Could sports betting save New Jersey?
Monday, August 09, 2010
Bob Considine, The Star-Ledger
We’ll call him “Charlie” because we don’t want our legs broken. Charlie is a longtime bookie in New Jersey. And he, for one, knows what the legalization of sports betting here would mean for him.
“It would pretty much put me out of business,” he says.
These days New Jersey could use some of Charlie’s action.
When the state budget came up $10.7 billion short, Gov. Chris Christie inflicted more cuts than Vitali Klitschko.
In Atlantic City, where casino profits continue to tumble, a big swig of some gaming Red Bull wouldn’t hurt.
And who could blame the horse-racing industry, which is basically on life support, for seeing sports betting as a sure winner?
About $600 million a year in new revenue is hard to refuse.
That’s the figure Cantor Fitzgerald came up with two years ago in a report that estimated how much money would go to the state’s casinos if sports betting were legalized. The report also projected an additional $60 million in tourism would be generated for the state treasury.
State Sen. Ray Lesniak, who likes those numbers, has been riding the sports-betting pony for a while. But it’s been mostly a cold trail for the Union County Democrat — until now. Last year, he sued the U.S. Justice Department seeking to overturn a federal law that restricts sports betting to Nevada, Oregon, Montana and Delaware. And with the support of Sen. Jeff Van Drew, a Democrat representing Cumberland and Atlantic counties, Lesniak also is pushing an amendment to the state constitution that would allow sports betting in New Jersey as well as the legalization of internet gaming through Atlantic City casinos.
If the cards fall into place, there could be a sports-betting question on the ballot in November.
“It’s ridiculous to me that New Jersey and 45 other states cannot legally bet on sporting events, but citizens in four states can,” he says. “We are being discriminated against.”
There’s little doubt New Jersey’s gaming outlets could use a lift. Gross operating profits at Atlantic City’s 11 casinos dropped 25.2 percent in the first quarter of this year, according to state casino regulators.
The decline is just the latest bad news in a prolonged three-year slump for the city’s casinos, which also are feeling the pinch from slot parlors in neighboring states. And it doesn’t help that Pennsylvania and Delaware were scheduled to offer table games this summer.
“The sooner it (sports betting) can happen in New Jersey, the better,” says Donald Trump, who maintains control of three Atlantic City casinos. “Atlantic City has a lot of competition right now. It needs an edge.”
At New Jersey racetracks, where the calls for slot machines have gone unanswered for years, there is perhaps a greater sense of desperation. Earlier this year, a transition committee put together by Gov. Chris Christie to examine the state’s gaming woes projected Monmouth Park and Meadowlands Racetrack would lose $22 million combined, and that the status quo was “not sustainable.”
As a result, thoroughbred racing for 2010 has been reduced to 71 live dates at Monmouth, down from 141 in 2009. At the Meadowlands, thoroughbreds will not compete for the first time since 1977.
“Our racetracks are all going to be closed within five years if we don’t get a boost,” Lesniak says.
It appears many New Jersey residents like the senator’s idea for increasing revenue. A poll last year by PublicMind, Fairleigh Dickinson University’s opinion research center, showed 63 percent in favor of sports betting in Atlantic City and 32 percent against it. Men were more in favor (69 percent to 27 percent) than women (58 percent to 36 percent).
In another PublicMind poll this spring, 56 percent favored betting at state racetracks, while 36 percent were against it.
Nationally, however, PublicMind found less support for sports betting. In a telephone poll of 1,000 people throughout the country conducted in May, two-thirds were opposed to legalized sports betting on the internet, and 53 percent were against betting on professional or college sporting events. But poll director Peter Woolley says those numbers could change once taxpayers recognize money could be made.
“If some states allow sports betting and profit by it, other states will want to follow,” he says.
The potential for success in New Jersey is tough to gauge, if only because law-breaking bookmakers are not about to disclose their financial information.
But Sen. Jim Whelan says there is a proven model for sports betting in Las Vegas, where the big game or tournament makes Sin City a destination.
“Sports betting brings us a marketing opportunity,” says the Atlantic County Democrat. “If you have a Super Bowl, people come, and they want to bet the game. But they’re also there to have dinner. They’re staying overnight. They’re spending money they wouldn’t otherwise be spending. “Super Bowl weekend is one of the busiest weekends in Las Vegas and one of the slowest weekends in Atlantic City. Why is that? Because they can bet the game and make a weekend out of it.”
But there is also the chance of diminished returns. A victory for Atlantic City also could be a win everywhere else.
“The problem is if New Jersey wins its lawsuit to have legalized sports betting, that opens it up for everyone to have legalized sports betting,” says Joseph Weinert, senior vice president of Spectrum Gaming Group, an independent gaming research and consulting agency based in Linwood.
“Presumably, the regional competition would benefit in the same way. Now, Atlantic City does have its tourism and its hotels, and that makes it more unique, so I think it would do well,” says Weinert.
“But I don’t think it would do as well as it could have in the early 1990s.” Oh, those halcyon days of the early 1990s. That’s when many believe New Jersey had its last, best chance to make sports betting legal. And, to some, the missed opportunity still stings.
A little back story: In 1992, Congress passed the Professional and Amateur Sports Protection Act. The bill, introduced by New Jersey Democratic senator and former NBA star Bill Bradley, outlawed sports betting except in the states that had it or had enacted legislation to conduct it: Nevada, Oregon, Montana and Delaware.
However, there was also a provision giving states that had regulated casinos for at least 10 years a one-year window to enact legislation to legalize sports betting. New Jersey was the only state that qualified. But in true Jersey-style, politics got in the way.
Lobbying efforts came hard from both sides in 1993. Bradley built a coalition that included commissioners from pro sports, college sports leaders, law enforcement agencies and church groups.
Representing the other side was the Casino Association of New Jersey, a nonprofit that promotes the welfare of the state’s gaming industry and consists of representatives from all Atlantic City casinos. Trump was also an outspoken advocate.
The bill twice won passage in the Senate. But when it got to the Assembly Appropriations Committee that summer, it died, much to the delight of the committee chairman, Rodney
Frelinghuysen, a Republican from Morristown who detested the idea of sports betting.
It later was revealed in sworn testimony during a Democratic investigation into the 1993 election of Gov. Christie Whitman that blocking the sports-betting referendum was a GOP campaign strategy.
Webster Todd Jr., Whitman’s brother and campaign adviser, admitted that Republicans believed putting a gaming referendum on the ballot could have increased the number of pro-Democratic urban votes. Whitman beat Jim Florio by just 26,093 votes out of 2,505,964 cast in the ’93 election.
Trump, who admittedly has much less to do with Atlantic City these days, still fumes about the missed opportunity.
“Bill Bradley did a tremendous disservice to the state of New Jersey,” Trump says. “That’s one of the main reasons he’s no longer in office and couldn’t get himself elected dogcatcher. He was a terrible senator. He didn’t know what he was doing. He made it just about impossible to get sports betting approved in New Jersey.”
Bradley declined to comment. What are the chances that New Jersey will finally get sports betting?
Lesniak acknowledges his lawsuit would have more merit if the new governor joined as a plaintiff. In February, Christie created the New Jersey Gaming, Sports and Entertainment Advisory Commission to study sports betting among other state gaming issues.
The seven-member panel, led by former New Jersey Sports and Exposition Authority chairman Jon F. Hanson, includes former Rutgers University athletic director Robert E. Mulcahy III, YES Network founder and developer Finn Wentworth, Southern New Jersey Chamber of Commerce president and CEO Debra P. DiLorenzo and former Yankees and Mets pitcher Al Leiter. It was scheduled to present its recommendations to Christie by Aug. 1.
Kevin Roberts, a spokesman for Christie, said the governor would not disclose his position on sports betting until the committee gave its report.
Lesniak said he was willing to wait, but he’s still not quite over a report issued in January by Christie’s transition committee, which preceded the governor’s gaming commission. In it, the committee described sports wagering as “100 percent wrong” for New Jersey.
Lesniak blasts the report as “self-serving” because one of the committee members, David Satz, is vice president of government relations for Harrah’s Entertainment Inc., which has its headquarters and main gaming interests in Las Vegas, where sports books are legal.
Harrah’s supports federal legislation of internet gaming, rather than state-by-state regulation. Under the federal legislation advocated by Rep. Barney Frank (D-Mass.), a state can tax online gaming profits generated only through facilities located in that state. So Harrah’s would escape taxation on internet bets made by New Jersey residents because its servers are located at its corporate headquarters in Nevada and at three off-shore facilities.
“The internet gaming issue is basically the state of New Jersey versus Harrah’s, in my opinion,” says Lesniak. “Harrah’s has sold out New Jersey for its corporate interests in Nevada.”
Satz, who is not part of Christie’s current gaming commission, said in a statement that the transition committee’s report simply focused on the current legality of sports betting.
“While we appreciate Sen. Lesniak’s enthusiasm to help Atlantic City and look forward to working with him in this regard, regrettably at this time, federal law is very clear that internet gambling and sports betting are unlawful in New Jersey under PASPA (the Professional and Amateur Sports Protection Act),” he wrote.
“This is not a New Jersey or a Harrah’s issue. It is what Congress dictated to all states. So unless or until Congress changes the federal law, this is law that guides all states and gaming companies.”
The issue was coming to a head in late June when a committee vote for Assembly Bill 817 was stalled, just as the Casino Association of New Jersey denounced sports betting, but then
approved it a few days later. As a Senate vote and Christie’s commission report loomed, Lesniak and four other state leglislators called for a “gaming summit” of lawmakers, policy experts and casino industry leaders to hear all concerns.
Lesniak says he will continue his lawsuit whether or not he has New Jersey’s backing. His firm, Weiner Lesniak of Parsippany, is handling the litigation on its own dime and was planning to file a motion for judgment in Federal District Court in Trenton. Lesniak expects the case to be heard in the fall.
Atlantic City-based casino law expert Lloyd D. Levenson thinks Lesniak could prevail.
“My gut tells me this: How can the federal government justify allowing sports betting to take place in the various states where it is legal and bar it from the rest of the country?” he asks. “From a pure law-school, hornbook point of view, it doesn’t pass the smell test. I do think they have a chance.”
The main arguments against legalized sports betting center on the promotion of excessive gambling and the corruption of sports itself.
As summer beckoned, it appeared sports betting in New Jersey had a feistier antagonist in the National Football League. At a public hearing in April, the NFL reiterated its long-standing position against legalized betting of its games, contending it could compromise the integrity of the sport.
“Mistakes are made in the course of the game, either by the ref or by players,” said NFL spokesman Timothy McDonough.
“But when mistakes are made, to a less rational person who is placing a bet, a mistake becomes a fix.”
New Jersey lawmakers and proponents of sports betting poked holes into the NFL’s stance. How would the league oppose wagering while doing business with broadcast networks that chatter endlessly about point spreads for their own games?
McDonough’s contention that the NFL couldn’t fight the First Amendment rang a bit hollow. But the league appeared to be gaining some ground in its battle in late May when the New Jersey Senate surprisingly pulled back from voting on the resolution, pushing it back to June 10.
It turns out the league was just a few days away from deciding whether to play Super Bowl XLVIII at the New Meadowlands Stadium, and some thought the league may have used its anti-sports betting stance as leverage in the negotiation.
McDonough had no comment on that theory. In the end, New Jersey got the Super Bowl anyway. The amendment drawn up by Lesniak and Van Drew would permit wagering on pro, college and amateur athletic events, but prohibit betting on college events that take place in New Jersey, as well as any game that features a New Jersey college team. (So all bets are off on Rutgers football.)
There is one commissioner of a major sport, however, who is warming to the idea of legalized wagering on his games. At least he acknowledges that it’s inevitable. NBA commissioner David Stern — ironically one of Bradley’s buddies who in the early ’90s thought it was best to keep sports books in Vegas — told Sports Illustrated in late 2009 that times have changed.
As if an NBA All-Star game in Vegas three years ago wasn’t enough of a sign.
“Considering the fact that so many state governments — probably between 40 and 50 — don’t consider it immoral, I don’t think that anyone should,” Stern says. “It may be a little immoral, because it really is a tax on the poor, the lotteries. But having said that, it’s now a matter of national policy: Gambling is good.”
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