Daily Fantasy Sports have been one of the biggest boons to the general sports betting industry in years. With the apparent similarity between fantasy leagues that allow for betting on individual player performances and typical sports gambling that wagers on the outcome of games, proponents of legalized sports gambling have additional ammunition against the leagues and the laws. And once again, New Jersey is leading the fight.
On Wednesday, February 17, the Third Circuit Court of Appeals heard arguments from New Jersey and the major sports leagues. This was a rare en banc hearing, where appeals court justices agree to rehear a case already decided earlier by three of the justices. The big issue discussed was whether or not New Jersey can repeal the state's laws prohibiting sports betting.
The problem with all sports gambling legislation has been the federal Professional and Amateur Sports Protection Act, passed in 1992 and designed to prohibit betting on sports in 46 states that, at that time, did not have sports betting laws that could be grandfathered in with the new legislation. In an effort to revive Atlantic City casinos, New Jersey has been attempting to legalize sports betting and seeking ways around the 1992 law.
The main argument from the sports leagues is the potential threat to the integrity of the games that would arise from gambling on games. The NFL, NBA, NHL, MLB, and NCAA are all opposed to New Jersey's legislation, as they foresee the temptation for players or coaches to throw games to cash in on bets made prior to the game.
The fact that this case is being heard by the Third Circuit has implications outside of New Jersey. Delaware has already legalized parlay betting on sports games, and Pennsylvania is considering how to proceed with sports betting legislation. The decision of the Third Circuit would be binding on these states, as well as the US Virgin Islands, another jurisdiction considering sports gambling.
Unfortunately, the Third Circuit is not likely to make its decision for months. If it rules in favor of New Jersey, sports betting may come to that state and others over the next few years. But if it rules in favor of the sports leagues, Nevada will remain the only state in the US where wagering on sports games is legal. Appealing the decision to the Supreme Court could be a next step for either side, but it is unlikely the highest court will take the case on.
Another possibility outside of court action would be if Congress reconsiders sports betting legislation. The recent media attention to Daily Fantasy Sports has raised awareness of what counts as betting on sports and what does not. With New York already moving towards regulating the DFS sites, and the leagues' interest in DFS, the current legislation is showing itself to be uselessly outdated.