The History of Sports Betting Since PASPA Was Passed 

New Jersey voters opted to legalize gambling in Atlantic City in the late 1970s, and the city quickly became known as the Vegas of the East Coast. While casino gaming has been in place since then, sports betting went off the menu for over two decades due to the 1992 Professional and Amateur Sports Protection Act (PASPA).

Atlantic City Coastline

PASPA was a federal law that forbid any states from passing new legislation that legalized sports betting. States that already had sports betting were grandfathered in, but they had to opt to do so within a year (which is how Nevada hung on to it). At the time, New Jersey was actually amenable to PASPA with one of the state's senators leading the push to enact it. The voters were asked their opinion in the form of a ballot measure in 1993; the measure failed, the grandfather clause window passed, and New Jersey was shut out of sports betting.

That was the state of affairs until 2011 when a referendum passed that allowed state casinos and racetracks to offer action on any games not involving New Jersey's college teams. The country's biggest athletic leagues (NFL, NBA, MLB, and NHL) banded together with the NCAA to challenge the new law, and initially won their case in District Court in 2013.

However, that was far from the end of the story. New Jersey had also legalized internet casino gambling in 2013 after several years of contention, and it was clear that public sentiment was tilting toward the legalization of sports betting. Internet sports betting represented an incredible amount of potential revenue for New Jersey, and both state politicians and the gaming industry had no intention of letting it slip away.

The Legal Battle Over Sports Betting in New Jersey

The NCAA and the quartet of professional leagues leaned on PASPA to justify their lawsuit. It won them the initial injunction in 2013, plus an appeal by the state in 2014.

After losing the appeal, New Jersey tried a different approach. The appellate court's ruling had confirmed that New Jersey had the right to repeal their own laws against sports betting. So that's exactly what the state did in late 2014, only months after losing their initial appeal.

New Jersey was playing the long game here. The sports leagues could obviously come right back with another lawsuit to shut down sports betting again, and one that was quite likely to succeed in district court. However, the main point of this maneuver was to highlight an inherent contradiction in the terms of PASPA. How could states be allowed to repeal their own sports betting bans by way of a court decision, yet also be forbidden from allowing sports gambling?

The ruling would appear to demonstrate that Congress had exceeded its authority over states with PASPA. Not only that, but the sports leagues were also effectively being deputized to enforce federal law against states since PASPA did not deem sports betting to be a federal crime.

It would take several years for this process to fully play out. It began with then-governor Chris Christie signing a law in October of 2014 that allowed the state's casinos and racetracks to once again offer sports betting, but this time without being subject to the state's gambling regulations. As expected, the sports league immediately came back with another lawsuit based on PASPA. The district court found in favor of the leagues and also upheld an appeal in 2015.

New Jersey was almost out of appeals at this point, but the state had one last long-shot option to keep the case moving in district court: requesting an "en banc" appealing hearing that involved all of the district court judges rather than a panel. Though these requests are rarely granted, the state managed to get their hearing. However, they lost it in 2016.

That was about as far as they could go in district court, but a new option had opened up. New Jersey could now appeal to the Supreme Court (SCOTUS), challenging the constitutionality of PASPA. SCOTUS opted to hear the case in June of 2017.

We know the outcome now, but it was very much in doubt as the case began. The Solicitor General, the second-highest-ranking attorney in the Department of Justice and the one responsible for arguing cases before the Supreme Court, had sided with the sports leagues. The whole process was conducted in a private session with no media allowed, meaning that there would be little meaningful indication of the outcome until the ruling was delivered.

The stakes went beyond the borders of New Jersey. If PASPA was found unconstitutional it would be repealed, and that would mean any state would be free to legalize sports betting if their voters supported it. New Jersey immediately gained support from 20 other states interested in legalizing some form of sports betting.

These states filed "amicus briefs," or formal petitions to the court from parties who have a strong interest in the outcome of a particular case. The American Gaming Association and powerful D.C.-based lobbying firm Wiley Rein LLC also filed briefs in support of PASPA repeal.

Initially expected to judge the case by the end of June, the Supreme Court would take nearly a year to deliver the ruling that PASPA was unconstitutional and was to be struck down. In the majority opinion, Justice Alito agreed with New Jersey's interpretation that the repeal of an existing ban was tantamount to an authorization of the formerly banned activity. The court decided that prior to PASPA, sports betting was a state's rights decision and should have stayed that way.

Sports Betting Returns to the Garden State

New Jersey didn't waste much time getting to the action. Sports betting was legalized and the first bets were taken in June of 2018. Both online and offline betting is legal at authorized casinos and racetracks.

There are a couple of wrinkles to sports betting laws in the state, however. One is that a prohibition on bets on New Jersey college teams, one of the concerns that led to PASPA in the first place, remains in place. Esports betting is also currently restricted to competitions in which the majority of the participants are at least 18 years old.

With a $3 billion handle in the first year and at least $300 million coming in each month, it hasn't taken long for New Jersey to see the benefits of legalized sports betting. The future might include greater connectivity (and opportunity) across the country as more states legalize.