Sports Betting.JPG

New Jersey is defending its attempt to legalize sports betting in a case that may end up before the U.S. Supreme Court. A sports betting parlor is shown in Delaware in this 2009 file photo.

(Associated Press file photo)

PHILADELPHIA — A federal appeals court ruled Tuesday that New Jersey does not have the right to legalize sports betting, delivering another bruising loss for state leaders who think the multi-billion-dollar industry could revive the state's struggling casinos and horse racing tracks.

The state said it would appeal to the U.S. Supreme Court, but the ruling will likely nix the chance to have sports betting in New Jersey in time for February’s Super Bowl at MetLife Stadium.

"I would doubt that now," state Sen. Raymond Lesniak (D-Union), a prime supporter of the law, said Tuesday. "That seems to be out of reach."

The appellate panel in Philadelphia — siding with the NCAA, the nation’s four largest sports leagues and the U.S. Justice Department — said in a 2-1 ruling that a federal statute barring states from legalizing or regulating sports betting is constitutional.

Lawyers for New Jersey had argued that the U.S. Professional and Amateur Sports Protection Act of 1992 unfairly allows sports betting in four states, which were grandfathered under the act. They also said it violates the 10th Amendment — which allows states to regulate when the federal government doesn’t — by forcing them to ban sports betting, and that the federal act "commandeers" the state’s Legislature.

Two of the three judges disagreed.

"It is hard to see how Congress can ‘commandeer’ a state, or how it can be found to regulate how a state regulates, if it does not require it to do anything at all," Judge Julio Fuentes wrote in the opinion, siding with Judge Michael Fisher.

Judge Thomas Vanaskie disagreed, saying the act "prohibits states from authorizing sports gambling and thereby directs how states must treat such activity."

Gov. Chris Christie vowed to take the case to the nation’s highest court. "Yes, if the Supreme Court will take it," Christie, the former U.S. attorney for New Jersey, said at a campaign event in Paramus. "We’re definitely going to ask them to."

Gov. Chris Christie at a campaign stop in Paramus on Tuesday. The governor said the state will appeal the decision.

Colin Reed, a spokesman for Christie, said the "decision is not at all surprising" and the state would forgo a chance to appeal to the full Third Circuit.

"Governor Christie has said all along this issue will likely be decided by the U.S. Supreme Court, and that’s what he believes should happen next," he said. "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"

The NCAA cheered Tuesday’s decision, saying in a statement that "the spread of legalized sports wagering is a threat to student-athlete well-being and the integrity of athletic competition."

In 2011, New Jersey voters approved a referendum to allow sports betting in hopes the state could legitimize a black market industry, tapping into billions in annual bets to produce a new source of revenue for the state budget, Atlantic City and the horse racing industry.

The Legislature then passed a law legalizing sports betting and Christie signed it in January 2012. The governor, expecting trouble, said: "If someone wants to stop us, then let them try to stop us."

The leagues answered seven months later, filing a lawsuit that claimed allowing and promoting sports wagering would "irreparably harm" amateur and professional sports and would violate the federal ban. The NCAA also canceled several events in the Garden State.

The leagues — later joined by the U.S. Justice Department — won the first round in February, convincing U.S. District Court Judge Michael Shipp that the federal act was constitutional. He banned the state from implementing sports betting.

Lesniak called Tuesday’s decision "quite frankly, bizarre," because it said the state had the right to allow unregulated sports betting. The judges said the state has the power to ban sports betting or to allow what is now illegal betting to take place — without government regulation.

Ronald Riccio, an attorney for the owners of the Monmouth Park racetrack, said the court had essentially provided a "road map" for the state to allow legal sports betting by repealing old state laws that banned it. "You could have sports betting self-regulated," he said. "There are plenty of industries that are not regulated by government but are regulated by the members of that industry."

Star-Ledger staff writer Matt Friedman contributed to this report.

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