New Jersey will be licking its financial wounds if its war against a federal prohibition on sports betting is unsuccessful.
But the state’s coffers will receive a massive boost if the verdict is positive in the Supreme Court case which is attempting to overturn the Professional and Amateur Sports Protection Act.
According to the reports released by the state’s legal department, the Sports and Exposition authority, as well as the Senate Majority Office, NJ has been charged to the tune of $8.7 million contesting the 1992 enacted federal legislation banning sports betting.
If PASPA is nullified, NJ is expected to make $173 million in tax earnings and witness the generation of over 3600 jobs, as outlined by an Oxford Economics report.
David Schwartz, an executive at the University of Nevada’s Center for Gaming Research, Las Vegas, stated that sports gambling represents approximately 2% of the overall gaming earnings in Nevada. He disclosed that even though sports betting would increase Atlantic City casinos’ incomes, he warned against depending on it to create a financial fortune for the resort.
A law firm, known as Gibson Dunn & Crutcher has billed the state over $7 million in five years, 2012 – 2017. These fees, according to the record keeper for the Department of Law, are taken care of by the Department of Gaming Enforcement as well as the Racing Commission with levies collected from horse racing courses and casinos.
Another firm, Gibbons PC charged the state Legislature an excess of $1.5 million for legal services for the period January 2012 until January 2018. This firm has also represented the Sports Commission, and a spokesperson of the commission affirmed that a legal fee of $77,000 was paid for the service.
In 2011, the people of New Jersey massively endorsed the amendment of the constitution to permit sports gambling. Then in 2012, the state Lawmakers approved the Sports Gambling Act with ex-Governor Chris Christie signing off on the regulation in 2012 & 2014 to ratify the amendment.
The legislation was contested by five sports leagues, including the NBA, NFL, NCAA, NHL, NFL and the MLB, with the case now referred to the United States Supreme court, which entertained the oral arguments last December. The court is expected to give judgment towards the end of June or at the beginning July.
All the seven casinos in Atlantic City as well as the two that will begin operation this summer are waiting anxiously for the court’s decision.
Although many of the casinos refused to comment on their possible course of action if the Supreme Court pronounce a favorable judgment, those that did, disclosed that they were ready to provide the “Las Vegas method” of sports gambling in Atlantic City.
Frank Leone, the CEO of Ocean Resort, which is due to open on June 28, said his casino was planning on incorporating a large sports betting area at the casino, where patrons can both bet and watch sports and racing events.
“Ocean Resort Casino plans to provide a ‘top- notch’ sports-wagering experience in an amazing highly dynamic and extremely breathtaking location together with what is generally regarded as the best names in the international sports wagering industry,” he said.
“Ocean Resort Casino will be placed to instantly provide both online and traditional sports gambling pending the issuance of license and regulatory authorization.”
Caesars Entertainment group run three casinos in New Jersey — Caesars Atlantic City, Bally’s Atlantic City as well as Harrah’s Resort Atlantic City, combined with 35 other casinos spread throughout the USA.
“We are of the opinion that PASPA should be annulled by the Court, even though nobody understands how the court will decide, or the regulatory situations that will emerge from the court’s decision, our reaction will be in accordance with the opportunity and regulations that follow if the regulation changes,” Caesars Entertainment’s regional public relation Executive Noel Stevenson said.
Trenton, NJ, lawmakers getting ready for positive result
Three Democratic lawmakers have presented a bill that will control and tax betting on professional and collegial sports. In the proposed bill, revenues from sports betting would be subjected to 8% tax while online sports wagering would be subject to a 12.5% tax.
Racetracks and Casinos would have to pay a yearly sports wagering “credibility fee” which will be equivalent to 2.5% of their sports betting revenues or $7.5 million. But one of the bill’s sponsors, Assemblyman John Burzichelli disclosed that he didn’t expect that condition to be incorporated into the final law.
Estimations from the American Gaming Associations showed that Americans stake in excess of $150 billion annually on illegal sports gambling with most of this money going to offshore gambling companies.
Considering that the US Supreme Court is due to legislate online sports betting later this year, DraftKings is poised to take advantage of the coming court ruling to expand its businesses within and beyond New Jersey.
The fantasy sports company has begun to liase with several New Jersey casinos to determine partnership courses to take when sports betting becomes legal in all US states.
The only US state where sports betting is currently allowed is Nevada. A federal 1992 Professional and Amateur Sports Protection Act (PASPA) makes it illegal for every other US state to operate regulated sports betting services. According to PASPA, government entities are not allowed to sponsor, operate, advertise, promote, license or authorize betting programs on games played by amateur or professional athletes.
But the state of New Jersey is currently leading others to challenge this prohibition at the courts, and the Supreme Court will be handing down its decision over the case towards the end of this year.
In readiness for a positive Supreme Court decision legalizing sports betting in most US states, DraftKings co-founder and CEO Jason Robins looks forward to expanding his sports betting business in New Jersey and beyond.
He stated that legalizing sports betting across the entire country would offer “enormous” development opportunities for DraftKings and other gambling operators across the US.
To underscore their readiness for business when the Supreme Court legalizes sports betting in the US, spokesman James Chisholm revealed that DraftKings is “perfectly positioned to succeed in a legal sports betting market.” And to further drive this point home, the DraftKing appointed Sean Hurley as the head of sportsbook, a newly created position within the company.
DraftKings disclosed to Associated Press that it has around 10 million customers. But the betting company revealed that it is focusing on its Daily Fantasy Sports (DFS), which is its core offering, at the moment.
“It’s not like [sports betting] is a new activity that all of a sudden is going to be there,” Robins told the media.
“It already exists; it’s just happening on the black market now.”
Many other potential sports betting operators are waiting with bated breath that the US Supreme Court will rule in favor of states so that the national sports betting market can be expanded beyond what currently happens in Nevada alone.
Sports betting is now legal in West Virginia.
The recently passed West Virginia Sports Lottery Wagering Act has completely changed the landscape of gambling in the eastern US state. It took effect last Friday when West Virginia Governor Jim Justice had declined to sign it, meaning the bill, which was formerly known as Senate Bill 415, automatically passed into law.
West Virginia becomes the sixth state in the United States to legalise sports betting, with the others being:
- New Jersey
- New York
West Virginia Lottery Commission to manage state’s gambling
The commission will empower the five gaming operators within the state to offer sports betting on pro and collegiate sports. To this extent, a revenue of 10 per cent will find its way into the coffers of the state from the gross revenue of the gambling operators.
Legislators and Sports Associations Disagree On Respective Demands
Gov. Justice expressed high hopes that the US Supreme Court would approve sports betting nationally in the coming months. This would enable him to sort out areas of conflict within the legislation and also analyze areas of partnership with major sports league. The governor emphasizes that partnering with big sports leagues will be beneficial everyone in West Virginia.
There is however a rift between state legislators and sports associations over the expected sports betting legalization by the Supreme Court. Legislators seek for the market to be highly regulated, but sports associations seek a 1 per cent integrity fee cut. The NBA and MLB dominate the sports associations, and the 1 per cent integrity fee they seek is estimated to amount to about $15 billion revenue.
NBA and MLB promise to work with Gov. Justice on sports betting activities
Following Gov. Justice’s encouraging words with sports betting in the state, both the NBA and MLB expressed hopes of working with the government to ensure a seamless operation of online betting activities in the state.
“We will work with all relevant parties on amendments that will protect consumers and the integrity of sports,” the NBA wrote in response to Gov. Justice’s comments.
The MLB echoed the NBA’s sentiment.
“We believe that with the Governor’s leadership, the amended statute will better protect the citizens of West Virginia and the integrity of sports, and also increase revenue for the state in the long run,” the MLB added.