TRENTON, N.J. — From March Madness brackets to Super Bowl pools to illicit back room wagers, people bet on professional sports games every day. But they can do it legally only in four states, and only two states currently offer state-sanctioned sports wagering.
With Atlantic City casinos in a financial free fall and New Jersey's budget in shambles, a state lawmaker filed a federal lawsuit Monday against the Justice Department that seeks to overturn a U.S. ban on sports betting. The casinos and their political allies say letting people bet legally on sporting events would let all 50 states in on a lucrative revenue source.
State Sen. Raymond Lesniak, D-Elizabeth, said sports betting already exists, and will continue to whether states tax it or not.
"As Captain Renault said to Rick, 'I'm shocked — shocked — to find that gambling is going on in here!" he said, quoting from the movie "Casablanca."
"Gambling is going on here, sports gambling," Lesniak said. "Rather than supporting thousands of jobs, economic activity and tourism, the federal ban supports offshore operators and organized crime."
Estimates of illegal sports betting in the United States vary widely, but range as high as $380 billion a year, according to the National Gaming Impact Study Commission.
A consultant hired by one of the lawsuit's plaintiffs, the Interactive Media Entertainment & Gaming Association, estimated that sports betting could become a $10 billion-a-year industry in New Jersey by 2011 if it were permitted in casinos, at racetracks, online and by telephone. That could generate nearly $100 million a year in tax revenues for the state, according to the group's CEO, Joseph Brennan.
Lesniak's lawsuit, filed in U.S. District Court in Newark, seeks to overturn the Professional and Amateur Sports Protection Act. The 1992 law restricts sports betting to the four states that met a deadline to sign up for it: Nevada, where Las Vegas sports books determine the odds for sporting events across the country; Delaware; Montana; and Oregon.
The law carved out a special exemption for New Jersey, giving it a chance to decide if it wanted legal sports betting. The state failed to enact a law that would have done so, and the exemption window closed.
The lawsuit argues that the U.S. law is unconstitutional because it treats four states differently than the 46 others.
It names U.S. Attorney General Eric Holder and Ralph Marra Jr., New Jersey's acting U.S. attorney, as defendants. A U.S. Justice Department spokesman said the government will review the lawsuit but declined further comment.
Professional and scholastic sports leagues vehemently oppose legalized sports gambling, arguing that the integrity of the games must be free of suspicion. They cite a long history of gambling-induced scandal, from the 1919 Black Sox, who threw the World Series at the behest of gamblers, to numerous college point-shaving schemes.
Nevada allows numerous types of sports betting.
Montana allows what's going on illicitly in most other states this month: NCAA basketball tournament pools at bars that register with the state lottery. The state also allows betting on fantasy sports leagues.
Oregon ended its sports lottery, which brought in about $2.5 million a year in tax revenues, in 2007. The National Basketball Association had sued the state over the lottery and the NCAA had vowed not to hold any postseason games there as long as sports betting was allowed.
Delaware is considering taking advantage of its exemption and could have a sports betting lottery in place in time for the fall football season. It would involve combination, or parlay, bets to make it more difficult to win.
States across the country are turning to gambling as a new or expanded source of money amid the economic meltdown. Proposals to allow or expand slots or casinos are being considered in at least 14 states, tempting legislators and governors at a time when many must decide between cutting services and raising taxes.
Atlantic City's casinos have endured months of declining revenues. Joe Corbo, president of the Casino Association of New Jersey, said the casinos would benefit from a modest new revenue stream of about $50 million or so, plus secondary economic activity at gambling tables, restaurants, spas and hotels.