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Bet on It

by C.J. Mittica
It may be a ways off, but local officials are certain they can win the fight to overturn a federal ban on sports gambling.

You’ve been there when it happens. The home team’s down, the crowd has quieted to a dull murmur. Hopes are fading fast. But then things start to happen—the Phillies string some hits together, or the Eagles reel off a couple big plays—and the fans come to life. The game is suddenly in the balance, and the crowd swells in a full-throated roar, so loud you can barely hear your own thoughts.

So goes the demand for sports gambling in New Jersey, rising from a few scattered voices to a fevered pitch. A voter referendum last November passed by an overwhelming 2-to-1 margin, and Gov. Chris Christie swiftly signed a bill to make sports gaming legal under New Jersey law.

Congressmen and state legislators are devising ways to surmount the federal ban that remains the final hurdle for the state. “We are committed to finding a way forward with this,” says U.S. Rep. Frank LoBiondo (R-2), who along with U.S. Rep. Frank Pallone (D-6) has introduced key federal legislation. The possibility of packed casinos and revenue infusions have both politicians and Atlantic City boosters encouraged. “I don’t think it’s a question of if,” says Haddonfield’s Liza Cartmell, CEO of the Atlantic City Alliance. “It’s a question of when.”

But, like a bet against the spread of an NFL game, this simple proposition is harder than it looks.

What’s standing in New Jersey’s way? The Professional and Amateur Sports Protection Act (PASPA). Enacted by Congress in 1992, the bill grandfathered in sports gambling in Nevada as well as restricted “sports lotteries” in three other states. It also provided a one-year window for other states, New Jersey included. But due to disagreement and looming influence from then-New Jersey Sen. Bill Bradley (the bill was called the “Bradley Act,” after all), New Jersey failed to capitalize. As a result, the state’s recent actions to enable sports gambling will have no effect until the federal ban is repealed.

That can be accomplished in one of two ways. One option is through congressional action, which is precisely what LoBiondo is trying to achieve. The South Jersey-based congressman has introduced the Sports Gaming Opportunity Act, designed to temporarily re-open PASPA until 2016 and allow New Jersey and the other 45 states to establish sports betting in that time. (Pallone’s bill would solely exclude New Jersey from the federal ban.)

The downside of the bill is it could mitigate the potential revenue boost in New Jersey (by extending the same opportunity to neighboring states). The congressman recognizes this prospect, but he sees it as a matter of which legislation has the best chance of getting passed. “We could go for the perfect, and sacrifice the good,” LoBiondo says, “and get nothing. We have nothing today and want something tomorrow. The reality is many of the other states who could be impacted by it don’t have the infrastructure we do in Atlantic City.”

By extending this chance to other states, LoBiondo believes their elected officials will rally behind his bill and increase its chances of passing. Others are skeptical. “I would love to see it go through Congress and have it overturned so we wouldn’t have to challenge [the federal ban] on unconstitutional grounds,” says Sen. Raymond Lesniak (D-Union), the state’s most prominent sports gaming supporter, “but I think there’s little chance of that succeeding.”

Lesniak’s belief is that it will be extremely difficult as long as Nevada’s Harry Reid remains the Senate Majority Leader because of his desire to protect his home state’s monopoly. In addition, many believe that as long as Republicans control the House of Representatives, the conservatives of the party will fight against any bill that promotes gambling.

There is another way, as Lesniak mentioned: to challenge PASPA in court. The state senator (who is also a lawyer) and Senate President Stephen Sweeney did exactly that last year, filing a lawsuit in federal court to deem the ban unconstitutional. The presiding judge threw out the suit, but Lesniak is undeterred. “The only reason it got thrown out,” he says, “was the judge says we had to amend our constitution to allow for sports betting first.” New Jersey has done so, and now any legal action must come from the state attorney general. (An attorney general spokesperson acknowledged increased inquiries about challenging the ban, but states, “We do not comment on litigation strategy, or what legal action the state might or might not consider.”)

Lesniak puts the chances of legally overturning the ban at close to 50/50, and is optimistically hoping for legal action by the end of the year. But just as he downplays the congressional bills, others cast skepticism on the success of a legal challenge. “It’s a very difficult way to go,” says Roger Gros, publisher of Casino Connection Atlantic City. “Courts aren’t happy with overturning laws passed by Congress, particularly if there is no unconstitutional argument there.”

It’s clear that any federal repeal of the sports gambling ban may take years. That is dire news for Atlantic City and its flagging gaming revenue, which has declined each of the past five years. A study released in December by PricewaterhouseCoopers predicts that A.C.’s gaming revenue will bottom out in 2015 with an additional 15 percent decline—while also estimating that overall U.S. gaming revenue will increase 5 percent in that same timeframe.

Adding sports books to its casinos will certainly give A.C. a boost—but how much? One 2010 study projected annual sports-book earnings of $50 million in Atlantic City alone; a second study estimates that figure could more than quadruple if A.C. casinos add online betting on sports. (State racetracks too would be able to take bets under New Jersey’s law). “This isn’t a silver bullet that will solve all of our problems,” LoBiondo says, “but it’s a nice additional option to be able to add for those people who want to make a wager on a sports event while they’re in Atlantic City.”

And the appeal is not limited to attracting sports bets. The additional benefits matter too—keeping the hotels booked during prime sporting events like the Super Bowl and NCAA Tournament, and attracting spouses and families who will dine, shop and spend money elsewhere. “There’s an opportunity to create this into a marketing story,” says Cartmell. “[It] can create events and activities that will be very appealing for people to participate in—not just from the gambling aspect, but from a social aspect.”

Internet Gamble?

Estimates of illegal sports betting run as high as $380 billion—a large portion of it fueled by online bets. The convenience of online betting has led many to wonder if sports fans will travel to Atlantic City to place a legal bet when they can quickly make one online. But it highlights something even bigger: the lucrative lifeline of online gambling of all kinds. And that’s why Roger Gros, publisher of Casino Connection Atlantic City, feels the efforts to legalize sports gambling have been misguided. “I think it’s been a waste of time; time that could have been spent really making a difference for Atlantic City,” he says. “If more time was spent on the online gaming bill, it could have been passed by now and New Jersey could be the Silicon Valley of online gaming in the United States.”

Progress is being made on that front. A bill in the state legislature would allow A.C. casinos to take online bets from anywhere in the world where gambling is legal. The projected estimates could mean hundreds of millions of dollars in revenue. And unlike in-person sports betting, there are far less federal roadblocks to enacting Internet gaming.

Online betting on sports with Atlantic City casinos has been discussed, even though the practice would be still be restricted under PASPA. The original bill allowed sports bets to be placed on cell phones and computers, but the provision was dropped when Gov. Chris Christie felt it created too many complications. Says Assemblyman John Burzichelli (D-Gloucester), as reported by WHYY Newsworks: “Rather than bog down the base question of sports betting in New Jersey by debating the second bigger issue of the definition of Internet gaming and where the bet is taking place, that debate is better reserved for separate legislation for a separate day.”

Published (and copyrighted) in South Jersey Magazine, Volume 9, Issue 2 (May, 2012).
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