No matter the outcome, a New Jersey court case could rapidly advance the prospect of nationwide sports betting. That was the opinion of Fort Lauderdale sports and gaming lawyer Daniel Wallach, a panelist at last week’s meeting of the National Council of Legislators from Gambling States. The non-partisan group has a neutral position on gambling, but meets to share information.
Wallach, who often speaks on such panels, discussed the outlook for the implementation of sports gambling, and, by association daily fantasy sports. Like many, Wallach reasons that DFS is just an extension of sports gambling, and once one becomes legal, the other would follow.
In mid-February, New Jersey argued for sports betting in front of the U.S. Third Circuit Court of Appeals in Philadelphia. At the heart of the matter is the Professional and Amateur Sports Protection Act (PASPA), a 1992 federal law that prohibits all but four states — Nevada, Oregon, Montana, and Delaware — from authorizing sports gambling. The circuit court is deciding not only whether New Jersey was violating PASPA in its attempts to legalize sports gambling with that state, but also whether PASPA is itself constitutional.
Wallach laid out three scenarios, all of which might advance the cause for sports gambling. 1) PASPA could be declared unconstitutional (and New Jersey sports betting would be legal); 2) PASPA could be declared constitutional but the court could rule that New Jersey has complied with PASPA, so unregulated sports betting would be legal in casinos and racetracks; or 3) PASPA could be declared constitutional and the court could rule that New Jersey’s partial repeal violates the law (and thus no sports betting is allowed in the state).
But even if the verdict is scenario No. 3, the opinion could have language that would allow the state to challenge it, Wallach believes. “One way or another we’re looking at legal sports betting in New Jersey in the next two years and it could have a channeling effect across the country,” he said. That was especially pertinent to attendees, the state legislators who need to start being prepared to address the issues.
Wallach notes that sports gambling really is the big prize, not DFS. “It gets overshadowed by DFS but the handle is just so much bigger,” he said. Industry estimates place legal DFS wagering last year in the United States at $4 billion. The black market sports gambling estimate for the same period was $200 billion – 50 times larger.
Wallach adds if states enact sports betting laws, the professional leagues will have a hard time arguing that one is legal when the other is not because they’re both encompassed in PASPA. “I think we’re going to see a challenge before the end of 2017,” he said. “We’ll see another state take a real bona fide shot at it.”
In May, American Gaming Association President Geoff Freeman called for the repeal of PASPA, prior to a congressional hearing on DFS. The House Subcommittee on Commerce, Manufacturing and Trade met to discuss “Daily Fantasy Sports: Issues and Perspectives,” and Freeman noted that DFS operated in a legal gray zone.
Wallach has long argued that progress toward sports gambling will come via the court system, rather than legislatures. “Ideally it’s a congressional prerogative but there’s really no sense of urgency on the federal government side,” he said. And sports leagues aren’t pushing for legislation, Wallach said, noting that NBA commissioner Adam Silver has said “we’re not going to lobby for it.”
But Wallach does note that litigation could shorten the time until there is federal action, by placing pressure on the leagues and on Congress. “It’s all about leverage,” he said. “With no leverage, nothing will happen. “New Jersey has been a key catalyst in advancing the discussion,” he said. “It has created a vulnerability for the federal government and for sports leagues.
“If New Jersey breaks through it could create enough pressure to force leagues and Congress to face the issue sooner than planned. It’s all about control.”
