On June 11, 2018, New Jersey Governor Phil Murphy signed into law Assembly Bill 4111, which legalizes sports gambling in certain locations throughout New Jersey. The law follows the landmark US Supreme Court (Court) decision in Murphy v. NCAA, in which the Court invoked the "anti-commandeering" doctrine to strike down a 1992 federal law intended to prevent states from repealing prohibitions on sports gambling.¹

This new law permits sports gambling for most sports events, such as professional, Olympic and college sports, but does not include games of New Jersey college teams, college games taking place in New Jersey, high school sports, electronic sports, fantasy sports or competitive "video gaming." Participants may place wagers in-person in Atlantic City casinos and at both current and former racetrack locations in New Jersey.

The law imposes an 8.5% tax on in-person wagers at these locations and a 13% tax on wagers made through the internet. Casinos and racetrack operators will be licensed by the state to accept these wagers. The tax base is the gross amount of revenue minus payouts to participants. The law takes effect immediately for in-person wagers and in 30 days for internet wagers.

Implications

The legalization of sports gambling in New Jersey represents the culmination of a six-year legal battle in which Governor Murphy, former Governor Chris Christie, and the New Jersey Thoroughbred Horsemen's Association squared off against the NCAA, NFL, NHL, NBA, and MLB, and the United States. State officials estimate that the tax on sports gambling will raise at least $13 million in revenue in the first year of operation, although unofficial estimates are higher. In addition, the law's sponsors expect that it will spur job growth in New Jersey and increase visits to racetracks and Atlantic City casinos, places where the tax rate is significantly lower in comparison to wagers accepted through the Internet.

New Jersey and Delaware are the first states to legalize sports gambling in the wake of the Court's decision in Murphy v. NCAA, but other states may soon follow.

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¹ Murphy v. NCAA, 200 L. Ed. 2d 854 (2018) (the slip opinion is also currently available here (last accessed June 15, 2018)). The anti-commandeering doctrine is grounded in the dual sovereignty of the state and federal governments and mandates the overturning of federal laws which compel state legislatures to pass laws or state officers to administer federal regulatory systems. See, e.g., Printz v. United States, 521 U. S. 898 (1997).