Delaware May Have Other Options With Sports Betting

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I'm still on my magical mystery tour of Vegas and last night I was hanging at the Mandalay Bay with two guys who have a vested interest in what happened in Delaware yesterday: Joe Brennan, chairman of the Interactive Media Entertainment and Gaming Association (IMEGA) and his lawyer, Eric Bernstein.

If there is a lawsuit to have any kind of anti-gambling legislation overturned, IMEGA is a part of it. Right now its case to have the Unlawful Internet Gaming Enforcement Act overturned is winding its way through the Third Circuit Court of Appeals, the same court that put the kibosh on Delaware's ambitious plans for single-game betting. And IMEGA is also a party in the case New Jersey state senator Ray Lesniak and Governor Jon Corzine brought against the DOJ to overturn the 1992 federal betting ban, also known as the Professional Amateur Sports Protection Act (PASPA).

Naturally, they were shocked by the decision of the Third Circuit's three-judge panel yesterday, as most legal experts have been.

Jeffrey Standen is a sports gambling law expert and professor at Willamette University in Salem. He e-mailed me this comment, which he had written in his blog, The Sports Law Professor, after the decision was announced: "For a federal court to intervene so strong at this stage, and most notably against the wishes of a sovereign state, threatens the latitude that underlies the delicate federal-state balance. And it's also a bad way to make law."

To recap, the four major leagues and the NCAA sued Delaware, which is exempt from PASPA because it had allowed for sports parlay bets in the mid-1970s, prior to the 1992 ban. But the leagues claimed the state's plans to allow single-game betting violated its PASPA exemption, which only allowed for parlays. A federal judge had denied the leagues' request for a preliminary injunction to stop Delaware, and the leagues then appealed to the Third Circuit.

It wasn't just that the trio of judges -- who make up a sliver of the entire Third Circuit bench -- sided with the leagues. It was that they went beyond what they were being asked to do and basically issued a summary judgment, eliminating the need for the scheduled December trial in federal court. The leagues won the race before the gun was sounded.

"The arguments were scheduled for 30 minutes a side, which is a lot for the Third Circuit," said Bernstein, who argued in front of the court just a couple weeks ago. "But both sides got an hour. Clearly the judges were looking for one of the parties to say something that made them feel strongly one way or the other."

And the folks in Delaware -- in the governor's office, at the tracks where sports books are being built and the bookmakers who were planning to run the games -- were blindsided by the outcome.

"Obviously I am disappointed with the court's decision," Delaware Governor Jack Markell said yesterday. "Nevertheless, the state still has the legal authority to offer a sports lottery of parlays."

Delaware now has a few options for keeping this case alive: It can ask the entire Third Circuit Court to hear the case. But the pitfall is that the three-judge panel that heard the case was unanimous in its decision that Delaware's single-game betting plan violated PASPA. It's unlikely the entire slate is going to feel differently than the panel did.

The second, more drastic option, is making an appeal to the US Supreme Court Justice who oversees the Third District and asking for a stay of the Third Circuit's decision pending a look from the highest court in the land.

At some point, and Delaware may have reached it, the state has to decide when to cut bait and take what it's been given. If it continues to appeal and lose, then the option for single-game betting action is closed forever. Right now, it can regroup, take NFL parlays for a season, make some money and figure out another way to attack this problem down the road. Also, for a state drowning in red ink, the governor has to ask himself how much of an appetite his constituents have for a prolonged legal battle that has already cost Delaware a hefty sum in legal fees for outside counsel.

That last point is something the NFL, at least, had been counting on to keep New Jersey from filing its own federal lawsuit against PASPA. One high-level gaming exec recently told me that he had a conversation with a big-time boss in the NFL in March, when Lesniak first threatened to file his case. The casino exec asked the NFL boss what he thought of the possibility and the response was, "It'll never happen. New Jersey doesn't have the money to chase a lawsuit like that."

But IMEGA does. And now Brennan and Bernstein are hoping Delaware considers a third option: Join them and New Jersey in the fight to have PASPA overturned. "It's something we've asked them to consider in the past," Brennan said.

Delaware resisted the idea, obviously preferring to go it alone and potentially have a monopoly on single-game betting east of the Mississippi. But IMEGA's and New Jersey's case is now the next best chance for advocates of legalized sports betting.


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