Delaware and New Jersey’s Quests to Become March Madness Betting Hubs

The two East Coast gambling states fight for the right to host basketball betting.

The 1992 Professional and Amateur Sports Protection Act was a major revision of American gambling laws, prohibiting sportsbetting in all but four states: Delaware, Nevada, Montana and Oregon. But because of a legal quirk, Nevada can takes bets this March while Delaware cannot. Delaware has recently appealed the federal government for the right to legally hold basketball betting. New Jersey is also lobbying to legalize bookmaking, with no success.

We’ll take a look at the background of the 1992 law, the effect it has had on the betting market in America, and the chances that it could be revised in the future.

The day the sportsbetting earth stood still

• The 1992 Professional and Amateur Sports Protection Act banned sportsbetting in all states accept Nevada, Delaware, Oregon and New Jersey

• Due to a legal quirk, Delaware can only host parlay betting on NFL games

• Delaware and New Jersey have both appealed the federal government to scrap the 1992 law, but have had not success

The federal government became increasingly involved in regulation the sportsbetting market throughout the 20th century. The 1961 Wire Act banned interstate gambling expect when between two states with legal markets, and the Illegal Gambling Business Act, which went after unlicensed providers.
The 1992 Professional and Amateur Sports Protection Act (PASPA) was a watershed moment for betting in America.

Designed to keep organized crime out of sports, PASPA banned sportsbetting nationwide but made a special exemption for states which had legal betting in some form between 1976 and 1990. Only four states fit this criterion: Nevada, Delaware, Oregon and Montana. The law required, however, that these states keep their betting markets in the same form which they had in previous years. No further liberalization would be allowed.

Implications for sportsbetting market

Delaware had one form of legal sports betting from 1976 to 1990: parlay wagering on National Football League games. Since the 1992 act federal law has prohibited it from legalizing any other forms of sportsbetting. New Jersey was given one year from the passage of the bill to legalize betting but lawmakers were unable to come to an agreement, so bookmakers cannot legally operate there.

By contrast, Nevada offered full-service sportsbooks covering a wide-range of events during those crucial years, and according the PASPA is the only state which can host betting on basketball games, including legal March Madness betting. For this reason sports fans from all over the country pour into Nevada every March to place bets on NCAA tournament games, providing a major source of revenue for businesses in the state as well as tax dollars for government.

PASPA was passed prior to the advent of online gambling, but Nevada is currently the only state with online sportsbooks. They only serve residents of the state, so there are no legal internet betting options available for the majority of Americans. Critics of gambling prohibition in the US argue that it pushes people to use foreign-operate sites which don’t pay taxes in America.

Delaware’ fight to liberalize its market

Since the financial crisis and recession of 2008 state lawmakers across the country have looked to sportsbetting as a way to raise tax revenue. In 2009 the governor of Delaware signed a bill legalizing single-event betting on all college and professional sports, the first such legislation to pass since 1992. State officials predicted legalization would produce between $50 million and $100 million in annual tax revenue. However, a federal court overruled the bill, finding it to be in direct opposition to PASPA. Delaware appealed to the supreme court, which refused to hear the case.

Delaware isn’t the only state fighting to hold basketball betting. In 2009 New Jersey senator Ray Lesniak filed a lawsuit against the federal government, claiming that PASPA was unconstitutional because it afforded special treatment to four states at the expense of the other 46. The case was dismissed, but politicians and lawyers across the country have come out in support of New Jersey’s challenge to PASPA.

Will March Madness come to the East Coast?

Delaware’s bill was struck down by the same federal court which has jurisdiction over New Jersey. It’s unlikely that it would change course and rule in New Jersey’s favor if it passed a similar bill. Why are the federal authorities so averse to liberalizing betting markets? One reason is that American sports leagues like the NFL, NCAA and NBA are powerful lobbies and stand in firm opposition to betting. They haven’t challenged the limited forms of wagering allowed under PASPA, but have fought tooth-and-nail against further liberalization.

Whatever the reason, don’t expect to see March Madness betting in 2014, 2015 or 2016 in Delaware, New Jersey or anywhere else. Those who wish to place bets on March Madness will have to make the trek to Las Vegas, or else stick to their local office pool.