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Hoping sports book isn't shelved

Backers prepared to make business case for wagering as leagues head to court

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Raymond J. Lesniak says sports betting is critical to reverse the fortunes of New Jersey's racetracks and casinos.
Raymond J. Lesniak says sports betting is critical to reverse the fortunes of New Jersey's racetracks and casinos. - (AARON HOUSTON)

State Sen. Raymond Lesniak has long maintained that a federal ban on sports betting in all but four states is patently unfair, but what gets the veteran lawmaker most excited isn't the fairness question — it's the business implications.

Legal sports "means hundreds of millions of dollars of additional revenue and thousands of jobs," said Lesniak (D-Union), "and that's just for New Jersey alone."

That revenue could prove a savior for the state's ailing racetracks and casinos, which could host sports betting under a state law signed in January. But before that can happen, the law must survive a Dec. 18 federal court hearing. It's a day Lesniak's eagerly awaiting, and just about everyone with an interest in sports or gaming is watching.

The hearing, at the U.S. District Courthouse, in Trenton, pertains to a lawsuit filed in August by the four major professional sports leagues and the National Collegiate Athletic Association. The leagues say New Jersey's law violates a 20-year-old federal statute that effectively created a four-state monopoly on sports betting.

The law contained a loophole giving states with a history of casino gambling — including New Jersey — one year to legalize sports betting, but New Jersey failed to do so.

Frank Catania, a former director of the Division of Gaming Enforcement and deputy speaker of the New Jersey General Assembly, said a New Jersey win could open the door for every state to legalize sports betting.

"New Jersey's challenge is something that everyone's looking at," said Catania, now an attorney and gaming consultant. "If it's OK in New Jersey and New Jersey wins, I think you'll see other states looking at it, as well."

NJBIZ sought comment from the National Football League, National Basketball Association, National Hockey League, Major League Baseball and the NCAA. All either failed to respond or responded to say they would not comment.

However, in their August complaint, the leagues wrote that their businesses would be damaged by sports betting in New Jersey, which "would irreparably harm amateur and professional sports by fostering suspicion that individual plays and final scores of games may have been influenced by factors other than honest athletic competition."

That argument carries little water with Lesniak, who noted the NFL will play two games at Wembley Stadium in London next year, even though the United Kingdom allows sports bets.

At the Dec. 18 hearing, a judge will hear oral arguments on competing motions for summary judgment; regardless of the hearing's outcome, the case could continue for months, either through a trial or appeals. But that may not stop the state from moving forward, as the Division of Gaming Enforcement is poised to begin issuing licenses as soon as Jan. 9, assuming the court doesn't step in first.

Even with the uncertainty, Monmouth Park is moving forward with sports betting, and Lesniak said at least one casino is doing the same, though he declined to identify which one.

Monmouth Park Chairman Dennis Drazin said the racetrack is willing to risk the $50,000 license application fee and roughly $1 million in renovations to a sports betting lounge in order to ensure it's taking bets as soon as possible.

"We probably will be the first venue that offers sports betting, because everyone else seems reluctant, because of their licenses in other states, to move forward until it's settled," he said.

Catania said Monmouth Park has good reason to move forward.

"It's the law in New Jersey right now," he said. "Until the federal court comes in and says you can't do it, or issues some type of temporary injunction, there's nothing precluding anyone from doing it."

Monmouth Park has been operating in the red in recent years, and with staunch legislative opposition to slot machines at racetracks, Drazin said sports betting offers the best hope to return to profitability. Despite retooling and union concessions, the park is still losing about $3 million a year.

"Sports betting will probably generate not only sufficient money to close that gap, but also enough money to let us put higher purses out there to attract better horses," he said.

Drazin said so-called racinos in other states are able to offer higher purses thanks to their gaming operations. Sports betting could level the playing field, he said.

Israel Posner, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at the Stockton College, said sports betting also would boost Atlantic City.

"While the actual win is in the low single digits in Nevada, the demographic that bets on the outcome of sporting events is very valuable in that they also participate in retail, dining, entertainment and other amenities," he said.

While Drazin said he's willing to bet more than $1 million that sports betting will be upheld, he said the track will wait until the court case is decided before building a new, multimillion-dollar sports betting facility.

Lesniak is optimistic the state will prevail, something he said is critical.

"Without sports betting, we'll see the continued decline of our horseracing industry, and we'll see future closings of casinos in Atlantic City, as well," he said.

E-mail to: jaredk@njbiz.com

On Twitter: @jaredkaltwasser

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