Judge denies sports wagering in Atlantic City

Mar 5, 2013 3:08 AM

Federal District Judge Michael Shipp gave illegal East Coast bookmakers good reason to “dance in the streets” last week as he slapped down New Jersey’s effort to install sports wagering in Atlantic City casinos.

“It was a great decision for the bookies. It protects their market,” said Las Vegas attorney Greg Gemignani who specializes in sports betting and Internet gaming law at Nevada’s largest law firm, Lionel Sawyer & Collins. “I’m sure they are applauding his decision.” Taking a stab at some black humor, “They’re maybe thinking about sending him fruit baskets.”

The essence of Shipp’s 45-page ruling is that the 20-year-old federal prohibition that limits any kind of sports betting to Delaware, Oregon, Montana and, of course, Nevada is not unconstitutional, as lawyers for the state had argued.

If New Jersey wants the Professional and Amateur Sports Protection Act (PASPA) of 1992 reversed, Shipp said, “Then the thing to do is get Congress to repeal or amend it.”

“That kind of statement is always a judge’s safe harbor,” Gemignani chuckled. “He’s saying don’t get mad at me, get mad at the other guys.”

Shipp’s ruling kept him within the lines established by the Third Circuit Court of Appeals several years ago when it ruled that Delaware did not have the right to offer wide open sports wagering at its three casinos because of the limitations imposed by PASPA. Consequently, that state’s three outlets are now limited to three-team NFL parlay cards.

Professional sports leagues and the NCAA did not waste time leaping to PASPA’s defense in both the Delaware and New Jersey cases.

Las Vegas gaming regulators and other attorneys, who shared thoughts on the condition they are not identified, saw Shipp’s decision as “about what you’d expect” – the statement of one man – from a young judge who was not interested in venturing beyond previously established boundaries about what is or is not constitutional.

But Shipp acknowledged during the several hearings in his Trenton courtroom prior to last week’s ruling that he never expected the case to end with his decision, which is being appealed to the Third Circuit. Whoever loses there will appeal to the U.S. Supreme Court where we will see if the High Court has an appetite to hear the case.

The court declined to hear an appeal several years ago when the state of Delaware unsuccessfully attempted to punch holes in PASPA’s limitations, but there were not any constitutional issues being argued then.

Other states and a variety of special interests have been closely following the process of New Jersey’s efforts for exactly the reasons cited by Shipp. There’s a lot of interest in adding sports gambling to the list of gaming options available in states where there is a strong appetite for new sources of tax revenues. But the biggest piece of implied fiction in this issue, according to Gemignani is that PASPA does anything to limit sports wagering.

“All PASPA does is limit legal sports betting.” Illegal wagering is very much alive just as it was 20 years ago. That’s why the East Coast bookies probably feel like they want to “dance in the streets.”

Shipp’s decision relieves some casino companies of what would have been a fascinating marketing challenge. Six of the 12 Atlantic City casinos are in the hands of companies with a strong Las Vegas presence. These include Caesars with its four licenses, and Landry’s Restaurants with its Golden Nugget. MGM Resorts is now applying for – and will almost certainly get – the right to regain control of its 50 percent interest in the Borgata, which is now being operated by its joint venture partner Boyd Gaming.

Phil Hevener has been writing about the Nevada gaming business for more than 30 years. He can be reached at [email protected].

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