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The Supreme Court decision in New Jersey's sports gambling case could be worth billions around the country

The future of sports gambling in America could hinge on what the Supreme Court says about New Jersey.

Supreme Court To Rule Soon On President Trump's Travel Ban Photo by Mark Wilson/Getty Images

WASHINGTON — The Supreme Court said Tuesday that it will hear a pair of New Jersey sports gambling cases with national implications.

Christie, Gov. of NJ, et al. v. NCAA, et al. and NJ Thoroughbred Horsemen v. NCAA, et al. have been consolidated, and oral arguments will be heard before the high court during its next term, which starts in October.

The question to be addressed is whether Congress is allowed to bar states from authorizing sports gambling, or whether the federal Professional and Amateur Sports Protection Act (PASPA) violates the Tenth Amendment of the Constitution, which protects states rights. Essentially, the powers not delegated to the federal government are reserved for the states.

PASPA, enacted in 1992, effectively prohibits sports betting throughout the United States. Exceptions were made for Nevada, Montana, Oregon, and Delaware, which had already implemented legal forms of sports betting. An exception would have been made for New Jersey if it had decided to legalize sports gambling within a year of the law passing.

However, the state legislature stumbled to even get a vote on the floor of the state’s assembly. Bill Bradley, the former Knicks All-Star and U.S. senator who essentially created PASPA, lobbied against the bill in the state, according New Jersey Lawyer Magazine.

There were other rumored complications. Nevada-based interest groups attempted to prohibit the exception from going through, ostensibly to keep a sports betting monopoly in the desert. At the time, there was also uncertainty about how supporting sports gambling could affect the 1993 governor’s race between Christine Todd Whitman, a Republican, and James Florio, a Democrat.

Now, nearly 25 years later, New Jersey’s challenge to federal law has a chance to usher in a more inclusive, multi-state approach to sports gambling where the spoils could change the financial outlook of the state.

“From an economic impact standpoint, I think that the future’s very bright,” Geoff Freeman, the CEO and President of the American Gaming Association, said. “And that future’s real based on a lot of what happens in Nevada right now, and how you project that elsewhere.”

The impetus for New Jersey’s challenge of federal law is the money to be earned.

“In the United States today, we have an estimated $150 billion being wagered on sports betting. Only $4.5 billion of that is taking place in Nevada,” Freeman said before circling back. “We’re looking at about more than 150,000 jobs, $5 billion in tax revenue at the state and local level.”

That’s an enormous financial boom to consider. The tax revenue would make up one-seventh of the budget that Jersey state lawmakers proposed this week.

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New Jersey state lawmakers have twice attempted to enact legislation that would legalize sports betting in the state. The four major professional sports leagues and the NCAA filed suit to enjoin both pieces of legislation, claiming they violate PASPA.

The first piece of legislation (Christie, Gov. of NJ, et al. v. NCAA, et al.) legalized sports betting and instituted regulations for licensing. The district court ruled it violated PASPA, and the decision was upheld by the Third Circuit Court of Appeals. The Supreme Court denied the state’s request to hear the case at the time.

The second piece of legislation took another tact. It did not attempt to regulate sports betting, but rather simply removed its illegality. The state interpreted the court’s ruling in the first case as only prohibiting the authorization of sports gambling implicit in regulating the industry, and in this instance, the state wasn’t attempting to regulate the industry at all.

As these cases were prolonged, technology changed sports gambling’s revenue potential. Freeman believes the industry could take advantage of the possibility of human interaction and engagement during games, and that venture capital money is laying in wait.

“We’re going to see a lot of innovation come to this space — which has a chance to turn these economic impact projections upside down, and really grow these things quite considerably,” Freeman said.

In political circles, both federal and state-oriented, news of the SCOTUS decision was met with either excitement or indifference.

State lawmakers from the New Jersey senate to the assembly to Congress have griped that change was necessary. Frank Pallone, a Democratic congressman from New Jersey, has been a leading voice on the matter.

Pallone sees the law as hypocritical and unfair. New Jerseyans have voted in large support for legalized sports betting throughout the 2010s. Their shore towns, like Atlantic City, have lived and sputtered relying on casinos and related tourism, as well as horse racing before numerous tracks closed.

Pallone believes that a positive decision could re-ignite economies in multiple communities.

“Both Congress and the Supreme Court should respect these actions,” Pallone said. “Rather than continuing to allow criminal and offshore entities to reap the benefits of illegal gaming, there is now an opportunity for the Supreme Court to allow the democratic process in New Jersey to appropriately regulate sports gaming.”

Frank LoBiondo, a conservative New Jersey representative in Congress, said he has never understood why the federal government has stood in the state’s way on sports gambling and the revenue that can come from it.

“This would be a big benefit to New Jersey. It’ll help boost economies all across (the state),” he said. “It’s not a silver bullet, but it’s another component that will help us out when the weather shifts and [shore towns] don’t have as much revenue.”

Struggling Casino Industry Drags Atlantic City's Economy Down Photo by Spencer Platt/Getty Images

Though many state lawmakers were encouraged by the Supreme Court’s decision to hear the cases, some were cautious. Jim Whelan, a current state senator and former mayor of Atlantic City, has been fighting for legal sports betting for years now. When sports leagues said that allowing people to bet on games would alter the integrity of athletics in 2014, Whelan led an effort to alter that way of thinking. Yet he said, the financial boon of legal sports gambling in New Jersey will have caveats.

“Let’s recognize just the fact that they are hearing the case doesn’t mean they will decide in the case of New Jersey,” Whelan said. “We need to be realistic about what a positive decision will mean. It won’t just be New Jersey. Everyone will have it. And I don’t know if it will have as much benefit as everyone is touting.”

Whelan doesn’t want to dismiss the economic benefit to failing cities like Atlantic City, but just like how opportunities to gamble have grown since casinos came to Atlantic City, so have the number of entities that want to cash in on sports. New Jersey and Nevada don’t have a monopoly on gambling anymore. If the Supreme Court rules in favor of New Jersey, the impact won’t stay local.

Apprehension or not, some state lawmakers couldn’t help but guess at what the economic outcome might be. In New Jersey and elsewhere, there is significant economic growth available. Legally, the money is estimated in the single billions. Illegally, NBA Commissioner Adam Silver claimed in 2014 there was at least $400 billion being spent just in America.

Many of PASPA’s detractors have called for this day for decades. Significant revenue boost, jobs, and economic prosperity may hang in the balance. Leonard Lance, a Republican congressman from New Jersey, said that the state's citizens have seen the economic impact gambling can have for New Jersey communities. They voted for sports gambling before for a reason.

And if not for that flub years ago, states like New Jersey might look much different now.

“A special deal worked out three decades ago outlawed sports betting in all but four states — preventing New Jersey from the benefits those four states enjoy,” Lance said. “New Jersey deserves its day in court."