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Behind the Bets

3/19/2009
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First it was Delaware, could New Jersey be next?

ESPN The Magazine has learned that New Jersey State Senator Ray Lesniak, who has been building support in his state to legalize sports betting, will file a lawsuit in Newark's U.S. District Court on Monday claiming the 1992 Professional Amateur Sports Protection Act is unconstitutional and violates state's rights. "We just want to free New Jersey up to adopt sports betting so we can get revenue and boost tourism," says Lesniak.

The 1992 ban, which prohibits states from being in the bookmaking biz, grandfathered Nevada, Montana, Oregon and Delaware, which already had sports betting laws on their books. However, New Jersey's neighbor, Delaware, hasn't actually participated in sports gambling for more than 30 years. The Magazine last week reported that Delaware Governor Jack Markell is going to reinstitute sports betting to help close a more than $700M budget gap. Now, Lesniak wants his state to get a piece of the action.

The Garden State once had an east coast monopoly on legal gambling. In fact, when Congress banned states from booking sports 17 years ago, gambling of any kind was legal in just a handful of places. Now, it's allowed in 37 states. That includes states a taffy pull away from Jersey, like Connecticut, New York and Pennsylvania. All those places are legit destinations for local high rollers. The new brick and mortar casinos, plus gaming's popularity on the Internet, have helped erode revenue in Atlantic City, increasingly turning the boardwalk from a good-time destination into an afterthought. In a recent report, the city's casinos showed a near 20% drop in income from a year ago, the biggest decline in three decades. As Lesniak told me recently, "AC is dead on Super Bowl weekend."

Lesniak has been threatening to file the lawsuit for two years, long before Markell was even campaigning for Delaware's top job. And this past February, after unsuccessfully lobbying his state's congressional delegation to support his ideas, Lesniak and N.J. State Senator Jeff Van Drew led the effort to pass a resolution in the New Jersey legislature urging action at the federal level. In reality, the resolution was nothing more than an official tantrum. None of New Jersey's congress people or Senators acted on it.

"The casino industry has been hard-hit by competition from surrounding states in recent years," said Van Drew, after the resolution was passed. "And I'm very worried sports wagering in Delaware will draw away customers and possibly cause irrevocable harm on the industry. New Jersey needs a level playing field to compete with other states for gaming revenue."

Last year, Nevada sports books won $136 million. But that pales in comparison to the total bet. Nearly $100 million was wagered on both Super Bowl weekend and March Madness. Nationwide, the estimate for illegal betting is as high as $380 billion, according to the most recent congressional study, which was done ten years ago. In that time, there's been no official accounting for how much more is bet on a yearly basis. But, with the Internet increasing the interest in, and availability of sports betting, it's safe to say the number has increased exponentially.

In Delaware, Markell is expecting his moves to bring in at least $50-$100M in revenue, based on sports betting, increased handle at racetracks and from slots and in concession sales. Lesniak isn't sure what kind of numbers sports betting would bring his state. But he's hoping for the chance to find out.

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Chad Millman is a Senior Deputy Editor at ESPN The Magazine, and once wrote a book called The Odds. His column takes a close look at the culture surrounding the bet.