In New Jersey, a Court Fight Over Sports Betting

The leagues had sued to stop New Jersey, which has been the most aggressive state in pushing sports betting, and have steadfastly opposed any legalization.

But the professional leagues’ resistance — and, it would seem, the likelihood of legalization — has changed since District Judge Michael Shipp sided with them last year. The leagues’ arguments Thursday were not against sports betting, but more narrowly against the way New Jersey is trying to legalize it — without, they contend, the proper regulation.

They are increasingly signaling that they, like financially burdened states, want in on what is estimated to be a $400 billion black market of sports betting.

This month, the National Basketball Association announced an investment in FanDuel, a fantasy sports betting website. Major League Baseball co-sponsors a daily contest on its website with DraftKings, another fantasy site. The National Football League allows bets on the increasing number of games it now plays in London, where sports betting is legal, and has allowed players to sign deals with fantasy websites.

And last week, N.B.A. Commissioner Adam Silver declared his support for the repeal of the 1992 federal prohibition on sports betting in an op-ed article in The New York Times, arguing “times have changed,” and citing New Jersey’s attempts to legalize sports betting as evidence of “an obvious appetite among sports fans” to bet on games. This fall, he told a sports business conference that legalization was inevitable — and that his league would want in.

Mr. Silver said in his op-ed article that he supported replacing the federal law, known as the Professional and Amateur Sports Protection Act, or Paspa, with a new federal framework including licensing and regulations, such as monitoring of unusual betting-line movements, and age restrictions. New Jersey’s plan, on the other hand, is essentially bereft of regulation.

Mr. Silver stated that measures like New Jersey’s were “both unlawful and bad public policy.” That put the N.B.A. and the other leagues back in the courtroom, continuing their suit. Judge Shipp had sided with the leagues in 2013, and earlier this year issued a temporary injunction against the state and the tracks seeking to offer sports betting, making proponents believe he will rule against them again Friday, when he has promised a decision.

“Legally nothing changes; aesthetically, everything changes,” said Marc Edelman, a professor of law at the Zicklin School of Business at Baruch College, who has followed the case. The teams’ forays into fantasy game sites, he said, “shows that the league owners are willing to take money directly from online gaming, and gives the owners a strong incentive to foster a legal environment that is favorable to at least certain kinds of online gaming.”

“We are dancing ever so much closer to traditional sports gambling becoming legal,” he said.

Lawyers for the state and the racetracks that want to offer sports betting seized on the leagues’ investment in fantasy leagues. Ronald Riccio, a lawyer for the New Jersey Thoroughbred Horsemen’s Association, accused them of “an effort to have your cake and eat it too.”

“These fantasy games are fantasy in name only,” Mr. Riccio said. “They are wagers that get placed based on the performance of individual players in the leagues’ games. That’s not fantasy. The leagues are sponsoring it, they are endorsing it, they have their own platforms for it, their players are participating in it.”

He disparaged the leagues’ arguments that sports betting would be a hardship on the leagues.

“The only hardship to the leagues is that there’s going to be another competitor,” Mr. Riccio told Judge Shipp. “That’s not a hardship. That’s unfair competition, and that’s illegal.”

In his arguments Thursday, a lawyer for the leagues did not address Mr. Silver’s shift in favor of sports betting, which many proponents had proclaimed a “game changer,” or the fantasy leagues. Instead, he argued that New Jersey’s attempt to work around the federal statute still violated it.

The Democratic-led Legislature and Gov. Chris Christie, a Republican, have pushed sports betting as a way to help bail out Atlantic City and the state racetracks, which have both been ailing for several years.

The state’s voters in 2011 approved a constitutional amendment legalizing sports betting at casinos and racetracks, and in 2012, the Legislature passed a bill decriminalizing sports betting.

The four major professional sports leagues and the National Collegiate Athletic Association sued, arguing that sports betting would corrupt the image of the sports and tempt athletes to fix games. Judge Shipp and later the United States Court of Appeals for the Third Circuit upheld their challenge, and the Supreme Court declined to hear the case.

The Third Circuit decision, however, said that nothing stopped New Jersey from declining to enforce prohibitions on sports betting. Governor Christie vetoed a bill this year that would repeal the state prohibitions on sports betting. But a month later, with several casinos in Atlantic City closing, he issued an order that the prohibitions not be enforced. The Legislature passed another repeal, which he signed, prompting the leagues to sue again.

Presuming Judge Shipp rules against legalization on Friday, proponents say their best chance may be with congressional repeal. The Senate shift to Republican control in January will sideline one of the biggest opponents of expanding sports betting, the majority leader, Harry Reid, a Nevada Democrat who has fiercely defended his state’s exclusive rights. Still, State Senator Raymond J. Lesniak, the biggest champion of sports betting in New Jersey, said he questioned whether Congress had the interest in repealing Paspa.

Short of a complete ruling in their favor, lawyers for the racetracks told Judge Shipp that they should be allowed to offer the same fantasy league betting that the leagues do on their websites.

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