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NJ Sports Betting Suit has Far Reaching Implications: Other States Offer Support

Written by:
C Costigan
Published on:
May/21/2014
New Jersey Sports Betting Suit has Far Reaching Implications: Other States Offer

Last week, the U.S. Department of Justice (“DOJ”) and the four major professional sports leagues, as well as the National Collegiate Athletic Association (“leagues”), filed their long awaited response to New Jersey’s petition to the U.S. Supreme Court to hear their appeal regarding the state’s sports betting law. This decision has far reaching implications for the future of sports betting in the United States.  

Although on its face this case is addressing the future of sports betting in the United States, this case raises significant constitutional issues with far reaching ramifications regarding how the federal government can regulate the states. In its petition to the Supreme Court, New Jersey is challenging the constitutionality of the Professional and Amateur Sports Betting Act of 1992 (“PASPA”). PASPA is a federal law that prohibits any state from offering sports betting unless that state had a sports betting scheme in place between 1976 and 1990. This clause in the statute allowed only four states to offer any form of sports betting and New Jersey was not one of those states. At the time, New Jersey was the only state given a one year window to enact a sports betting scheme, but failed to act.

Then in 2011, New Jersey voters approved a referendum by a 2-1 margin amending the state’s constitution to allow for sports betting in the state’s casinos and racetracks. The state legislature then passed a bill legalizing sports betting in the state and it was signed into law by New Jersey Governor Chris Christie. The professional sports leagues then sued the state in federal court to stop the implementation of the law and the DOJ later joined them as plaintiffs in the case. The district court ruled in favor of the leagues and the DOJ and the state appealed.

The U.S. Court of Appeals for the Third Circuit affirmed the ruling from the district court in a 2-1 vote, with a strong dissenting opinion which noted that there is clear precedent that the federal government cannot direct state legislatures to enact legislation or direct a state official to implement a federal policy. The state then asked for a rehearing by the Third Circuit, but that request was rejected. The Third Circuit held that PASPA is a valid exercise of federal power that barred New Jersey from proceeding with the implementation of sports betting in the state.

The Third Circuit found that the anti-commandeering principle, which applies when the federal government requires a state to implement a federal regulatory program, did not apply because PASPA does not require states to take any action. The leagues and the DOJ argued that New Jersey was able to comply with PASPA by doing nothing, so the anti-commandeering principle was inapplicable.  

The other key constitutional issue in the case whether PASPA treating 46 states that are not permitted to have sports betting, differently than the four states that are permitted to, violates the principle of equal sovereignty that all states should be treated equally. Although the way PASPA regulates state laws on sports betting is very unique among federal laws, the DOJ and the leagues both argue that it is consistent with equal sovereignty principles. Both the DOJ and the leagues noted in their briefs that New Jersey had a one year period when PASPA was enacted to authorize sports betting, an opportunity only New Jersey and no other state was afforded, but failed to act. 

Interestingly last year in a different context in Shelby County v. Holder, a Voting Rights Act (“VRA”) decision, the Supreme Court struck down a section of the VRA finding that it violated equal sovereignty principles because it subjected some states to more stringent requirements than other states. The dissenting opinion in Shelby County specifically mentioned PASPA as a statute implicated by the Court’s holding in the case.

The states of West Virginia, Wisconsin, and Wyoming filed an amici curiae brief in support of New Jersey, arguing that this decision raises serious concerns about the federal government’s ability to regulate state policy, regardless of if it is done by an affirmative or negative command. These states are not necessarily concerned with offering sports betting within their boundaries, but are instead focused on the potentially far-reaching consequences of a ruling in this case that allows the federal government to control state policy.

New Jersey has the option to file a reply brief if it so chooses. The briefs will then be reviewed by the justices who will decide if the case will be heard on the merits. There is very little case law on PASPA. The Supreme Court has never directly addressed the constitutionality of PASPA and there is only one other appellate case ever that analyzed PASPA.

If the Supreme Court grants the petition for certiorari to hear New Jersey’s appeal challenging PASPA then it may indicate that the Court is leaning toward overturning the federal ban on state sponsored sports betting. A decision from the Supreme Court in New Jersey’s favor would present other states with the opportunity to offer sports betting within their borders. The dissenting opinion in the Third Circuit on a key issue provides a very strong basis for review and shows that the Third Circuit struggled in forming its opinion on the issue. This case raises very important constitutional issues regarding the federal government’s ability to direct states to implement a federal policy and the importance of these issues makes this the type of case that the Supreme Court may be interested in resolving.

This piece was provided by Griffin Finan, Associated at Ifrahlaw.com for first run on the Gambling911.com website.

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