Why Did New Jersey’s Sports Gambling Appeal Get Rejected?

December 2, 2014 Updated: April 23, 2016

Last month, Governor Chris Christie had a significant political disappointment. Hoping to buoy the flagging Jersey gambling industry, Christie petitioned the federal government to lift its ban on sports gambling on New Jersey’s shores. The governor seemed confident in the success of his state’s appeal, but found himself opposed by none other than the National Football League, which formally opposes the enactment of legalized sports gambling in the 46 US states where it is illegal. The NFL cites integrity as the primary reason why they oppose such gambling. To see it legitimized would undermine and dilute the game…or something. The reality is slightly more complex.

 

Sports betting and spread betting are legal, but untaxed, in the UK. The industry is exploding, exhibiting 8% growth in 2013, and guaranteed to report another banner year come January 1st, 2015. Strong numbers are hard to come by, but if US equivalents are any measure, the industry figures are staggering. Nevada reported $99 million in 2013 Super Bowl bets. And that’s just the numbers on the books! Imagine what the entire nation of England and its thousands of brokers generate. So why don’t they tax this revenue?

 

The answer is simple: they’d also have to provide tax breaks for spread betting losses. On 1 in 5 spread betters actually wins money. The others lose a lot more than the others win, meaning that if taxes were brought into play, the government would lose a lot more than they gained. The US and the UK have two different approaches to the practice, as such. The UK gains untrackable increases to their economy. The industry pulls a lot of money into the system, but who knows who ends up with it? In effect, the UK is calling it a wash. The US, in contrast, tends to condemn that which it cannot monetize (cannabis, anyone?). They know the tax realities just as well as British lawmakers do, but rather than letting the chips fall where they may, they are maintaining a more traditionally puritanical stance, hence Christie’s disappointment.

 

And this, I think, is the basis of the NFL’s opinions on the matter. The National Football League is just as unable to monetize the wins and losses of sports spread betting, without becoming a casino. And while spread betting is more than just sports betting, sport is the focus of most of the spread betting in the United States, so opposition from the Leagues is enough, combined with the Feds’ tax problem, to keep the issue tabled for the foreseeable future.

 

New Jersey has appealed the issue, and a higher court will rule on the matter. But the ruling won’t trickle down for another 3-6 months. It could very well be just another “No” for Christie and his political ambitions. But by this time, he will be too far down the campaign trail to do much about it anyway. Despite his hopes and worries, gambling is not the most salient consideration for American voters. For now, sports gambling and spread betting will remain a compartmentalized vice for the USA.