By Jonathan Stempel
(Reuters) - A federal appeals court on Tuesday said New Jersey cannot legalize sports betting, in a big defeat for supporters of the years-long effort to allow such wagers in the state.
The 3rd U.S. Circuit Court of Appeals in Philadelphia said the 2014 law allowing sports betting at casinos and racetracks violated the Professional and Amateur Sports Protection Act, a 1992 federal law prohibiting the practice in all states other than Nevada, Delaware, Montana and Oregon.
"Because PASPA, by its terms, prohibits states from authorizing by law sports gambling, and because the 2014 law does exactly that, the 2014 law violates federal law," Circuit Judge Marjorie Rendell wrote.
The 10-2 decision is a defeat for Republican Governor Chris Christie, who has seen courts void two state laws, including one in 2012, designed to raise revenue through sports betting.
It is also a victory for Major League Baseball, the National Basketball Association, the National Football League, the National Hockey League and the National Collegiate Athletic Association, which opposed New Jersey's laws.
"We were relying on having sports betting to give a big boost to our ailing Atlantic City casinos and our suffering racetracks," state Senator Raymond Lesniak, a Democrat from Elizabeth who sponsored the 2014 law and a 2011 voter referendum allowing sports betting, said in an interview. "It's just wrong for Congress to deny New Jersey what the state of Nevada has."
New Jersey argued that its law amounted to only a "partial repeal" of its prohibitions on sports betting, did not "license or authorize by law" such betting, and could help curb the "thriving" black market in the practice.
Reflecting the stakes, two former U.S. solicitors general were on opposite sides of the case, with Paul Clement arguing for the sports organizations and Theodore Olson representing New Jersey.
"We are reviewing the opinion and considering our options," said Paul Loriquet, a spokesman for state Attorney General Christopher Porrino.
Clement was not immediately available for comment.
Nevada bookmakers made $231.8 million on sports betting in 2015, the state has said.
New Jersey's law banned wagers on state college teams and limited bets to people age 21 and older at casinos and racetracks.
Rendell acknowledged the law's "salutary purpose" in trying to revive those troubled industries, but said PASPA does not unconstitutionally "commandeer" the state.
The sports organizations, backed by the U.S. government, called the law "yet another attempt" to allow sports betting "only under the conditions of the state's choosing."
One dissenting judge thought the 2014 law permissible despite PASPA. The other thought PASPA was unconstitutional because it violated state sovereignty.
The American Gaming Association, an industry trade group, wants PASPA repealed.
"We do have two judges dissenting," Lesniak said, "and we certainly will take a shot at the Supreme Court."
The case is National Collegiate Athletic Association et al v. Governor of the State of New Jersey et al, 3rd U.S. Circuit Court of Appeals, Nos. 14-4546, 14-4568, 14-4569.
(Reporting by Jonathan Stempel in New York; Editing by Lisa Von Ahn and Tom Brown)