The case was heard by a three-judge panel at the 3rd U.S. Circuit Court of Appeals in Philadelphia, and the state could seek to have the case re-heard by the full appeals court. But Tuesday's ruling more likely means New Jersey's last chance to legalize sports gambling is to ask the U.S. Supreme Court to hear the case.
In March, U.S. District Judge Michael Shipp ruled that some of the questions raised in the case were novel, but he suggested the best way to change the U.S. law was to get Congress to repeal or amend the 1992 Professional and Amateur Sports Protection Act.
Tuesday's appellate ruling, by a 2-1 majority, reinforced Shipp's view.
"We are cognizant that certain questions related to this case — whether gambling on sporting events is harmful to the games' integrity and whether states should be permitted to license and profit from the activity — engender strong views," judges wrote. "But we are not asked to judge the wisdom of PASPA or of New Jersey's law, or of the desirability of the activities they seek to regulate. We speak only to the legality of these measures as a matter of constitutional law ... New Jersey's sports wagering law conflicts with PASPA and, under our Constitution, must yield."
In a dissenting opinion, Judge Thomas Vanaskie agreed substantially with his two colleagues but differed in his interpretation of PASPA, a law that allowed state-sanctioned sports gambling only in Nevada and three other states.
"PASPA attempts to implement federal policy by telling the states that they may not regulate an otherwise unregulated activity," Vanaskie wrote. "The Constitution affords Congress no such power."
Gov. Chris Christie's spokesman on Tuesday reiterated that the administration would take the case to the Supreme Court if necessary.
"In the dissent, the judge agrees with New Jersey's central argument — that the law is unconstitutional since it prevents sports betting in New Jersey against the wishes of its own elected officials and citizens," spokesman Colin Reed said in an email. "This makes the issue all the more appropriate to be decided by the U.S. Supreme Court.
"Two years ago, the people of New Jersey voted overwhelmingly to bring sports betting to New Jersey, and the governor agrees with his constituents. There's no reason it should be limited to only a handful of states. It's a fundamental issue of fairness."
Voters passed a sports betting referendum in 2011, and last year New Jersey enacted a law that limited bets to the Atlantic City casinos and the state's horse racing tracks. Bets wouldn't be taken on games involving New Jersey colleges or college games played in the state. Christie said at the time that he hoped to grant sports betting licenses by early this year, but those plans were put on hold.
The NFL, NBA, NHL, Major League Baseball and the NCAA sued the state last year and claimed the betting law would harm the integrity of their games. The NCAA moved several of its championship events out of New Jersey, though it later relented.
Attorneys for the state had attacked PASPA on several constitutional levels. They argued the law unfairly "grandfathered" Nevada, Oregon, Montana and Delaware, which each had some form of sports gambling at the time, and said the law violated state sovereignty and equal protection provisions and trampled the authority of state legislatures under the 10th Amendment.