NJ Supreme Court Win Doesn’t Guarantee Return of Online Sports Betting

Update: Clearly we got this wrong, as the SCOTUS decision ushered in a wave of new states legalizing online sports betting.

The Supreme Court of the United States is set to issue a decision in New Jersey’s challenge of the Professional and Amateur Sports Protection Act (PASPA) any day between now and the end of June.

The decision will have far-reaching consequences extending well beyond the New Jersey case. A ruling in favor of New Jersey will open the door for other states to follow suit and legalize sports betting in similar fashion. A handful of states have already passed legislation legalizing sports betting if the federal ban is lifted, and even more states are likely to pass similar legislation in the future.

Optimism is running high right now, but there are no guarantees that the legal landscape will look exactly like we’ve always imagined. For one, there’s a chance that Supreme Court rules in favor of New Jersey, but words its decision in such a way that precludes online sports betting.

PASPA Can Survive a New Jersey Win

A recent Associated Press article explains that the Supreme Court could rule in favor of New Jersey by striking down PASPA as unconstitutional. In that case, individual states would be free to regulate sports betting as they see fit. States would retain the ability to authorize online sports betting if they choose.

The Supreme Court could also rule in favor of New Jersey without striking down PASPA. A narrower ruling in favor of New Jersey could allow the state to authorize sports betting at casinos and race tracks without ending the wider federal prohibition. Such an outcome would give future sports betting efforts online and in other states a boost, but it would certainly delay online sports betting in the USA.

A partial victory for New Jersey is a very possible outcome. During oral arguments last year, Justices Gorsuch and Sotomayor both explored possible outcomes in which they rule in favor of New Jersey but avoid answering any uncomfortable constitutional questions.

Gorsuch said (pg. 30) at one point that “we normally interpret statutes in ways to avoid constitutional difficulties, not in ways to create –“ before being interrupted during a back-and-forth exchange with New Jersey counsel Ted Olson.

Sotomayor also explored the possibility of interpreting PASPA as permitting a state to repeal its own sports betting laws without necessarily regulating the activity. The Supreme Court would “avoid the constitutional question” by interpreting PASPA in a specific way rather than by declaring PASPA entirely unconstitutional.

The future of sports betting in other states would remain uncertain, and that in turn would greatly lower the odds of online sports betting becoming a widely-regulated activity in the United States.

Younger Customers Value Convenience

That same AP article referenced earlier poses an interesting question: can operators still attract the younger, technologically-savvy crowd without online sports betting? There’s no doubt legal sports betting would bring in new revenue to states, but how successful would it be in attracting the former online poker and current daily fantasy crowd?

The younger crowd that daily fantasy sports tends to attract is used to convenience and gaming-on-demand. Convincing those people to drop their daily fantasy lineups in favor of filling up the car, driving to the casino and placing bets in person will not be as simple as legalizing sports betting.

One experienced fantasy sports player interviewed by the AP said he plays daily fantasy and bets on sports online through offshore sportsbooks. Offshore betting sites operate illegally in the United States, but currently there are no laws against individual customers signing up to bet online.

When asked if he would be willing to visit brick-and-mortar casinos to bet on sports, the DFS player told the AP probably not. “I would probably stay with what I have right now, with the convenience and accessibility,” he told interviewers. In other words, this player would rather deal with unregulated offshore sportsbooks even if he had the option to do business with US-licensed sportsbooks simply due to the convenience factor.

That’s not to say legal sports betting would be a total flop. In all likelihood, casinos across the nation will jump on the opportunity and see subsequent revenue growth. However, a lack of online sports betting will almost certainly represent a huge missed opportunity.