WASHINGTON—The Supreme Court opened the door to legal sports betting across the country by invalidating federal prohibitions on such wagers, in a ruling Monday that could mark a groundbreaking shift for sports leagues, fans and casinos.

The court, in a 6-3 opinion written by Justice Samuel Alito, struck down the 1992 Professional and Amateur Sports Protection Act, or Paspa, a federal law that said states couldn’t “sponsor, operate, advertise, promote, license, or authorize” sports gambling.

The Supreme Court overturned a federal ban on sports betting in a decision announced Monday. NBA Commissioner Adam Silver explains why that could bring greater transparency and integrity as well as business opportunities. He spoke with WSJ's Jason Gay at the Future of Everything Festival in New York on May 8.

The ruling, which sided with a challenge brought by New Jersey, clears the way for states, if they choose, to allow gambling on athletic events watched by millions of Americans. It also set off an immediate scramble, as state and federal lawmakers, sports executives and gambling operators began envisioning a world in which legal, state-sanctioned wagers become a central part of the American sports landscape.

“It’s going to add an entirely different dimension to fan engagement. What remains to be seen is whether it’s a good dimension,” said Nellie Drew, a sports-law professor at the University of Buffalo.

In the 31-page decision, the high court agreed with New Jersey’s argument that the federal law was an intrusion into states’ rights to regulate activity within their borders.


Paspa “unequivocally dictates what a state legislature may and may not do,” Justice Alito wrote, adding that “a more direct affront to state sovereignty is not easy to imagine.”

Congress has the authority to regulate sports gambling directly, “but if it elects not to do so, each state is free to act on its own,” Justice Alito wrote. Sen. Orrin Hatch (R., Utah) suggested Monday he would push for national legislation.

Joining Justice Alito were Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas, Elena Kagan and Neil Gorsuch.

New Jersey had waged a six-year battle to allow sports betting within its borders. The justices reversed lower-court decisions that blocked the state from implementing a 2014 law that repealed prohibitions on sports wagers at casinos and racetracks.


New Jersey Gov. Phil Murphy, a Democrat, praised the court’s ruling, as well as efforts by his predecessor, Republican Chris Christie, to open the state to sports wagers. The Justice Department, which defended the federal prohibitions, declined to comment.

Sports enthusiasts could now see legalized sports gambling in a number of additional states in coming months, including Pennsylvania and West Virginia, which have already passed legislation to allow for wagers. A group of 18 state attorneys general and three governors filed a brief supporting New Jersey’s position.

Share prices for regional U.S. casino operators such as Caesars Entertainment Corp. , Penn National Gaming Inc. and Boyd Gaming Corp. rose Monday. Caesars was up more than 5% at the close, while Penn was up 4.6% and Boyd rose 3%.

Caesars said it planned to expand its U.S. sports betting business “wherever secure and responsible wagering on sporting events is legalized.”


On Monday, Daily fantasy sports operators FanDuel Inc. and DraftKings Inc. said that they are planning to enter the sports-betting market.

Obstacles remain. States will need to craft licensing and taxing regimes, and legalization efforts could face opposition from antigambling forces. Congress could choose to get involved, though it is unclear whether lawmakers in a gridlocked Capitol have the appetite to tackle the issue.

Mr. Hatch, an original author of Paspa, said he would offer legislation in the coming weeks to set federal standards as states decide whether to allow sports betting. “We cannot allow this practice to proliferate amid uneven enforcement and a patchwork race to the regulatory bottom,” Mr. Hatch said.

Congress passed the 1992 law in response to concerns that a growing number of states wanted to allow sports wagers. Bets on individual sporting events now take place only in Nevada, since a long history allowed the state to be grandfathered into the federal law. Laws in Oregon and Delaware allow for more limited wagering, but legal bets on single sporting contests have been off-limits to most Americans, leaving only unregulated black markets—and informal pools on marquee events like the Super Bowl and the NCAA men’s basketball tournament.


While some states may resist on moral or other grounds, the lure of new tax revenue could prove strong, given that Americans are believed to wager billions of dollars a year illegally.

“I’m very confident we can get this done next year,” said Republican Iowa state Rep. Jake Highfill, who has offered legislation that would allow sports bets in Iowa’s 19 casinos, as well as through online platforms.

Guests attend a viewing party for the NCAA men’s basketball tournament at the Westgate Las Vegas Resort & Casino in March. Photo: Ethan Miller/Getty Images

One big unknown is what form wagering might take throughout the country. If states restrict it to in-person bets at casinos, that would make for a much smaller market than allowing wagers to be placed online.

“My generation doesn’t go to casinos,” said Mr. Highfill, 28 years old. “If you want to fix the black market, you have to allow online.”

A study last fall from industry consultant Eilers & Krejcik Gaming LLC found that total annual revenue from sports betting at casinos and racetracks in all 50 states would amount to $7.1 billion, whereas adding online wagers would more than double the annual revenue to about $16 billion.

Sports leagues and the National Collegiate Athletic Association had sued New Jersey to stop its betting plans, but the four major professional sports leagues—the National Football League, National Basketball Association, Major League Baseball and National Hockey League—have been quietly working to mobilize for the day this ruling would arrive.

The NBA and MLB have positioned themselves to try for a cut of the action from gambling activity in their sports. The NFL intends to push for legislation that would require any new sports gambling operations to use its officially sanctioned league data.

This is a reversal from the longtime antigambling stances the leagues took in part because they had, for a century, been rocked periodically by gambling-related scandals.

The sports leagues sent a consistent message Monday that they will work to protect the integrity of the game in states where the practice becomes legal.

Ted Leonsis, owner of the NHL’s Washington Capitals and the NBA’s Washington Wizards, said in an interview Monday that there are enormous opportunities for fans, players and media companies to benefit from regulated wagering. “Everyone has come to the realization that there’s so many good things that happen by bringing this shadow economy into the sunshine,” Mr. Leonsis said.

Travis Leach, co-head of the sports practice at law firm Ballard Spahr, said it isn’t hard to envision pro sports leagues integrating gambling information, like daily sports lines, into their contests, just as they now promote fantasy sports, games in which fans do battle with virtual teams and can win cash prizes.

“I imagine they will find some way to do it that is tasteful and maintains the integrity of the game,” Mr. Leach said.

No sports body may be in a tighter spot than the NCAA, which has consistently positioned itself against the expansion of sports betting. Now it is preparing to change a longstanding policy against holding NCAA championship events where sports betting is legal, which could soon mean much of the country.

In a statement, the NCAA’s chief legal officer, Donald Remy, said, “While we are still reviewing the decision to understand the overall implications to college sports, we will adjust sports wagering and championship policies to align with the direction from the court.”

Write to Brent Kendall at brent.kendall@wsj.com, Chris Kirkham at chris.kirkham@wsj.com and Andrew Beaton at andrew.beaton@wsj.com