TISWA Could Be The PASPA Loophole New Jersey Has Been Waiting For
The time where sports betting is legal may be closer than once anticipated, notwithstanding federal law prohibiting such behavior for both professional and amateur sports events. Yesterday, the New Jersey Assembly passed a bill by a 73-4 vote that the New Jersey Senate strongly approved earlier this week that would legalize sports betting within the state. This is just one step in the long fight New Jersey has been engaged in to help its struggling casino and racetrack industries, but this time one proposal may be the difference between federal preemption's prohibition (i.e., where federal law governing the same area as a state law trumps the state law) and legal compliance. All it needs is Governor Chris Christie's signature within 45 days.
Back in a 2011 referendum, New Jersey citizens voted and approved legalizing sports betting. Governor Christie then signed the legislation, which allowed the casinos and racetracks within New Jersey to gamble on professional and amateur sports with the exception of bets placed on college events played in New Jersey and out-of-state college events played by New Jersey college teams. Also, the New Jersey Division of Gaming Enforcement, a government agency, issued the sports betting regulations. The "Big Four" leagues and the NCAA successfully challenged the legislation's legality citing preemption by the Professional and Amateur Sports Protection Act of 1992 (PASPA, i.e. the "Bradley Act"). PASPA bans sports betting across the nation, but Nevada, Delaware, Oregon, and Montana were grandfathered in as exempt since state-regulated sports betting practices were already in place there. The district court agreed and banned New Jersey from issuing sports betting licenses, and the Third Circuit Court of Appeals upheld the district court's decision. Interestingly, the Third Circuit opinion alluded that New Jersey could legalize sports betting so long as the state was not licensing, sponsoring, or regulating it.
This time around, Dennis Drazin, the Monmouth Park racetrack operator, announced the creation of The Independent Sports Wagering Association ("TISWA"), which could be the game changer and loophole New Jersey has been searching for in response to the federal appellate judge's ruling last year against the state's proposals. TISWA would independently "self-regulate" sports betting within New Jersey, as the name suggests, and not be a regulating government agency handing out licenses like the New Jersey Division of Gaming Enforcement. So, it appears that this bill is within the Third Circuit's decision because an independent association would be establishing an ethics code, rules, and regulations "to promote a safe, secure, and reliable sports wagering environment," as Drazin argues.
If Governor Christie decides to sign the legislation into law, the leagues will certainly challenge this law's constitutionality like it did for the previously passed legislation. Here, though, the state created a plan that is not the same type of procedures that the court ruled PASPA prohibits and has a chance to win if it wants to go down the path it has fought so long to walk.