Brett Silverberg – Since 1992, there has been a nationwide mandate prohibiting sports betting outside of Nevada. However, the forthcoming decision in NCAA, et al v. Governor of New Jersey, et al seems likely to reinstate sports gambling in Atlantic City. The implications of this New Jersey decision are enormous because the revenue derived from sports betting could help revitalize Atlantic City’s struggling economy. Moreover, the New Jersey decision could establish precedent and pave the way for legislation in other states.
Turning to the facts of the case, the outlook initially seemed bleak for the state. On two different occasions, the U.S. Court of Appeals for the Third Circuit rejected New Jersey’s bid to legalize sports wagering at casinos and racetracks. The Court reasoned that the legalization of sports betting poses a threat to the integrity of professional sports and violates the Professional and Amateur Sports Protection Act (PAPSA), which bars all but four states from legalizing sports gambling. New Jersey state officials have contended that legal sports betting is the key to helping revive a cash-strapped Atlantic City. As such, on October 14, 2015, the Third Circuit granted a request by Governor Christie’s administration to rehear the case, signaling a shift in the Court’s attitude toward reinstating sports betting in Atlantic City.
What would such a shift mean for Atlantic City? There is currently an enormous demand for sports betting in Atlantic City. Indeed, economists estimated that Atlantic City loses millions of dollars every year to illegal sports betting. By legalizing sports betting, people will be lured away from the offshore, illegal betting sites. Not only will legal sports betting help curb corruption, but it will also provide Atlantic City with a lucrative, new revenue stream that could generate hundreds of millions of dollars annually.
Atlantic City is currently enduring a financial crisis and is on the verge of bankruptcy. Revel, Atlantic City’s newest and largest hotel, epitomizes Atlantic City’s recent financial struggles: the $2.4 billion hotel was built in 2012 but closed in 2014. It failed to turn a profit while casinos in neighboring states siphoned off Atlantic City’s business. Meanwhile, because sports betting remains illegal in Atlantic City, Atlantic City is squandering at the opportunity to help boost its economy. As evidenced by Las Vegas’ economy, sports betting can be a powerful economic development tool; $4 billion is spent on sports betting in Las Vegas every year. And the city of Las Vegas reaps the financial benefits through tax revenue. Indeed, if Atlantic City prevails in this legal battle, and is able to tap into the sports betting market, the influx of tourism would undoubtedly help the city combat its financial struggles.
Although it appears that legal sports betting would be a tremendous win for Atlantic City and the state of New Jersey, there are several potential drawbacks associated with legalizing sports betting. Conceivably, the costs of regulating sports betting could negate the potential gains in tax revenue derived from legal sports betting. Moreover, legalized sports betting breeds crime and addiction. The convenience and accessibility of sports betting would increase, and thus, the enhanced exposure to sports betting could be problematic. Correspondingly, legalizing sports betting could erode the integrity of professional sports given that athletes may become more inclined to engage in match-fixing. If the Court sides with the state, professional sports could further transform from a source of entertainment to a vehicle for money and gambling.
On balance, the potential economic benefits of legalizing sports betting in Atlantic City seem to outweigh the potential drawbacks, especially after taking into account Atlantic City’s precarious financial situation. In lieu of the public remarks recently made by both the current and former NBA commissioners condoning sports betting, it appears that momentum for legalizing sports betting nationwide is beginning to pick up. Ultimately, the pending decision in NCAA, et al v. Governor of New Jersey, et al could open the floodgates for other states.
