By Martin Owens
New Jersey Heats Up
Rebooting, Review and Rebellion.
It took a long time for Internet gambling to hit New Jersey, but now that it's there, it's hit with a vengeance. Major developments have come to pass within just a few days of each other. Atlantic City casinos began testing a beta version of their new online gambling software. A Federal appeals court turned down New Jersey's efforts against PASPA, the Federal ban on states and tribes legalizing further sports betting. Whereupon State Sen. Lesniak, quite possibly America's feistiest supporter of state level Internet gaming, announced a new bill to bring the world's online gaming markets to New Jersey.
While it has apparently escaped the attention of some government officials, the Internet gaming industry (gambling and non-gambling) has long known that realistic, comprehensive field testing is needed before a complex system can be opened for business to the public. Perhaps it ?s because the online gaming operators tend to be legally liable for any screw ups. Therefore, the New Jersey Internet gaming licensees began offering what the trade calls "beta versions" of the software on November 15th, to a gaming public eager to try them out. Some problems have been reported, seemingly centered around the technology designed to keep out underage and out-of-state bettors, but at the time of this writing there are no indications that they will delay the scheduled opening of Internet gambling in The Garden State, on November 26. In any case, Jersey's Gaming Enforcement authorities are in favor of pushing and challenging the system, the better to be sure that it will work and keep working when it's actually launched.
Handicapping the Supreme Court and New Jersey's gambling lawsuit
Even as Atlantic City is fielding beta versions , word has come down that New Jersey has lost its latest bid to overturn the Federal ban on states- and tribal authorities, for that matter- legalizing betting on sports events, online and off. The Federal Third Court of Appeals has just turned down the latest appeal of a permanent injunction against New Jersey's offering online gambling to its residents. Actually it was a request from New Jersey Governor Chris Christie for a rehearing of a previous rejection. Now this has also been rejected. The next stop is the US Supreme Court. Maybe
To borrow a line from Ronald Reagan, the problem is not that people are ignorant about the Supreme Court and its decision-making. Rather, the problem is they know so many things that just ain't so. Here are a few things to keep in mind.
First, while New Jersey is almost certain to make the appeal, getting reviewed by the Supreme Court is far from an automatic process. Let's be realistic. If everybody who wanted a hearing in front of the Supreme Court could get one, the Court would need more members than the Marine Corps..What happens instead is called the process of certiorari. Something like 10,000 requests for review are presented to the Court every year..The Justices themselves decide which ones they'll take. The operating mechanism is called the "rule of four": if four Justices pull for a particular case, then it's eligible for the list of those that might be heard. Something like 1% are actually reviewed, argued, and decided.
For the rest, the operative phrase is "certiorari denied". And this is the first problem. Certiorari denied does not mean the Supreme Court necessarily agrees with the decision being appealed. For the most part it means that they have not discovered adequate grounds to question or overturn the decision of the court below. Or they just plain ran out of space on the calendar. Or the case is not what we lawyers call "ripe". Meaning nobody can claim to have been hurt or affected yet. Throughout its history, the Court has steered away from giving "what-if" opinions.
Second, even if New Jersey loses a Supreme Court case, it doesn't necessarily mean that the Court is positively saying that one side is right and the other is wrong. The Justices may simply find, on examination, that there isn't enough in the appeal to overturn the lower court decision, or to return it for rehearing. Or that, even if there is merit in the appealing party's case, that merit is outweighed by the merit of other, older, bigger considerations over there someplace.
It is the duty of the Court to balance the needs of the present against the basic structure that the Constitution has given our nation. More often than not, it ain't easy. That's why news coverage of these decisions can be so misleading - it's difficult to boil down 20 pages of close legal analysis to a sound bite, and even harder to get it right.
Thirdly, a negative result from the Supreme Court doesn't have to be the end of the world. In the days before Brown Versus the Board Of Education opened up the civil rights movement, there were plenty of previous Supreme Court decisions in favor of Jim Crow laws and segregated facilities. Times change. And the people that get what they want are the people who keep trying.
Lesniak leads the charge, invents money-boarding
That's why it's worth remembering that the first victory of the American Revolution was won at Trenton, New Jersey, From that day to this, a proper citizen of Jersey knows what to do: when you see a good fight, get in it. State Senator Raymond Lesniak is a worthy heir to that honorable and truculent tradition. What keeps the states, and the tribal gaming authorities, from opening up their own books, same as Vegas? Simply put, a misbegotten and wrongheaded law known as the Professional and Amateur Sports Protection Act (PASPA) inflicted on an unwary country in 1992.
PASPA begins with the preposterous notion that betting on sporting events is far and away the prime threat to American morals and prosperity. It then proceeds to contradict itself by grand fathering four states, including of course Nevada. It is lawful and wholesome, says this law to bet on sports from the staid and bucolic environs of Las Vegas. But it is a threat to our way of life to allow such an outrage to take place in that den of mad libertines known as Salt Lake City.
And anyhow, under the Tenth Amendment, the Federal Government has no business dictating state gambling policy.
The law then goes on to violate the Constitution in other ways. It does not adequately define what gambling offenses it prohibits (Fifth Amendment). It places irrational and unequal burdens on the interstate commerce in wagering (Commerce Clause). And by allowing sports leagues such as the NBA or NHL to sue state governments over state gambling policies, it scotches the Eleventh Amendment. Then, too, it sets a bizarre and unhealthy example: suppose oil companies could sue state governments about their policies on drilling or fracking?
But the fact remains: Federal judges are most very reluctant to render decisions overturning existing Federal laws, however illogical, un-Constitutional, or just plain silly those laws might be. Occupants of the bench are not exactly chosen for their urge to buck the system.
Sen. Lesniak is aware of all these things, and yet is unwavering in his determination to make New Jersey a global hub of Internet and interactive gaming of all kinds. And so, rather than tackling the Feds head-on, he is proposing a very creative licensing scheme: global online gaming companies will be encouraged to locate in New Jersey, even though those companies will mostly not be able to offer their services to the residents of New Jersey or the USA- at least not the full range of them.
What will this accomplish? It will inflict a subtle and devastating form of torture on US state governments and the Feds as well. Online gambling is a market worth over $30 billion annually. So even with the large sector of the US market eliminated, locating online gambling companies inside a US state will result in a continual parade of money in and out of those companies-money that the state and national governments can't touch. It is waterboarding using the flow of money: money boarding. Watching the money flow in from abroad in bets. Watching it flow out again in winnings and in taxes to the home countries of the foreign bettors. Some taxes and fees, to be sure, may be collected, but American legislators will be faced every day with the reality that they are excluding themselves from the really big money that comes from complete legalization and thus the ability to tax every bet.
And while this tantalizing spectacle is paraded before their eyes, it will be shown that Internet betting, as already licensed, destroys neither society nor the existing gambling industry. American powers that be will reach inevitable conclusion- that they have been excluding themselves from participation in a very lucrative market, including sports betting, for no good reason.
Take it all around, Sen. Lesniak may just get his wish. New Jersey is addressing the opportunities of Internet gambling with an energy matched by very few in the nation just now.