In vetoing a bill last month to allow New Jersey’s casinos and racetracks to take sports bets in violation of a federal ban, Gov. Chris Christie said “the rule of law is sacrosanct, binding on all Americans”.
Well, not that “sacrosanct,” it appears, not this month, and not “on all Americans,” not a governor with presidential aspirations whose political liabilities keep piling up in Atlantic City—four casino closings so far in 2014, gone by the boards something like 8,000 jobs, a fifth casino slated to close before the end of the year.
Much of the reputation the chief executive’s supporters have nurtured for him over two terms in office as a no-nonsense, take-charge champion of free enterprise in the finest Republican take-charge, no-nonsense tradition is staked on Atlantic City’s recovery. It’s been a bad bet.
Revel, the gamble’s $2.4 billion centerpiece, a 1,400-room folly conceived by investment bank Morgan Stanley at the height of the housing bubble, would receive $270 million in Christie-backed tax breaks and other incentives to get it open after the bank wrote it off in 2010 as a $1 billion loss and walked away.
Revel did open, two springs ago, to much fanfare, and within 11 months was in bankruptcy reorganization, the first of two trips it would make to the federal courts for protection from its creditors. On 2 September 2014, it finally gave up the ghost.
At that point, Showboat and Atlantic Club were already out of business, Trump Plaza announced it would soon be too, and Trump Taj Mahal was about to inform its employees that its days were numbered.
This is the backdrop against which Christie emerged on 8 September from a closed-door summit on Atlantic City’s dismal future to issue a directive through the state Attorney General’s Office that picked up where the bill he vetoed in August left off—a bill he criticized as “novel” and “rushed”.
“Victory at last !” pronounced pro-gambling state Senator Raymond Lesniak, who sponsored the vetoed bill. “People should book their hotel rooms in Atlantic City for the Super Bowl now because there won’t be any available in February.”
Legal opinion is not so sure. Those who’ve spoken publicly see in the directive a sleight-of-hand that won’t stand up to the challenge coming its way from the major sports leagues; moreover, they warn that it could inveigle the casinos and tracks in a dangerous legal fraud. Not surprisingly, not a track or a casino has sprung to the opportunity to start booking bets.
Christie and his advisors believe that by taking their nebulous stand they’ve placed sports betting safely out of reach of the Professional and Amateur Sports Protection Act, an anti-gambling law enacted by Congress in 1992 at the behest of the leagues. It restricts sports betting to the four states where it was legal in differing forms at the time. It also gave the other 46 states a year to join them by legalizing it too. None did.
This was never an issue for New Jersey until the Atlantic City market began to unravel at the end of the last decade. Then it became a big issue. After a series of failed attempts, by Lesniak and others, to challenge PASPA in the courts, the state Legislature went ahead in 2011 and authorized sports betting by repealing the state’s own ban. Christie promptly signed the measure and dared the leagues and the federal government to intervene. They did, suing in U.S. District Court the following spring and winning a ruling that blocked the law from taking effect. New Jersey fought on to the 3rd U.S. Circuit Court of Appeals, which is where things got murky enough to inspire Lesniak to devise a way to sneak the 2011 authorization through the back door. In attempting to clarify some of the finer points surrounding the District Court ruling the appeals judges adopted the Justice Department’s argument that PASPA is not unconstitutional because it does not force states to prohibit sports betting. In other words, they could choose not to regulate it either way.—“It would be a really, really bad idea,” the lead U.S. attorney in the case noted, but PASPA does not forbid it.
Hence, Lesniak’s Senate Bill 2250, which the Legislature passed in June, three days after the state’s Hail Mary pass bounced to the ground before the Supreme Court. It declares that “all prohibitions” against sports betting—meaning PASPA, the only prohibition currently in force—are repealed as they apply to Atlantic City’s casinos and the state’s racetracks.
In vetoing it, Christie said the issue was nothing less than the rule of law, pointing to his duty to as governor to uphold it, whether he agreed with it or not. “That duty adheres with special solemnity to those elected officials privileged to swear an oath,” he said. “Ignoring federal law, rather than working to reform federal standards, is counter to our democratic traditions and inconsistent with the constitutional values I have sworn to defend and protect.”
So much for that.
A statement accompanying his new directive says: “Based on the arguments of the sports leagues and the United States Department of Justice, the 3rd Circuit has already ruled that New Jersey can carry out sports wagering. … The motion simply would clarify and formalize that authority and give clear guidance to casinos and racetracks waiting to open a sports pool in New Jersey.”
Of course, it’s expected the whole thing will be back in the courts, that is, once the lawyers for the sports leagues and the Justice Department finish scratching their heads.
But the governor is a step ahead of them there. He’s already gone for backup and has had the state file a motion asking a federal judge to clarify or modify the original District Court decision based on the Circuit Court’s opinion. An answer is expected early in October 2014.