New Jersey’s bid to legalize sports betting is in the hands of the U.S. Supreme Court, where a positive ruling could chart a path to new revenue for the state and debt-ridden Atlantic City.

The high court heard oral arguments in December about a 2014 New Jersey law authorizing sports wagering at horse racing tracks and Atlantic City casinos. The U.S. Third Circuit Court of Appeals struck down the law, saying it violates the 1992 federal Professional and Amateur Sports Protection Act prohibiting state-sanctioned gambling except in Nevada, Oregon, Montana and Delaware.

“It’s very important beyond just the revenue numbers it would generate,” said state Sen. Raymond Lesniak, D-Elizabeth, who spearheaded New Jersey’s efforts to offer legalized sports betting after filing a lawsuit in 2009 on the issue with support from the state legislature. “This will bring people into Atlantic City and our racetracks not just for betting, but overnight visits and dining on weekends when there are big sporting events.”

Revel Atlantic City, center, stands in this aerial photograph taken over Atlantic City, New Jersey, U.S., on Thursday, Aug. 28, 2014, shortly before it closed. There are plans to reopen it in 2018,
Backers of the sports gambling bill say it would generate business for casinos in Atlantic City (pictured) and at horse racing tracks. Bloomberg News

Lesniak followed up his initial lawsuit by introducing legislation to allow sports wagers at Atlantic City casinos and New Jersey racetracks in New Jersey that was signed into law by Christie in 2012.

The major sports leagues banded together to obtain an emergency injunction to block it, as they did with the 2014 that is now before the Supreme Court.

If New Jersey gets the green light for sports wagering, the Garden State is estimated to generate more than $173 million in additional annual tax revenue and 3,633 jobs, according to a study from Oxford Economics.

Any gains may be fleeting, said Marc Edelman, a professor of law at Baruch College’s Zicklin School of Business, who said any fiscal gain for New Jersey might be muted by the fact that 32 other states would be positioned to also offer sports betting over the next five years.

“If New Jersey could offer sports betting now and no other state was allowed it could have been a real windfall,” said Edelman, who consults on legal issues involving the sports and gambling industries. “New Jersey may enjoy a head start since they already have a statute in place, but once more states follow suit that early advantage would be eradicated.”

New Jersey, where the Atlantic City casinos once enjoyed a East Coast casino gambling monopoly, has seen gambling revenues dwindle as casinos opened throughout the Atlantic seaboard.

Monmouth Park Racetrack in Oceanport was set to offer sports betting in late 2014 before U.S. District Judge Michael Shipp ruled on behalf of five professional sports leagues and the National Collegiate Athletic Association to prevent the law from moving ahead. The U.S. Third Circuit appeals court upheld Shipp’s ruling in a 2015 2-1 decision with Judge Maryanne Trump, sister of President Trump, joining Judge Marjorie Rendell in the majority.

Assemblyman Ralph Caputo, D-Belleville, who co-sponsored the 2014 sports betting legalization bill with Lesniak, said after the Dec. 4 Supreme Court arguments he was “optimistic” about by the state’s chances. Caputo said allowing sports betting at casinos would help revive Atlantic City’s economy with stations at racetracks providing a jolt to the state’s horse racing businesses.

“When we started this effort many years ago, many legal experts told us we had no chance, but I knew the existing federal law was unfair,” said Caputo. “Our gaming industry – and the benefits it brings to our state – needs sports betting, if it’s to stay modern and survive.”

New Jersey has faced fiscal pressures in recent years stemming mainly from a large unfunded pension liability burden and has incurred 11 bond rating downgrades since Gov. Chris Christie took office in 2010. The Garden State, which will swear in newly elected Democratic Governor-Elect Phil Murphy on Jan. 16, has bond ratings of A3 from Moody’s Investors Service, A-minus from S&P Global Ratings and A from both Fitch Ratings and Kroll Bond Rating Agency.

New Jersey sports betting backers have also pushed the benefits struggling Atlantic City would receive from the industry. Increased regional gambling competition has prompted five casino closures in the Jersey Shore resort since 2014. The city, which has junk bond ratings of CCC-plus from S&P Global Ratings and Caa3 from Moody’s, has faced state control since November 2016 after it nearly defaulted on its debt.

Lesniak said legalized sports betting would provide a shot in the arm to Atlantic City casinos and especially the Revel, which is scheduled to reopen this year under new ownership nearly four years after declaring bankruptcy. The Democratic lawmaker said the tax breakdown between how much revenue Atlantic City and state would receive is unknown depending how the court rules, but he stressed that with billions of dollars already being spent on illegal sports wagering there is a major economic opportunity for New Jersey.

“This would be a lifeblood for Atlantic City,” said Lesniak, who opted not to seek re-election last year after a 40-year career in the New Jersey legislature with his term ending Monday.

New Jersey voters showed strong support for legal sports wagering in 2011 with a 64% approving a non-binding referendum on the issue. Monmouth Park proceeded to build a $1 million sports-betting lounge, which during the legal fight has operated as a sports bar offering prizes during championship games.

“This would bring liveliness and economic vitality to our racetracks,” said Lesniak. “Our racetracks are dying and this would bring more young people to them.”

Edelman said how the high court will rule is hard to gauge with justices weighing the powers of state and federal powers. He noted that depending how the court sides, Congress could still step in with a new law barring sports betting or repealing PASPA.

“Congress could pass a new law to repeal PRASPA that curtails sports gambling,” said Edelman. “The final decision may lie with Congress.”

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