Legal landscape note: This article was originally published in 2016 and describes the law as it stood at that time. New Jersey law changes frequently -- contact us to discuss how the current law applies to your situation.
Overview
New Jersey's 2014 law legalizing sports betting at casinos and racetracks was struck down in August 2016 by a twelve-judge panel of the U.S. Court of Appeals for the Third Circuit. The law, which had been amended in 2014 to allow wagering on amateur, college, and select professional sporting events for persons over 21, was found to violate the federal Professional and Amateur Sports Protection Act of 1992 (PASPA), 28 U.S.C. § 3701 et seq.
The ruling mattered to New Jersey residents and Atlantic City stakeholders who had viewed sports wagering as a potential economic boost. Two-thirds of New Jersey voters had previously approved a referendum favoring sports betting legalization, yet federal law stood in the way.
The Legal Framework
PASPA prohibits state-sanctioned sports betting in all states except those with pre-existing schemes -- Nevada, Delaware, Oregon, and Montana. In NCAA et al. v. Governor of New Jersey, Case Nos. 14-4546, 14-4568, and 14-4569 (3d Cir. 2015), the en banc court held that New Jersey's law amounted to an impermissible state authorization of sports wagering in direct conflict with the federal statute.
The majority further rejected the argument that PASPA unconstitutionally commandeers state legislative authority under the Tenth Amendment. Two judges -- Judge Fuentes and Judge Vanaskie -- dissented, reasoning that New Jersey's repeal of sports betting prohibitions did not amount to affirmative authorization of a wagering scheme and that PASPA itself could not survive constitutional scrutiny.
Background of the Dispute
The 2014 law followed a 2012 statute that voters approved by referendum. The amended law permitted sports betting at licensed casinos and racetracks throughout Atlantic County and elsewhere in the state. The NCAA, NBA, NHL, MLB, and NFL brought suit to block implementation, arguing that the law threatened the integrity of competitive sports.
Governor Chris Christie's administration referred the matter to the Attorney General's Office for further review following the adverse ruling. The question of whether to seek certiorari to the U.S. Supreme Court -- which later accepted review and ultimately overturned PASPA in Murphy v. NCAA, 138 S. Ct. 1461 (2018) -- remained open at the time.
What the Ruling Meant for New Jersey
For casinos in Atlantic City and racetracks in Monmouth County and elsewhere, the decision delayed the launch of legal sports books. Businesses that had invested in infrastructure and staffing faced uncertainty. The ruling also underscored the tension between state voter preferences and federal statutory restrictions.
It is worth noting that the legal landscape shifted dramatically after Murphy v. NCAA invalidated PASPA in 2018, clearing the way for New Jersey to become one of the nation's largest legal sports betting markets.
Key Takeaways
- The 2016 3rd Circuit ruling enforced PASPA's ban on state-authorized sports betting nationwide
- New Jersey's voter-approved referendum could not override the federal statute at the time
- The dissenting judges argued that PASPA unconstitutionally commandeered state governments
- The U.S. Supreme Court's 2018 decision in Murphy v. NCAA ultimately reversed this outcome
- Sports betting is now legal in New Jersey, but the path required nearly a decade of litigation
Reviewed by Britt J. Simon, Esq., Managing Partner -- Simon Law Group, LLC -- May 2026
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