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Supreme Court Accepts New Jersey’s Challenge To Federal Law Barring Sports Betting

Baseball And Cash

The Supreme Court has agreed to hear the State of New Jersey’s appeal of its challenge to a Federal law that prohibits states from legalizing sports betting:

The Supreme Court agreed on Tuesday to hear an appeal from Gov. Chris Christie and the state of New Jersey to allow betting on professional and collegiate sports at the state’s casinos and racetracks.

The case, which the court will hear in the fall, will be a major test for the federal ban on sports betting as established by the Professional and Amateur Sports Protection Act, known as Paspa, which Congress passed in 1992 outlawing betting on amateur or professional athletes except in four states that already had operations.

New Jersey has been fighting either to overturn the federal ban or to find a way to work around it since 2011, when voters in the state approved a nonbinding resolution to allow sports betting. The effort has since been supported by Democratic and Republican legislators as a way to help shore up the sagging Atlantic City casinos and state racetracks.

But the effort was met with lawsuits from the N.C.A.A. and the four major sports leagues after Mr. Christie signed a law in 2014 to allow sports betting. The challenges wound their way through numerous lower courts, finally reaching the United States Court of Appeals for the Third Circuit in Philadelphia, which issued a ruling last year upholding the federal ban.

In a news conference in Trenton on Tuesday, Mr. Christie said he was “thrilled” by the decision of the court.

“The fact that the Supreme Court granted cert. in this case is a very good sign for sports betting having a future in New Jersey,” he said. “I’m encouraged by it. We’re not declaring victory, but at least we’re in the game, and that’s what we want to be.”

The decision by the Supreme Court to hear the case comes as a bit of a surprise after Jeffrey B. Wall, the acting solicitor general of the United States, asked the court in May not to hear the case.

With that much at stake, the American Gaming Association announced the creation of a coalition this month encompassing attorneys general, the police, policy makers and others to advocate a repeal of the federal ban.

“We are pleased the Supreme Court appears to have responded favorably to our arguments as to why they should hear this important case,” said Geoff Freeman, the president and chief executive of the gaming association. “And we are hopeful their engagement will provide further encouragement for Congress to take the steps necessary to create a regulated sports betting marketplace in the United States.”

In a recent meeting with reporters for The New York Times, Mr. Freeman said his organization had detected a new willingness among the sports leagues to make sports betting legal. Adam Silver, the commissioner of the N.B.A., has been forthright in calling for legal betting and the openness that accompanies it. Rob Manfred, the commissioner of Major League Baseball, has acknowledged that a sports betting market would continue to fuel fan interest in baseball.

The N.F.L., long an opponent of the bill, has signaled a softening of that stance in recent months with the commissioner, Roger Goodell, saying the league’s thinking on sports gambling was “evolving,” a shift underscored in March when team owners approved the move of the Oakland Raiders to Las Vegas.

Mr. Freeman, however, acknowledged that the N.C.A.A. remained the most concerted opponent to legalized sports gambling, noting that collegiate athletes are unpaid amateurs. He said one possible solution would be to prohibit betting on college football and basketball.

The N.C.A.A. did not immediately comment on the decision by the Supreme Court to hear the case.

This isn’t the first time that New Jersey has been before the Supreme Court on this issue, in fact it’s part of a battle that stretches back several years.  As the article above noted, it began in 2012 when Governor Christie signed a bill into law meant to implement a 2011 voter referendum that authorized sports betting at the Atlantic City casinos and select horse racing venues That law was quickly challenged in Federal Court by a coalition of all the major sports leagues along with the N.C.A.A. that argued that the state’s effort was not authorized by Federal law. A Federal District Court Judge ruled n favor of the leagues, and the Third Circuit Court of Appeals upheld that ruling. New Jersey appealed that decision to the Supreme Court, but the Justices declined to accept the appeal and let the Third Circuit’s ruling stand. One noteworthy aspect of the Third Circuit’s decision was a suggestion that a state could make an end-run around the PASPA by repealing its law against sports betting as long as any sports betting operation in the state was not directly regulated by the state.

In reliance on this suggestion by the Third Circuit, New Jersey took a number of actions to attempt to establish legal sports betting in the state regardless of the existence of the PASPA. First, in October 2014 Governor Christie issued a directive stating that casinos and racetracks in New Jersey would not be prosecuted under state law for accepting sports bets. The directive also requested the Federal Judge who had initially ruled against the state to allow the initiative to go forward. Simultaneously, the state legislature moved forward on the effort to repeal those provisions in New Jersey law that banned sports betting, a bill which Governor Christie quickly signed into law. Before that repeal could take effect, though, the same sports leagues that had challenged the initial New Jersey law filed a new Complaint in Federal Court and obtained a stay that halted betting pending a ruling. In their lawsuit, the leagues argued that the state’s repeal of its laws against sports betting was merely a fig leaf meant to accomplish the same thing that the initial law did. In the end, the Federal District Court Judge agreed with the sports leagues, and his decision was upheld by the Third Circuit notwithstanding what it had said in its previous ruling.

At the center of this dispute is a Federal law known as the Professional and Amateur Sports Protection Act (PASPA) which bars states from “sanctioning” sports betting. The law, however, contained an exemption that provided that states which already had laws authorizing sports betting that had been in existence within a year of when the law went into effect could allow that betting to continue. At the time there were only four states — Nevada, Oregon, Delaware, and Montana — that eligible for this exemption, however, Nevada is the only state where there is active sports gambling. On some level, this exemption seems to be unfair to say that very least.

As I’ve said before, it strikes me that New Jersey has the better case here:

Much like the arguments against legalizing marijuana, there really isn’t any argument against sports gambling that doesn’t boil down to the fact that some people don’t like the choices that other people make and try to use the power of the state to prevent them from making them. Prohibition and the War On Drugs, however, have shown us that making something people want to do illegal just forces it underground. The practice is already legal in Nevada, where there is an active business, and three other states, it’s legal overseas where it it common for people to place bets on American sporting events, and, of course, it occurs in the less than legal venues of person-to-person wagering and operations run by organized crime. Given all of that, there really doesn’t seem to be any reason why it should not be permissible for government to allow sports gaming to be a legal business that takes place out in the open rather than something that takes place in back rooms run by criminals. Ideally, Congress and the states should get out of the way and let the marketplace decide if there really is a big market for sports gaming in the United States. The political influence of the major sports leagues makes it unlikely this will happen in the short term, of course, which is why the course New Jersey has taken these last several years through the court system necessary. I for one hope they succeed.

Additionally, there is a strong argument that the PASPA itself is unconstitutional because it is not authorized by the Commerce Clause and conflicts with an individual state’s rights to establish its own laws on an issue such as this under the Tenth Amendment.

This case will be briefed over the summer and most likely argued early in the Court’s new term that starts in October. You can track the various filings and other actions by the Court at the case information page at SCOTUSBlog.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. James Pearce says:

    He said one possible solution would be to prohibit betting on college football and basketball.

    Prohibiting betting on college football and basketball is a “possible solution” to the “How do I make my illegal sports book really earn?” problem.

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  2. Daryl's other brother Darryl says:

    Gambling. New Jersey. What could go wrong?
    (I say that as someone who used to own vacation property in the town immediately south of Atlantic City.)

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  3. Pete S says:

    @James Pearce:

    Prohibiting betting on college football and basketball is a “possible solution” to the “How do I make my illegal sports book really earn?” problem.

    For sure; you would think the NCAA would be leading the charge to legalize sports gambling in the US. Point shaving does not usually get initiated by people placing legal bets.

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  4. James Pearce says:

    @Pete S:

    For sure; you would think the NCAA would be leading the charge to legalize sports gambling in the US.

    I can see why the NCAA wouldn’t want to get involved, but it’s not like we need to ask their permission anyway. Despite being unpaid amateurs, college ball is still a high-profile athletic event. Bets will be placed.

    They could be subject to IRS oversight, or they could be subject to oversight provided by the criminal underground. It’s a choice.

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  5. DrDaveT says:

    Mr. Freeman, however, acknowledged that the N.C.A.A. remained the most concerted opponent to legalized sports gambling, noting that it would make it much harder to preserve the pretense that collegiate athletes are unpaid amateurs.

    Fixed that for him.

    Perhaps we’ll get a more fact-based decision here than was handed down in the Northwestern case.

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