A state senator, seeing the potential for increased revenues and economic activity, filed a lawsuit yesterday aiming to overturn a federal ban on sports betting in most states, including New Jersey.
If successful, the suit would let every state decide whether to allow sports gambling.
State. Sen. Raymond Lesniak (D., Union) envisions a change that would bring up to $100 million to state coffers in taxes, generate billions in betting, spark economic activity, and throw lifelines to casinos and the horse-racing industry.
"Our casinos are suffering, our racetracks are dying, and our state budget needs revenues," Lesniak said.
He said the Professional and Amateur Sports Protection Act, under which only four states are permitted to have sports gambling, "blatantly discriminates" against other states.
"How can Congress say to the people of the state of New Jersey, 'You do not have this right that the people in Nevada do?' " Lesniak asked.
He contends, among other things, that the federal law does not uniformly regulate commerce and is overly broad and vague.
Nevada, Delaware, Oregon, and Montana were "grandfathered" into the 1992 law, giving them exemptions that allow them to permit sports betting.
Nevada allows the widest scope of such gaming, and Montana has some gambling on games, too. Delaware is looking to add sports betting in time for the 2009 National Football League season. Oregon in recent years scrapped its betting on sports.
New Jersey had a window to decide if it wanted to join the four states with exceptions, but several legislative attempts to do so fell short.
Lesniak said those decisions ceded a multibillion-dollar gambling industry to organized crime and backroom arrangements. Despite the ban, he said, sports gambling exists everywhere from bookies to office NCAA Tournament pools.
A study funded by the Interactive Media Entertainment and Gaming Association, which joined Lesniak as a plaintiff, estimated that sports betting could become a $10 billion-a-year industry in New Jersey by 2011. The group's chief executive, Joe Brennan Jr., said taxes and fees from that gambling could bring $100 million a year to state coffers.
If the lawsuit is successful, Lesniak said, lawmakers would still have to approve which types of bets would specifically be allowed, and voters would likely get a direct say, too. The study assumed betting would be allowed in casinos and racetracks, on the Internet, and by phone.
Michael Pollock, managing director of Spectrum Gaming Group, a consulting firm outside Atlantic City, said the estimates seemed "extremely optimistic."
The risk in the lawsuit, Pollock said, is that it would open the door for all states to participate, creating intense competition.
"If it's a home run in New Jersey, then obviously other states would pursue it. It's the nature of how things work," Pollock said.
Jeffrey Standen, a professor of sports law and gaming at Willamette University in Salem, Ore., said Lesniak's case made some good points.
"There's some pretty strong arguments to make that this law is unconstitutional," Standen said. "Arguably, it's an intrusion into state sovereignty."
College and professional sports organizations have vehemently opposed the expansion of gambling on their games, including previous attempts to legalize sports books in New Jersey.
The NCAA, the governing body for college sports, refused to hold its popular college basketball tournament in Oregon while gambling continued, Standen said. That factored into the decision to end sports betting, and last weekend the state hosted two rounds of the tournament in Portland.
Standen, however, questioned whether the state would gain as much revenue from sometimes hosting the tourney as it did each year from sports bets.
Lesniak's suit was filed in federal district court in Newark.