Supreme Court Ruling Opens Door to Sports Betting

WASHINGTON—The Supreme Court on Monday opened the door for states to allow betting on sporting events, invalidating a federal law that prohibited such wagers in most of the U.S.

The court, in an opinion by Justice Samuel Alito, sided with a challenge brought by the state of New Jersey, which has waged a six-year battle to allow sports betting within its borders.

The state has been unable to do so because of the 1992 Professional and Amateur Sports Protection Act, a federal law that says states can’t “sponsor, operate, advertise, promote, license, or authorize” sports gambling.

Bets on individual sporting events now takes place only in Nevada, where a long wagering history allowed it to be grandfathered into the federal law.

New Jersey argued the federal law was an intrusion upon states’ rights, and the Supreme Court agreed.

The high court said the 1992 law exceeded the powers of Congress. Congress can regulate sports gambling directly, the court said, but it can’t direct states on how to regulate their own citizens.

The ruling could bring major changes to the wagering landscape, with ramifications for U.S. professional sports leagues and college athletics, as well as casinos and European betting shops, which have been eager to tap into the U.S. market.

Analysts have predicted that an expanded and legal U.S. marketplace for the sports-betting industry could generate at least $7 billion annually.

The leading U.S. leagues and the National Collegiate Athletic Association have worried that state-sponsored gambling could undermine the integrity of their contests. They sued New Jersey to stop its betting plans and won in the lower courts.

However, some league leaders, including in the National Basketball Association, have begun to warm to the idea of wagering, if properly regulated.

A handful of states have passed legislation to allow for sports betting, and other states could follow in light of the high court’s ruling. A group of 18 state attorneys general and three governors filed a court brief supporting New Jersey’s legal attack on the betting ban.

New Jersey twice in recent years had attempted to allow sports wagers, most recently with a 2014 law that repealed state prohibitions on sports wagers at casinos and racetracks. That law was blocked by lower courts.

Write to Brent Kendall at brent.kendall@wsj.com

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