New Jersey's online gambling fight: racin' in the street

ACCORDING to a 1999 National Gambling Impact Study, US$380bn a year was being illegally wagered on sports betting. A decade later, that amount no doubt now exceeds US$500bn.

Profits from these wagers are lining the coffers of offshore internet operations, backroom bookies and organised crime rings. Sports betting in the US is unregulated, untaxed and illegal, except as allowed by a federal law passed in 1992, in Nevada, Delaware, Montana and Oregon.

This federal law deprives the State of New Jersey of over US$100m of yearly revenues, as well as depriving our casinos, racetracks and internet operators of over US$500m of gross income.

Rather than supporting thousands of jobs, economic activity and tourism, the federal ban instead supports offshore operators and organised crime.

New Jersey’s casinos are suffering, our racetracks are dying and our state budget needs revenue.

I have filed a lawsuit on behalf of the people of the State of New Jersey, in the United States District Court, District of New Jersey, to declare the law passed by the United States Congress and signed into law by the President of the US of America on 28 October 1992 unconstitutional.

The law, entitled the Professional and Amateur Sports Protection Act of 1992 (PASPA), violates the Commerce Clause of the United States Constitution by not uniformly regulating commerce throughout the US.

It also violates the 14th Amendment to the United States Constitution by being unconstitutionally discriminatory against the plaintiffs and the people of the State of New Jersey.

It also violates the 10th Amendment to the United States Constitution by regulating a matter that is reserved to the states.

PASPA represents a substantial intrusion into states’ rights and restricts their fundamental right to raise revenue to fund critical state programmes. Moreover, it blatantly discriminates between the states.

Finally, particularly with respect to state-sponsored sports-pool lotteries, the law cannot be justified on its merits and creates a virtual monopoly for organised crime over a multi-billion dollar industry. Those are not just my words. These views were also expressed back in 1992 by US Senator Charles Grassley in opposition to the PASPA legislation.

PASPA’s intrusion into states’ rights gives Congress the power, which has typically been left to the states, to determine how states raise revenues; and it is particularly troubling in that it permits enforcement by sports leagues. Again, those are not just my words. They were also the opinion expressed by the US Department of Justice in a letter to then Senate Judiciary Chairman Joe Biden dated 24 September 1991.

I hope to have a favourable ruling on my lawsuit in time for the residents of New Jersey to place a bet on next year’s Super Bowl. Bet on it.

And I’m not stopping at sports betting. The federal government is also interfering in New Jersey’s ability to conduct intrastate internet gaming, taking the position that if it’s over the internet, it can be regulated at the federal level, even if the servers and participants are exclusively within a state’s borders.

And legislation pending in Washington, DC which would allow internet gaming, prohibits states from taxing their revenues, so they’re trying to get us coming and going.

Intrastate internet gaming in New Jersey would bring in US$150m a year to our beleaguered casinos and US$37.5m a year to our beleaguered state.

You would think my fellow legislators would jump at this opportunity, but they’re resisting, expressing concern about opposition from the federal justice department.

I look at it differently. New Jersey’s Bruce Springsteen wrote:

“Some guys they just give up living,
And start dying little by little, piece by piece,
Some guys come home from work and wash up,
And go racin’ in the street.”

I prefer “racin’ in the street”.

For more on New Jersey, see this month’s Market Focus: New Jersey two-minute briefing.