The Rumor Mill: Harry Reid May Quash any New Jersey Sports Betting Plans

So far neither the NFL nor NCAA have said anything about Lesniak’s announced legislation and surprisingly neither has the DoJ, but the leagues and DoJ may be the least of New Jersey’s concerns in attempting to amend PASPA.

After New Jersey’s overwhelming vote to pursue sports betting, Senator Ray Lesniak announced legislation that would see the product legalized in the state. The proposed plan would allow sports bets to be taken at casinos and racetracks which in turn would be subject to an 8% tax on gross revenues and a 1.25% investment tax. The only stipulation is that no bets will be allowed for games that take place in New Jersey and no bets will be offered for New Jersey based college teams regardless of where the game takes place. The reasoning behind those rules is to convince the professional leagues and NCAA that there is no threat of cheating to their leagues from the betting and thus neither they, nor the DoJ would have any reason to challenge New Jersey’s plans. According to sources New Jersey would see billions bet each year under their scenario.

So far neither the NFL nor NCAA have said anything about Lesniak’s announcement and surprisingly neither has the DoJ, but a Nevada lawyer close to the situation has told me that the leagues and DoJ may be the least of New Jersey’s concerns in attempting to amend PASPA. According to the source, Nevada Senator Harry Reid has been heard to mumble that he may block any bill put to the Senate to challenge PASPA if it aims at offering single game sports. When Delaware received the right to offer sports betting, the Senator likely wasn’t worried since it involves parlays on 3 or more NFL games, which isn’t really a serious competition for Nevada. But single game sports betting is. Some estimates have suggested that if Atlantic City casinos offered single game bets on the NFL and NCAA it could take away up to 5% of Nevada’s tourism for visitors from the Northeastern states, particularly around New Years and March Madness. Congressman Frank Pallone Jr. has promised to introduce legislation in the House tomorrow but even if it somehow passes the House, Reid as the Senate Majority leader can kill it on the spot by moving it off the agenda. While the Senate majority leader is supposed to work for citizens of all states, his job relies on the residents of Nevada. That state’s tourism is suffering greatly as a result of the downturned economy and housing prices in Nevada are among the lowest in the country. The source has said that Nevada wants the single game sports betting monopoly it has now and if Reid fails to come through for sportsbooks in Nevada it could cost him his job in 2014. Don’t forget Reid almost lost the election last year so any trip ups could see him lose next time out. At the same time it is believed that Reid will not block any legislation if it’s similar to Delaware. In better words if New Jersey was willing to offer sports betting on the NFL only and if it limits bets to 3 game or more parlays then Nevada won’t oppose it. It’s unlikely any other interests would oppose it either except maybe the legislature in Delaware who wouldn’t want competition from a close by state. Mind you that type of wagering doesn’t seem to interest New Jersey legislators who believe that PASPA is unconstitutional. Not only would it kill revenue projections that the state is hoping for but it would also paint them as weak.

Of course New Jersey can start a constitutional challenge of the law in the courts and avoid the House and Senate altogether, but most believe Governor Christie wouldn’t agree to that action and more importantly there is little interest from lawyers to take up that challenge. When I asked a well-known trade lawyer if his firm would take on the challenge for New Jersey, he replied “not if they aim to go forward with the challenge to PASPA as it stands. There’s no use in taking up a case in front of the Supreme Court that has no widespread legislative backing and no chance of winning.”

In any case Pallone’s legislation will go forth tomorrow. It’ll be interesting to see the reception it gets in the House from Congressmen like Barney Frank and Spencer Bachus.

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