Delaware Sports-Betting Violates U.S. Law, Court Says

BY JEF FEELEY & PHIL MILFORD, BLOOMBERG

THURSDAY, AUGUST 27, 2009Delaware's plan to introduce single- game sports betting violates U.S. law, a federal appeals court ruled, following a challenge by groups including the National Football League.

The NFL and other major professional sports leagues urged the 3rd U.S. Circuit Court of Appeals at a hearing in Philadelphia to halt Delaware Governor Jack Markell's wagering plan until after a Dec. 7 trial on the legality of expanding the state's sports lottery.

"It would be a violation of federal law for the state to proceed," said NFL lawyer Kenneth Nachbar after the hearing.

The National Football League, the National Basketball Association, Major League Baseball, the National Hockey League and the National Collegiate Athletic Association sued Markell last month, alleging the plan authorized by state law in May violates Delaware's constitution and federal law.

The three-judge panel said it will issue a formal order later today further explaining the decision.

Jobs ‘Jeopardized'

Markell's sports-betting plan was designed to "generate revenue and create jobs for Delaware," Michael Barlow, the governor's chief legal counsel, said in interview outside the courtroom. "We're disappointed that may all be jeopardized."

Barlow said state officials won't decide how to proceed with the sports-betting initiative until they review the panel's written decision.

Dover Downs Gaming & Entertainment Inc., a betting venue based in Dover, Delaware, fell 51 cents to $6.33 in New York Stock Exchange composite trading at 4:02 p.m. after dropping as much as 10 percent. The stock has almost doubled this year.

The appeals court concluded a Delaware law authorizing single-game bets as part of the state's lottery violated the Professional Amateur Sports Protection Act (PASPA).

That federal statute, passed in 1992, barred the expansion sports gambling. It may exceptions for existing betting systems in four states, including Delaware.

The leagues argued the law bars Delaware from expanding its lottery to allow Las Vegas-style single bets. Delaware's only foray into sports gambling occurred in 1976 when the state offered parlay betting on NFL games. That required gamblers to pick winners in several games for a payoff.

Parlay Betting

The NFL unsuccessfully took on parlay betting in Delaware, challenging Delaware's sports lottery in 1976. A judge rebuffed the league's suit.

The experiment with legal sports betting collapsed that year after the lottery office late in the NFL season offered point spreads that tipped the advantage to players, according to court filings.

Markell, a Democrat elected in November, pushed for the return of sports betting to help close an almost $800 million budget gap in the wake of the U.S.'s economic decline. State officials said the betting expansion is expected to generate as much as $17 million in the fiscal year that began in July.

"Businesses already have invested heavily in the sports lottery," Andre Bouchard, a lawyer representing the state, wrote in court filings.

He told the judges today that single-game betting "will have no cognizable impact" on the sports leagues.

‘Quite a Leap'

Even if the court rules against Delaware, "there will still be legal betting in Nevada, there will be illegal betting across the country including Delaware, and there will be betting on the Internet," Bouchard told the panel.

"You've got quite a leap" extending wagering to sports other than the NFL, U.S. Circuit Judge Thomas Hardiman told Joel Friedlander, one of the state's lawyers, during today's arguments.

Markell's plan to expand gambling to other sports and college games, as well as offering single bets on NFL games, was a clear violation of PASPA, Ken Nachbar, a lawyer for the leagues, told the appeals court today.

Single-game betting "impacts on the integrity and image of the game" by raising doubts in fans' minds about "what happens on the field," Nachbar said.

During the argument, Nachbar said the NFL wouldn't object if Delaware went back to offering parlay betting on multiple pro football games.

Parlay Betting Returns

Markell said in a statement today that Delaware officials plan to offer parlay betting on NFL games starting Sept. 10. The bets will be taken at Dover Downs and two other horse-racing tracks that also feature slot machines.

"We look forward to welcoming to Delaware visitors from all over the region to place parlay bets on professional football games," Markell said in the statement.

The Delaware case is Office of the Commissioner of Baseball v. Markell, 09-CV-538, U.S. District Court, District of Delaware (Wilmington). The appeals case is Office of the Commissioner of Baseball v. Markell, 09-3297, 3rd U.S. Circuit Court of Appeals (Philadelphia).