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Will sports betting become legal in New Jersey? Experts weigh the odds

NEW JERSEY – Come January, will football fans in New Jersey be legally plopping down Super Bowl bets? To hear Governor Chris Christie tell it, that’s completely possible – if the Supreme Court allows it.

“We’re waiting for the United States Supreme Court to make a decision,” Christie said earlier this month while on the “Boomer and Carton” show on WFAN Radio in New York. The governor was referring to an appeal New Jersey is hopeful the Supreme Court will take up, to allow sports betting in the state.

A decision on whether to take up that appeal was expected to come Monday morning, but no announcement, for or against, was made. If the Supreme Court agrees to take it up, a majority of justices would still need to find in favor of the state to advance Christie’s cause.

“Hopefully they’ll decide on our side,” Christie said. “Let’s just say this: Supreme Court says it’s OK for the state to make decisions (on sports betting). If they say that, Monmouth Park will be open inside a week to 10 days. They’re ready to go. … Certainly in time for the Super Bowl.”

Christie started taking steps toward legalizing sports betting in 2011, and, in 2014, the governor issued a directive allowing sports betting in New Jersey:

Since then, however, courts have repeatedly agreed with the sports leagues, and not with the Christie administration.

Christie’s current optimistic timetable is welcome by many in and around the sports betting industry. But is it realistic? As sports bettors, we can’t help ourselves in asking what are the odds of having full-on, single-game, legal sports betting in a state other than Nevada in 2018?

Dennis Drazin says it’s an even-money bet. Drazin is an attorney who serves as an adviser to Darby Development, which operates Monmouth Park, so he has his fingers right on the pulse of this issue.

“To go out and say it’s going to happen in 2018, I would not be that confident,” Drazin told Covers. “If I pegged it for 2018, I’d give it 50/50 odds. I’d say there’s 100 percent certainty that within the next five years, there will be other states, besides Nevada, taking sports bets. I don’t think there’s any question in my mind that that’s 100 percent.

“I think the governor’s theory is that the Supreme Court will take the case and that we’ll win, and we’ll be good to go as far as taking bets at Monmouth Park. I probably agree with the governor that we’ll be taking bets, but maybe not the way he’s describing it.”

Drazin sees a situation where either the Supreme Court doesn’t take the case, or takes it and denies New Jersey’s appeal. In either event, he said the state Legislature would need to step in and go beyond the partial repeal of sports betting laws that it thought would be sufficient to pass judicial muster. In other words, the Legislature would have to pass a full repeal of prohibitions on sports betting in New Jersey.

“If we did a total repeal, they could not stop it and it would not violate PASPA,” Drazin said, citing the Professional and Amateur Sports Protection Act of 1992. That legislation outlawed sports betting in the U.S., with the exception of Nevada’s already well-established legal and regulated betting, and exceptions for sports lotteries in other states. “Things could happen if New Jersey passes a total repeal.”

The American Gaming Association, while an avid supporter of legal sports betting expansion, also hedged its bet on whether 2018 is reasonable. Geoff Freeman, the AGA’s president and CEO, didn’t want to put hard odds on expansion and mirrored Drazin’s opinion.

“I’m probably a bit more conservative than the other prognosticators,” Freeman told Covers, noting the federal government should be part of the solution. “I think this happens in the next three to four years. But that’s rocket speed in Washington terms. The way we get this done is when leagues and the industry are on the same page in terms of structure and regulation. Those discussions are ongoing, and that takes time. I could see legislation introduced as early as next year, and we could see that legislation completed in 2019. That’s more realistic.”

Highly-regarded sports law attorney Daniel Wallach was willing to stretch a bit further than other advocates of betting expansion. Wallach is all in on 2018, figuring that if the Supreme Court fails New Jersey, the state Legislature will leap in and get sports betting to the finish line in a hurry.

“It’s an overwhelming favorite. I wouldn’t doubt the resolve or resiliency of New Jersey,” Wallach told Covers. “This has been a six-year odyssey for New Jersey, dating back to the successful 2011 voter referendum, and the state has come tantalizingly close to succeeding. Even in defeat, New Jersey has exposed significant cracks in PASPA’s armor. The state will not just simply take its ball and go home now. There is strong political will to take this as far as it needs to be taken.

“And the only logical next step for New Jersey is a complete repeal. It is the only option guaranteed to pass muster under PASPA. If the Supreme Court turns down the case, New Jersey will immediately proceed to the nuclear option, which it would probably roll out in weeks, if not days.”

Wallach said utilizing that nuclear option – the complete repeal of sports betting prohibitions – would give the Legislature the upper hand, and that such an effort would assuredly get Christie’s signature. Further, it could provide incentive to Congress and the major professional sports leagues to work together on federal legislation.

“If Gov. Christie is predicting 2018, I believe that just indicates that part of his plan is to sign a complete repeal by the end of this year, meaning in time for the 2018 Super Bowl,” Wallach said.

Covers reached out to Gov. Christie’s office in the past week, with press secretary Brian Murray saying Christie did not want to expand beyond his statement on WFAN at this time. Christie, though, wasn’t alone in addressing this issue of late.

Earlier this month, several media outlets reported that leaders of the players’ unions in all four major professional sports leagues – the NFL, NBA, Major League Baseball and the NHL – have met several times over the past 18 months to prepare for the expected reality of sports betting expansion.

Freeman said the AGA also took part in those meetings and was pleased to work with and be a resource for the players unions. Wallach doesn’t believe those meetings will necessarily accelerate the timeline for legalization, but he said they are still noteworthy in that they underscore the far-reaching economic impact of legalized sports betting.

"This equates to more revenues for the leagues and teams, and, if properly captured in labor deals, higher salaries for the players,” Wallach said. “It’s the first time they’ve showed an interest, and they should, because this is something that will spur economic activity in leagues, sponsorships, media outlets, technology companies, and banks and financial institutions. The overall economic impact of sports betting will have a powerful impact on salaries. The players unions need to telegraph this issue in future collective bargaining – some formula for having players share in that growth.”

Of course, sportsbooks and casino operators would have a stake, as well. Which brings an interesting perspective of this whole process from Jimmy Vaccaro, one of the most renowned oddsmakers in Las Vegas. Vaccaro, currently the oddsmaker at the South Point sportsbook, has long been a big proponent of expanded sports betting, not just to other U.S. jurisdictions, but in what can be bet on, whether in Nevada or elsewhere (Think Academy Awards and even elections, though that’s a story for another time).

But as much as he’d like to see expansion to New Jersey and beyond, he may be among the most pessimistic about how and when it will happen, making a point no one else has really yet made. And it’s a takeoff of Wallach’s point about the players unions and leagues most certainly wanting a piece of the sports betting pie.

“All of a sudden, they found out they could make money, so all of a sudden, they’re OK with sports betting. The holdup, and it’s gonna be a major holdup, is why do we really need them?” Vaccaro told Covers. “We want them on our side, but think about this: On average, having a good year for a sportsbook, you hold 7.5 percent of handle. Like any other business, it costs money to operate. You take a lot of that 7.5 percent off the top.”

Then, in addition to those operating costs, there’s a 0.25 percent federal tax on every wager – which doesn’t sound like much, but stay with Vaccaro here – along with taxes payable to the state of Nevada.

“How much is left to give to the leagues? Nothing,” said Vaccaro, while explaining the impact of the 0.25 percent federal levy on each wager. “Say you have a guy walking up to the window, and he bets $100,000 on Floyd Mayweather. Before anything else happens, you have that 0.25 percent tax, which we pay whether Mayweather wins or loses. It costs us $250. If Mayweather wins, we pay out the winning ticket, and it still costs another $250 to take that winning wager on Mayweather.”

Ostensibly, Vaccaro is saying the math will not pencil out for sportsbooks to cut in more partners, unless for example bettors have to start laying -120 instead of -110 on standard wagers – meaning it would take a $120 bet, rather than $110, to collect a $100 profit – or a three-team parlay payout dropping from 6/1 to +480.

AGA chief Freeman said of expansion prospects: “I’m gonna leave the odds to Jimmy Vaccaro.” So what is Vaccaro’s price for sports betting outside Nevada in 2018?

“No is -2,000. I hope I’m really wrong,” he said. “Trust me, I want this thing as much as or more than anybody, to show that we aren’t what people think we are. We have strict rules to follow, it’s not the Wild West like some people believe. I’d bet there are more politicians in jail than bookmakers.”

Vaccaro looked much more favorably on crafting a solution by 2020, making “Yes” a -300 favorite. Not coincidentally, 2020 is when the NFL’s Raiders are to debut at a new Las Vegas stadium.

As noted previously, Freeman believes that’s a reasonable timeline, noting what will help move this along is bringing together a diverse combination of stakeholders – law enforcement, leagues, players unions, etc. – that support the expansion of sports betting.

It likely also requires the repeal of the archaic and dubious PASPA, a law that only bolsters the flow into the illegal sports betting market, estimated at $150 billion to $400 billion annually. That’s light years beyond the $4.5 billion wagered legally in Nevada last year.

“When you peel it back and look, there are not a lot of people speaking up on the merits of PASPA, because those merits just aren’t there,” Freeman said, while adding that moving the sports betting ball forward will require a shove from all those elected representatives in D.C., too. “I’m going to focus on what we do well, and that’s getting things done in Washington. The wheels of Congress move a little slower. I think realistically, three to four years is what we’re looking at.”

Still, a favorable Supreme Court ruling and a 2018 expansion would suit Freeman just fine.

“I appreciate Gov. Christie’s enthusiasm, and I hope to be wrong,” Freeman said. “In terms of how fast this gets done, I’m rooting for a win, and against me.”

Editor's note: This article was written by Patrick Everson (@Covers_Vegas), a Las Vegas-based senior writer, for Covers.com, which is also owned by Tribune.