New Jersey Sports Betting Bill Bans eSports Gambling

New Jersey eSports Betting Ban - Atlantic City Sports Betting

Daniel Wallach and Rahul Sood each suggested the eSports ban might have been a mere oversight.

New Jersey Gov. Phil Murphy signed a sports betting legalization bill, but a last-minute ban on eSports betting mystified many gaming experts. The bill is in response to the US Supreme Court striking down the PASPA federal ban on sports betting.

Between the Supreme Court decision on May 14 and the final draft on June 4, lawmakers tinkered with the bill several times, so several drafts of the bill exist. Betting on eSports (video game contests) was placed into the New Jersey sportsbook legalization bill sometime before June 4.

The bill contained a ban on certain types of sports bets, but it was a limited clause. The bill stated, “A prohibited sports event includes all high school sports events but does not include international sports events in which persons under age 18 make up a minority of the participants.”

Essentially, the original language kept New Jersey sportsbooks from offering odds on high school football, basketball, or other sports. That made sense, because high school students do not need additional pressures from adults to perform in sporting events, while high school kids would be particularly vulnerable to match-fixing and point-shaving attempts — since most lack regular salaries or wages.

New Jersey Sportsbook Bill 2018

The version of the bill which Governor Murphy signed on Friday contained a more general ban — one which included eSports betting. The new version of the bill read, “A prohibited sports event includes all high school sports events, electronic sports, and competitive video games but does not include international sports events in which persons under age 18 make up a minority of the participants.”

Video game proponents wondered why a ban appeared at the last minute. Did lawmakers naturally assume all eSports contestants were teenagers, so they banned it in the same spirit as the high school bet ban?

Why Did New Jersey Ban eSports Betting?

Did they make a last-minute change to assure betting could not take place with any event which contained under-18 performers, but use sloppy language with unintended consequences?

Did certain lawmakers decide to ban eSports betting as a sop to the sports leagues, who might not have wanted competition? Did executives at Atlantic City casinos or Monmouth Park convince them to include the ban? Or did a particular lawmaker have a grudge against the video game industry?

Compete online magazine asked representatives of the New Jersey state legislature or Gov. Murphy’s office to give a statement, but the request was declined.

Daniel Wallach on New Jersey Sports Betting Law

Daniel Wallach, a Miami-based sports gaming lawyer often quoted in the New York Times and Washington Post, gave Compete his theory on the inclusion. The lawyer suggested that a loophole exists for electronic sports betting, but one which would have to be addressed on a single-event basis.

Wallach said the bill might allow eSports betting “on a case-by-case basis. The existing licensed betting operators in New Jersey can request permission from regulators to accept wagers on esports competitions, so long as it does not violate the prohibition contained in the legislation.”

If so, then the eSports betting ban might be a nuissance, but not a disaster for electronic sports. For the past couple of years, Atlantic City casinos have hosted eSports events. They clearly want to attract millennial customers and have been willing to host eSports competitions to draw millennials into their venues, even if they could not gamble on eSports.

Single-Event eSports Betting

That does not sound like an industry which wanted to see eSports betting banned from New Jersey. Under the current law, of Borgata wanted to offer eSports betting on a competition, it could petition the Division of Gaming Enforcement for the right to do so — on a single event basis.

That setup is not much different than Nevada’s original eSports betting framework. Eventually, the Nevada Gaming Commission changed to allow a wider list of bets on electronic sports competitions, because it was more convenient and efficient. It also allowed organizers to plan their events betting, while it allowed oddsmakers to offer more and better bets.

Speculations on eSports Betting Ban

Daniel Wallach chalks up the strange wording to human error and the rush to get legislation to the governor’s desk. Daniel Wallach speculations, “The whole point of this piece of legislation was to replace the partial repeal law that was enacted in 2014 that was just decriminalizing betting on professional and amateur sports.”

In a rush to catch up with Delaware, New Jersey legislators might have overlooked the finer points of the law. Wallach added, “That original law from 2014 was only dealing with sporting events. It wasn’t dealing with esport….This bill was introduced fairly quickly, and the legislature’s goal was to move it fast and get it into the hands of the governor so that Monmouth Park and the other racetracks and casinos can be operational as soon as possible without ceding ground to other states.”

Esports Betting Ban Could Be an Oversight

When the New Jersey sports betting bill (which is being repealed now) was first passed in 2014, eSports betting on League of Legends Championship Series and Overwatch League hardly existed. (Overwatch didn’t exist at all.) Most gaming law having to do with video games has focused on skin-betting or loot boxes, so eSports betting might not have been high on the list of priorities.

In fact, it is possible that New Jersey lawmakers did not simply overlook the issue, but they were unaware of it altogether. As most lawmakers are in their 40s, 50s, 60s, and 70s, there is a high likelihood those lawmakers do not play video games. Even those who do (or did) are not that likely to follow the eSports tournament circuit.

One only had to see the US congressional hearings on Facebook to know that lawmakers in particular seem out of touch with social media, smartphones, and aspects of modern technology. The key lawmakers might have been so focused on traditional sports betting that they did not realize they had banned another type of betting.

Unikrn Founder on eSports Gambling Ban

Rahul Sood, the founder and CEO of Unikrn, agreed. Sood, who left Microsoft to build an American eSports betting site, said, “I think the clause around electronic sports and video games was added as a last minute item — and there is really no clarity around it. With that said, any type of language seems completely counter to what such regulation is designed to do: protect consumers. Without regulation, illegal skin betting and online gambling will continue to plague the space and steal revenue from the United States.”

“Worst of all, bad operators will continue to prey on people who should not be allowed to gamble in the first place—not to mention these people operate sites that are clearly ripping off consumers without any consequences.”

If so, then it might be that lawmakers eventually pull back the current law, with some consultation from the AC casinos and the eSports industry. Rahul Sood added, “It’s the entire reason Unikrn exists. If regulators need help understanding this space, we’re happy to help.”