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Expert Focus – All on the line in New Jersey’s battle of PASPA

Jeff Ifrah

All eyes are set to fall on the USA today, as the Supreme Court of the United States (SCOTUS) hears oral arguments from New Jersey officials regarding the constitutionality of the Professional and Amateur Sports Protection Act (PASPA).

With a distinct focus on New Jersey’s bid to offer licensed sports betting, the state has already faced seven losses in federal court, before SCOTUS agreed to hear the case.

SBC has been talking to Jeff Ifrah, founding partner of Ifrah Law, and Daniel Wallach, a lawyer and shareholder in Becker and Poliakoff, about PASPA and the potential eventualities of what could be landmark proceedings, with Ifrah offering a brief insight into the history of this potentially historic case: So basically, for years, literally, New Jersey has been trying to offer betting on sports at its casinos, it’s racinos and it’s horse tracks.

“There has been push backs by the sports leagues, because there is a federal law that allows the sports leagues to object to any state that is looking to authorise sports betting.

“It’s strange, because Delaware and Nevada are already authorised, and offer sports betting at their casinos and racinos.  But nevertheless the way the law works, there was a window that was open, and if you didn’t take advantage of it as a state, then you have to forever hold your peace. So basically, Nevada and Delaware can offer, and no one else can.

“So New Jersey didn’t think this was fair, and it’s not fair obviously, so they brought in some legislation, which Governor Christie signed.  And it was never able to be implemented, because the league immediately went to court and challenged New Jersey’s law, under this federal law known as PASPA.”

A number of states have introduced or passed laws relating to sports betting as they await a Supreme Court ruling, with Utah, a state that has no gambling, becoming the 19th to sign a bill that challenges PASPA on grounds that the federal ban infringes on states rights.

Ifrah explained: “There are states that are waiting to hear what the Supreme Court is going to do. And those states have passed laws that said, “If the Supreme Court reverses PASPA and offers sports betting, we want our casinos to offer sports betting.” Those states do not have online casinos, do not have online poker. So the model that ends up existing in those states, is not necessarily going to be a model that is supportive of a mobile product, like it will be in New Jersey.”

Daniel Wallach

With Daniel Wallach also commenting: “Connecticut is going to issue regulations shortly. The governor has signed into law a bill that would allow sports betting, coextensive with the repeal of PASPA. And over the next several months, I believe Connecticut’s, I guess, regulatory body, will promulgate regulations.

“So the first two to market, certainly Connecticut. Mississippi is going to be number one. But there are very few states are going to be left in the dust. It’s just a question of first. But I believe by the end of next year, if PASPA falls, or there is a legitimate pathway for sports betting, no fewer than fifteen states will follow New Jersey’s path.”

With a final decision not due until 2018, what potential outcomes could be brought forward by SCOTUS? In truth a plethora are possible, however, in principle it could potentially boil down to three eventualities.

New Jersey loses and PASPA is deemed constitutional, the state wins and PASPA is no longer federal law or a partial repeal is awarded and other states would have to follow this same path.

Wallach believes what he calls ‘the reversal court’ will be favourable to the arguments put forward by NJ: “I believe that this court will hand victory, in some measure, to New Jersey. What the victory looks like, is unknown at this point. But this is a reversal court. Over the last five years, the Supreme Court has reversed Federal Court of Appeals decisions at a clip of 70%, plus. During last year’s term, the reversal rate was either 82% or 83%.”

“I think the US Supreme Court decision will likely provide the answer. Because if PASPA is declared unconstitutional, impediments on the state level are removed immediately. And then of course, it becomes a state-by-state framework. And then, good luck putting the genie back in the bottle. But if PASPA remains intact, the league’s hold the upper hand, and they will get their federal approach.”

The role of America’s varying sporting organisations, NBA, NHL, NFL, MLB, NCAA, cannot be underestimated in this case, although their stance, particularly that of the National Hockey League, is believed to be softening, with the Golden Knights franchise in it’s inaugural season at its Las Vegas home.

The role of European operators will also have to be defined, as will the approach taken should NJ be successful, whether it be on a state by state basis or a comprehensive federal solution.

Bricks and mortar vs mobile is another debate that will rage, with Ifrah believing mobile is unavoidable somewhere down the line: “Brick and mortar. Going into a casino, registering in a casino and, you know, betting or wagering on the sports book offerings in the casino. It’s not going to be a mobile product. It’s not going to be a PC desktop product, at least not immediately.

“Hopefully New Jersey, which already has a robust online gaming market – both poker and casino are legal in New Jersey. Hopefully, because the casinos already are familiar with an online product and an online platform, it won’t be long. And they are very supportive of moving a sports betting product online.”

Wallach added: “Yes, online is inevitable. Maybe not at the outside. The way New Jersey’s law is structured is a brick and mortar centric law. And some of the other states that are, sort of, on deck, don’t have online permissiveness. But inside of a couple of years, it’s going to go that way.”