WASHINGTON (Reuters) – The U.S. Supreme Court on Monday paved the way for states to legalize sports betting in a defeat for the major American sports leagues, endorsing New Jersey’s bid to allow such wagering and striking down a 1992 federal law that prohibited it in most places.
The court upheld the legality of a 2014 state law permitting sports betting at New Jersey casinos and horse racetracks and voided the federal Professional and Amateur Sports Protection Act. Some states see sports betting, like lotteries, as a potentially important source of tax revenue.
The ruling takes the United States a step closer to legal sports betting in numerous states, perhaps nationwide, rather than just in select places such as Nevada, home to the gambling capital Las Vegas. The current illegal sports betting market is worth billions of dollars annually.
The justices struck down the entire federal law on a 6-3 vote.
“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own,” Justice Samuel Alito wrote on behalf of the court.
Industry analysts have said that dozens of states might legalize sports betting if they are not barred from doing so by the federal law.
Shares in gaming companies and casinos rose in brisk trading after the news. Penn National Gaming Inc shares were up 4.3 percent at $33.62 while Boyd Gaming Corp shares were up 3.3 percent at $36.13 and Scientific Games Corp shares were up 9 percent at $58.30. Casino operator Caesars Entertainment Corp shares were up 6 percent at $12.60, while rival MGM Resorts International shares were up 2 percent at $32.45.
‘OPEN, TRANSPARENT AND RESPONSIBLE’
Geoff Freeman, president of the American Gaming Association industry group, welcomed the decision, saying it favors “an open, transparent and responsible market for sports betting.”
Freeman said his group would work with states, sports leagues and law enforcement “to create a new regulatory environment that capitalizes on this opportunity to engage fans and boost local economies.”
Daily fantasy sports company DraftKings Inc said in a statement that it is weighing entering the sports betting business as a result of the decision.
“This ruling gives us the ability to further diversify our product offerings and build on our unique capacity to drive fan engagement,” company CEO Jason Robins said.
New Jersey’s sports gambling law, championed by Republican former Governor Chris Christie, was challenged in court by the National Football League, Major League Baseball, the National Basketball Association, the National Hockey League and the National Collegiate Athletic Association, the major governing body for intercollegiate sports.
They called New Jersey’s law a threat to the integrity of competition, fearing game-fixing and other types of cheating.
New Jersey argued that the 1992 federal law infringed upon state sovereignty as laid out in the U.S. Constitution by compelling states not to license or regulate sports betting.
Christie appealed lower court rulings striking down the state law as a violation of that law, which effectively prohibited sports gambling in all states except Nevada and, to a limited extent, Delaware, Montana and Oregon.
Christie left office in January and was succeeded by Democrat Phil Murphy. Christie served as an advisor to President Donald Trump during the 2016 presidential race but was ousted as the head of Trump’s transition team after the election. Trump’s administration was on the opposite side of the case, opposing the New Jersey law championed by Christie.
The state law at issue would allow people age 21 and above to bet on sports at New Jersey casinos and racetracks, but would ban wagers on college teams based in or playing in the state.
Professional sports leagues in recent years have begun to shift their views regarding sports betting. Las Vegas now has an NHL team and will soon have an NFL team, and the NBA’s commissioner called for legalizing sports betting so it can be properly regulated.
Reporting by Lawrence Hurley; Additional reporting by Andrew Chung and Sinead Carew; Editing by Will Dunham