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Best of Dan Podheiser

Gaming Guru

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Monmouth Park betting sports wagers will soon be legal in New Jersey

15 September 2014

Monmouth Park is going all-in on the future of sports betting in New Jersey.

The Garden State race track has invested more than $1 million in renovating its facilities to open the state's first sportsbook. Monmouth has partnered with William Hill, which operates several sportsbooks in Nevada. The track is currently hiring and training new employees with the goal of taking wagers some time this calendar year.

The only problem: Sports betting is still not quite legal in New Jersey.

But that could all change Oct. 6, when a federal district court judge will rule on a request by New Jersey Gov. Chris Christie to dissolve an injunction that prohibits legal sports betting in the state.

The decision by the judge, Michael Shipp, will inevitably be based on his interpretation of the Professional and Amateur Sports Betting Act of 1992 (PASPA), which prohibits any state from offering sports betting unless that state had a sports betting regulatory scheme in place between 1976 and 1990. Nevada was exempt under this law, as were the sports lotteries in Delaware, Montana and Oregon. When PASPA was passed, Congress also provided a one-year window for states with licensed casino gaming to pass legislation authorizing legal sports betting, but New Jersey decided not to get involved.

But in 2011, New Jersey voters approved a referendum to amend the state constitution to allow for legal sports betting in casinos and race tracks. The state legislature then passed a bill to legalize sports betting in the state, which was signed by Gov. Christie.

The professional sports leagues and the NCAA fought back, however, banding together to sue in federal district court to prevent New Jersey from legalizing sports betting. The district court granted summary judgment in favor of the sports leagues, leading New Jersey to appeal to the Third Circuit Court of Appeals. But the Third Circuit ruled that New Jersey's law directly violated PASPA. The ruling also hinted that sports betting, as long as it didn’t violate state law and did not involve the participation of the state, might be legal.

So in June 2014, New Jersey State Senator Raymond Lesniak introduced legislation that made sports betting conducted at a race track or casino lawful and not subject to criminal or civil liability for participating in sports betting. Gov. Christie vetoed the bill in August, however, saying that while he did not agree with the Third Circuit's 2011 decision, he believed it was his role to defer to the court.

Christie wrote that ignoring federal law was "counter to our democratic traditions and inconsistent with the Constitutional values I have sworn to defend and protect."

But amidst a devastating year for the state's casino industry -- which has seen three Atlantic City casinos close their doors and another two ready to shut down -- Christie changed his tune on Sept. 8, when he issued a directive saying that New Jersey would not prosecute casinos and race tracks for accepting sports bets. Christie then asked the U.S. District Court in Trenton to clarify the applicability of its original injunction to the state's new directive.

Monmouth Park, meanwhile, is busily setting up shop to begin operating a sportsbook as soon as possible. Under the terms of a potential legal sports betting market, the race track would be able to offer bets on all professional and collegiate sporting events, except for games involving New Jersey collegiate teams or on any game played in New Jersey.

Monmouth Park officials initially said they'd be open for business on Sunday, Sept. 14, to take wagers for Week 2 of the NFL season. But soon after Gov. Christie issued his directive, the sports leagues mounted their inevitable defense.

"The leagues were in touch with the [state's Attorney General's] office and clearly signaled that they're going to be in court and that they wanted to have a briefing schedule," said Dennis Drazin, an attorney and advisor to Monmouth Park. "To have accomplished all of that by [Friday, Sept. 12] would have been next to impossible and it wouldn't have been fair."

The leagues asked for Monmouth Park to hold off running its sportsbook operations for 45 days. And though the race track likely could have made a quick cash grab by taking bets on Sunday and up until Shipp's ruling on Oct. 6, that was never the goal.

"We could have tried to take bets in a small-scale way beginning Sunday," Drazin said, "but it wasn't the right kind of launch and it wouldn't have given the public the confidence in us that we want in the long run."

"Bottom line: We don't believe we're going to lose," Drazin said.

Monmouth Park is confident Judge Shipp will dissolve the injunction. But Joe Kelly, an expert in gaming law and professor of business law at SUNY College at Buffalo, is not as convinced.

"I can't see a judge [dissolving the injunction] when the legislation was specifically found to be in direct violation of PASPA," Kelly said. "I don't think this end-around will be successful."

Kelly acknowledged that Judge Shipp will likely take several factors into consideration when examining Gov. Christie's directive, such as the public policy and societal implications of allowing New Jersey casinos and race tracks to operate sportsbooks. But none of that, Kelly explained, will override the core issue.

"The main question: Is sports betting prohibited across the U.S.?" Kelly said. "I think it is, and I think that's all that will matter here."

Sen. Lesniak thinks that while the sports leagues may push back in court, they have lost a lot of their leverage and will inevitably be forced to make a deal with New Jersey sportsbooks. In a phone interview, Lesniak cited recent comments made by NBA Commissioner Adam Silver, who said that legalized sports betting in states like New Jersey is "inevitable" and that the NBA "will ultimately participate in that." Lesniak believes the sports leagues may have asked for Monmouth Park to hold its operations for 45 days in order to negotiate a deal.

"It's pure speculation," Lesniak said. "I'm just trying to read between the lines."

Drazin, like Lesniak, thinks the sports leagues have a unique opportunity to embrace and benefit from the sports betting industry.

"I would like to see the leagues have an intelligent conversation with us about working out some kind of revenue share," Drazin said. "Then we can present this to the judge and make his job a lot easier."

If the judge were to rule in favor of New Jersey, Monmouth Park would likely begin taking sports bets some time around Oct. 24. And though Atlantic City casinos have remained mostly silent on the issue of sports betting in New Jersey, Lesniak believes they will get involved.

"I'm certain that as soon as there's a judicial stamp of approval they will move forward as well," Lesniak said.

Nevada casino operators have a history of being wary of entering "gray" gaming jurisdictions, with a fear that their licenses will be revoked in Las Vegas. But Drazin doesn't believe that will be an issue in New Jersey.

"I don't think William Hill would agree to start doing this at Monmouth Park unless they were sure Nevada regulators would be OK with it."

A legal sports betting industry in New Jersey will have the potential to prop up the Atlantic City casino market as it attempts to rebuild. The city has lost four of its 12 casinos in 2014, and the Taj Mahal could be next to go soon. Sportsbooks will likely help Atlantic City's casinos and hotels fill up during the fall and winter months, when occupancy rates have historically been low.

Still, a win in court is far from a sure thing for New Jersey. But it may be all that's left for the chances of legal sports betting in the Garden State.

"This has been a five-year battle," Lesniak said. "I've left no stone unturned to make this happen."
Dan Podheiser

Dan Podheiser has covered the gambling industry since 2013, but he has been an avid poker player for more than a decade, starting when he was just 14 years old. When he turned 18, he played online poker regularly on U.S.-friendly sites until Black Friday in April 2011.

Since graduating from Emerson College with a degree in journalism in 2010, Dan has worked as the sports editor for a chain of newspapers in Northwest Connecticut and served a year as an Americorps*VISTA, writing and researching grant proposals for a Boston-based charity.

Originally from South Jersey, where he still visits occasionally to see his family (and play on the state's regulated online poker sites), Dan lives in Brighton, Mass. with his wife and dog.
Dan Podheiser
Dan Podheiser has covered the gambling industry since 2013, but he has been an avid poker player for more than a decade, starting when he was just 14 years old. When he turned 18, he played online poker regularly on U.S.-friendly sites until Black Friday in April 2011.

Since graduating from Emerson College with a degree in journalism in 2010, Dan has worked as the sports editor for a chain of newspapers in Northwest Connecticut and served a year as an Americorps*VISTA, writing and researching grant proposals for a Boston-based charity.

Originally from South Jersey, where he still visits occasionally to see his family (and play on the state's regulated online poker sites), Dan lives in Brighton, Mass. with his wife and dog.