New Jersey files suit on sports-betting ban

PHILADELPHIA Mon Mar 23, 2009 6:20pm EDT

Ginger Punch with jockey Rafael Bejarano (R) drives past Hystericalady with jockey Eddie Castro (C) and Octave with jockey Garrett K. Gomez to win the Breeders' Cup Distaff race at Monmouth Park in Oceanport, New Jersey October 27, 2007. REUTERS/Tim Shaffer

Ginger Punch with jockey Rafael Bejarano (R) drives past Hystericalady with jockey Eddie Castro (C) and Octave with jockey Garrett K. Gomez to win the Breeders' Cup Distaff race at Monmouth Park in Oceanport, New Jersey October 27, 2007.

Credit: Reuters/Tim Shaffer

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PHILADELPHIA (Reuters) - A group representing gaming and horse-racing industries in New Jersey filed a lawsuit on Monday seeking to overturn a federal law that bans sports betting in New Jersey and most other U.S. states.

The suit filed against the federal government claims the Professional and Amateur Sports Protection Act of 1992 violates five amendments to the U.S. Constitution by discriminating against the people of New Jersey and by regulating a matter that should be reserved to the states.

Gaming is an important industry in New Jersey, with 11 casinos located in Atlantic City. New Jersey Governor Jon Corzine told reporters the initiative to legalize sports betting was "worth pursuing" and would boost Atlantic City if it happened.

Because the law allows sports betting in Nevada, Delaware, Montana and Oregon -- states where the practice was already in place before the federal law was passed -- it also violates the commerce clause of the Constitution by failing to impose uniform standards throughout the country, the suit said. Of those four states, only Nevada, which is home to a large gaming industry, has implemented sports betting.

The suit was filed in U.S. District Court, District of New Jersey, on behalf of the Interactive Media Entertainment & Gaming Association, the New Jersey Thoroughbred Horsemen's Association, The Thoroughbred Breeders Association of New Jersey and the Standardbred Breeder & Owners Association of New Jersey.

New Jersey State Senator Raymond Lesniak, also one of the plaintiffs, said the law deprives New Jersey of millions of dollars in tax revenues and income for the legitimate gaming industry that is instead going to offshore Internet operations, back room bookmakers and organized crime rings.

"This federal law deprives the State of New Jersey of over $100 million of yearly revenues, as well as depriving our casinos, racetracks and Internet operators of over $500 million in gross income," Lesniak said in a statement.

According to a 1999 study, $380 billion a year is illegally wagered on sports betting.

Corzine he said he expected a court challenge to the law would take years, and said it would be better if Congress revisited the issue.

In February, Atlantic City's 11 casinos suffered their biggest revenue decline in the city's 30-year gambling history as the recession cut into spending and competition increased from slots parlors in neighboring Pennsylvania.

Competition could intensify if Delaware, another neighboring state, begins to regulate sports betting, as it is reported to be considering, said New Jersey State Senator Jeff Van Drew, a backer of the suit who represents the Atlantic City area.

"We cannot afford to be naive about illegal sports betting," Van Drew said in a statement. "It's happening right now, and is funding other criminal enterprises which are far more dangerous."

In Pennsylvania, Governor Ed Rendell has proposed legalizing and taxing video poker to raise $500 million a year to subsidize college tuition at state-run universities.

Charles Miller, a spokesman for the Justice Department, said only that officials are reviewing the suit.

(Editing by Leslie Adler)

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