New Jersey legalizes sports gambling following landmark US Supreme Court ruling

On June 11, 2018, New Jersey Governor Phil Murphy signed into law Assembly Bill 4111, legalizing sports gambling in select locations throughout the state of New Jersey. This law follows the landmark US Supreme Court decision in Murphy v. NCAA, in which the Court invoked the “anti-commandeering” doctrine to strike down a 1992 federal law intended to prevent states from repealing prohibitions on sports gambling.

The law permits sports gambling for most sporting events, such as professional, Olympic and college sports. It excludes, however, games of New Jersey college teams, college games taking place in New Jersey, high school sports, electronic sports, fantasy sports and/or competitive “video gaming.” Participants may place wagers in-person in Atlantic City casinos and at both current and former racetrack locations in New Jersey.

This law imposes an 8.5% tax on in-person wagers at the aforementioned locations and a 13% tax on wagers made through the internet. Casinos and racetrack operators will be licensed by the state to accept these wagers. The tax base is the gross amount of revenue minus payouts to participants. The law takes effect immediately for in-person wagers and is effective in 30 days for internet wagers.

Implications

The legalization of sports gambling in New Jersey represents the culmination of a six-year legal battle in which Governor Murphy, former Governor Chris Christie, and the New Jersey Thoroughbred Horsemen’s Association squared off against the NCAA, NFL, NHL, NBA, and MLB, and the United States. State officials estimate that the tax on sports gambling will raise at least $13 million in revenue in the first year of operation, though unofficial estimates are far higher. In addition, the law’s sponsors expect that it will spur job growth in New Jersey and increase visits to racetracks and Atlantic City casinos, places where the tax rate is significantly lower in comparison to wagers accepted through the Internet.

New Jersey and Delaware are the first states to legalize sports gambling in the wake of the Court’s decision, but other states may soon follow.

 

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