lone circuit court decision is usually not enough to merit certiorari review, particularly since other states (such as California and Minnesota) have recently introduced bills which would legalize sports wagering in those states. Thus, it is likely that the moment of truth will arrive only after other federal circuits (such as the Ninth Circuit, which covers California, and the Eighth Circuit, which covers Minnesota) have weighed in on the constitutionality of PASPA and a split among the circuits develops. At that point, the Supreme Court could step in to resolve the circuit conflict (perhaps in a few years). But, in the absence of a circuit conflict, it is conceivable that the Supreme Court could still accept certiorari to clarify the rules surrounding federal preemption (such as whether preemption applies in the absence of any federal scheme) and the circumstances under which the anti-commandeering doctrine are applicable. Ironically, the future of this case may have little to do with sports or gambling, but, rather, may turn on broader constitutional principles.

New Jersey is set to launch real money online gambling in the coming days, however, sports betting will be excluded from any such offering.

- Gilbert Horowitz, Gambling911.com