The NCAA Men’s Basketball Championship is the epitome of a money machine. The annual extravaganza known as March Madness, which tipped off at arenas across the U.S. on March 15, generates billions upon billions of dollars from myriad revenue streams including corporate sponsorships, television rights, fees and travel, and hospitality, to name but a few.
And as the initial field of 68 teams is whittled down over the coming weeks until a champion is crowned, yet another stream of big-time bucks flows unabated through bookies, illegal offshore websites and bracket pools — the latter an annual ritual among employees at businesses ranging from the largest corporations to the smallest mom-and-pops.
The American Gaming Association, a national trade group representing the $240 billion U.S. casino industry, estimates Americans this year will wager more than $10 billion on the tournament. But of that money, only about $300 million, or 3 percent, will be wagered legally in Nevada sports books.
Illegal betting has been rampant across the U.S. since the passage of legislation called the Professional and Amateur Sports Protection Act of 1992, which was designed with the intent of preserving the integrity of sporting events. PASPA, also known as the “Bradley Act,” is named for its author, former New Jersey senator and New York Knicks star Bill Bradley.
Now, the Garden State is again out front on the topic of sports betting, this time seeking to overturn the constitutionality of PASPA. The U.S. Supreme Court is expected soon to rule on Christie v. NCAA and N.J. Thoroughbred Horsemen v. NCAA, the most consequential challenges yet to the prohibition on state-sanctioned sports wagering.
“PASPA doesn’t prohibit gambling or sports betting; it prohibits states from authorizing by law sports betting,” said Ronald Riccio, general counsel at Morristown-based McElroy, Deutsch, Mulvaney & Carpenter LLP and the lawyer who argued on behalf of Monmouth Park racetrack before the Supreme Court. “Our argument is you can’t do that because you’re not regulating the people – you are telling the states. It is known as commandeering.
“I understood what Sen. Bradley was saying,” Riccio told NJBIZ. “But even in 1992 there was widespread gambling going on. In fact, under PASPA, New Jersey was given one year to decide whether it wanted to have legal gambling but never acted on it.”
Former Gov. Chris Christie for years fought to expand gambling at Monmouth Park, which the New Jersey Sports and Exposition Authority purchased in 1985. (The state got out of the racing business in 2012 when Darby Development took over management of the track.) In one of his last acts as governor, Christie was in Washington, D.C., to watch Riccio and others argue their cases before the high court.
At a recent gaming symposium at the Seton Hall University School of Law in Newark, Riccio, formerly the school’s dean, explained how the case evolved.
“In 2011, New Jersey voters approved a referendum to amend its constitution, allowing the Legislature to approve sports gambling at its casinos and at current and/or former racetracks,” he said. “But that law was successfully challenged in federal court by the National Football League, National Basketball Association, National Hockey League, Major League Baseball and the National Collegiate Athletic Association. The New Jersey Legislature would approve bills and in the federal courts, [but] the leagues would continue to stymie state efforts.”
One of those leagues has since shifted its stance, after NBA Commissioner Adam Silver said last July he expects legalization of sports betting “in the next few years.”
If PASPA is overturned, betting on college games would be allowed, with limitations.
“Betting would not be allowed on any college game that takes place in New Jersey or on any New Jersey college team regardless of where the game is played,” Riccio said. “For example, bets on Rutgers sports events will not be permitted no matter where Rutgers plays. Or, if Duke plays a game in New Jersey, no bets would be permitted.”
Chris Soriano, a partner in the Cherry Hill office of Duane Morris LLP and a member of the Trial Practice Group that focuses on gaming law and business litigation, said look no further than across the Atlantic to see that safeguards can be put in place to protect the virtue of the games.
“In Europe you can bet on almost every sport, so the betting shops and the leagues work together to insure the integrity of the events,” he said at the Seton Hall symposium. “If a betting shop notices irregular betting, they will halt the wagering and notify the league. There are computer algorithms that can detect this. It usually doesn’t happen on major events, like Manchester soccer. It will occur in a tennis tournament with the 90th seed playing the 100th seed.”
Though legalized sports betting isn’t mandatory to the survival of Monmouth Park, there is much at stake for the iconic Jersey Shore venue, said Dennis Drazin, chairman and CEO of the racetrack and partner at Drazin & Warshaw law firm.
“Monmouth Park will always be here; I don’t believe we are in danger of closing,” Drazin said. “But we have had to adjust our racing days regarding the purse money we have. We are down to 52 days of live racing with six days of turf racing at the Meadowlands.”
Also a participant at the symposium, Drazin told attendees that when opportunities for sports betting came along, Monmouth figured it would be “a win-win” for racing and the casinos.
“But only Monmouth took the lead,” he said. “None of the other tracks or casinos were going to begin sports betting because they all had licenses in other states and had concerns about regulatory issues in other states. We were the test case. My feeling is that we will win this case. In addition to hopefully bringing large crowds back, it will provide us with a revenue stream to allow or increase our purses and racing days and make capital improvements.”
Caesars Atlantic City spokesman Noel Stevenson said in an email the casino favors the repeal of PASPA.
“No one knows how the court will rule or what regulatory landscape will emerge as a result,” Stevenson said. “Our response will be based on the opportunity and rules which result if the law changes.”
Said Tropicana Entertainment chief Tony Rodio via email: “Sports betting will generate a lot of incremental visitation to the city and each of the respective properties. Tropicana Atlantic City is working on a plan in the event that sports betting is approved by the U.S. Supreme Court.”
According to the American Gaming Association, at least 18 states have active sports betting-related legislation, with more expected to introduce bills.
Nevada is the only state offering single-game betting. Delaware, Montana and Oregon are exempted from PASPA, because they already had some form of operational sports betting at the time the law was enacted.