Following the Great Recession of 2008, America’s two major political parties have been involved in an epic and exhausting battle over how to fix our lifeless economy.
While Republicans routinely point to massive, European-style budget cuts (known as Austerity) as the answer to our fiscal problems, Democrats have argued that the best way to stimulate the economy is through a balanced approach which includes both cuts and revenue increases.
With the re-election of Barack Obama, it appears that Democrats have assumed the upper hand in terms of which policies will actually be signed into law. However, because Republicans are likely to fight any additional tax increases tooth and nail, many politicians have been looking for creative new ways to generate revenue and, hopefully, stimulate the economy and pay down our massive debt.
This brings us to the current fight over legalized sports betting in New Jersey.
Independent reports have stated that legalized sports betting could generate over $1 Billion in bets in its first year alone. Since New Jersey carries an 8% tax on all casinos’ gross revenue, that additional $1 Billion in bets would produce over $100 million in revenue for the Garden State.
However, that figure could end up being exponentially higher when you take into account several other factors. For example, according to the Washington Post, last year a total of $3.5 billion was bet on sports in the state of Nevada. This speaks to how popular and in demand legalized sports betting is.
In addition to revenue generated from taxes, there is also a potential economic boon based upon the creation of thousands of legal sports betting-related jobs and millions of tourists that are sure to flock to the bars, restaurants and local establishments in surrounding areas.
In order to assess New Jersey’s chances at having legal sports betting, let’s take a quick look back to see just how far the debate has come over the past century.
-1919: Professional gambler Joseph Sullivan pays Shoeless Joe Jackson and other Chicago White Sox players thousands of dollars to throw the World Series against the Cincinnati Reds, which came to be known as the “Black Sox Scandal”.
-1989: Pete Rose receives lifetime ban from Baseball for betting on games.
-1992: Congress passes the Professional and Amateur Sports Protection Act (PASPA), which bans all sports betting outside of a select few states (Nevada, Oregon, Montana and Delaware).
-2012: New Jersey Gov. (R) Chris Christie signs legislation legalizing sports gambling in New Jersey.
-2012: Major sports leagues (NCAA, NFL, NBA, MLB, NHL) file suit against Christie’s bill, claiming it violates the 1992 Federal Ban and could lead to more corruption in sports.
-2013: NFL Commissioner Roger Goodell, recently voted the most powerful person in sports by Sports Illustrated, comes out against legalized gambling, arguing that it “threatens to damage irreparably the integrity of, and public confidence in, NFL football”.
-2013: Rep. Frank LoBiondo (R-NJ) and Rep. Frank Pallone Jr. (D-NJ) introduce new legislation that argues “New Jersey must be allowed to move forward with legal sports betting and bring much needed revenue to the state”.
So where does New Jersey’s push for legalized sports betting stand now?
At this point, the big issue stems from the centuries old battle between states’ rights and the jurisdiction of the federal government, which was the major crux of the Civil War in 1865.
While Christie is able to legalize gambling in New Jersey, he does not have the authority to override the 1992 Federal Ban.
“In my view, the only way this goes anywhere is if the Supreme Court finds PASPA to be unconstitutional or if Congress reverses itself and passes a new law”, said Frank J. Fahrenkopf Jr., President of the American Gaming Association.
Should it reach the Supreme Court, many believe the 1992 ban could be struck down because, according to backers of legalized gambling, Congress does not have the power to regulate interstate commerce in this particular case.
Also, many believe the 1992 ban also violates the 10th Amendment and is unconstitutional because it treats states differently, allowing gambling in some states like Nevada but not others.
As it stands today, it appears the push for legalized sports betting remains stuck in congressional quicksand.
However, with Democrats adamantly against Sequestration-style budget cuts and Republicans hell-bent against additional tax increases, legalized sports betting may be the one revenue-generating avenue where compromise remains possible.
Let’s just hope they come to their senses sooner rather than later.