A bill to make sports betting legal in New Jersey cleared a hurdle in the NJ assembly yesterday.
Two obstacles remain. First, voters must give their blessing in a referendum. That would be an interesting campaign, as MLB, the NBA, NCAA, and NFL would become politically involved, and claim the moral high ground. I share the Sports Law Blog's cynical view of that prospect.
If the referendum passes, a 1992 Federal law - the Professional and Amateur Sports Protection Act - made sports gambling illegal in any state that had not allowed it at that time. New Jersey would have to win a court challenge to the Sports Protection Act.
The story above mentions that legal opinion is divided on whether New Jersey would succeed in striking down the law. I think they've got a fighting chance. The law allows sports betting in 4 states (Delaware, Montana, Nevada, and Oregon). To restrict neighboring states from doing the same certainly violates the spirit of federalism. Whether the law is improper under the Commerce Clause is the legal question. Would a statute limiting automobile production to Michigan and Tennessee pass muster? I doubt it, and the argument that sports gambling is sufficiently distinct to make this a federal issue seems weak. In any event, the legal challenge could be as interesting as the democratic one.
New Jersey's initiative follows a well established trend in gambling legislation. The state budget is $4 billion in arrears, and raising taxes is politically costly. Spending money is politically beneficial, hence legislators resist expenditure cuts, and search for new sources of revenue when times are tough. Opening the state's economy to new forms of gambling and taxing them is a common political solution. The pattern has been repeated many times, as I discuss in this paper. (An early version of it can be obtained from my web page if you don't have university access to the publisher's site).