Final decision expected by June
On Monday, December 4, the Supreme Court of the United States heard oral arguments in Christie v. National Collegiate Athletic Association, New Jersey’s appeal in favor of its sports-betting law, which also challenges the constitutionality of the federal ban on sports betting.
At stake in the case in the near term is the validity of a 2014 law signed by New Jersey Governor Chris Christie to create a self-regulated sports betting program operating at the state’s casinos and racetracks. The long-term stakes involve the potential of state governments across the U.S. to tap into what is now conservatively estimated to be a $150 billion illegal sports betting industry.
New Jersey’s law was written on the basis of the former U.S. solicitor general’s opinion in the wake of the courts shutting down New Jersey’s first law authorizing sports betting, passed in 2012. The 2014 law repealed the state prohibition on sports betting in New Jersey, and created a system under which sports betting would be authorized that was not regulated by either the state or the federal government.
By the time the 2014 law was signed, a different U.S. solicitor general had reversed the opinion of his predecessor, saying that any state law authorizing sports betting would violate the 1992 Professional and Amateur Sports Protection Act (PASPA).
The four major sports leagues—the NFL, NBA, Major League Baseball and the NCAA—filed suit in both cases claiming any authorize sports betting violates PASPA, which made sports betting illegal in all but four grandfathered states, with only Nevada permitted full-blown sports books.
New Jersey’s appeals in the present case, though, go beyond the state’s rights arguments of the first case, which went all the way to the U.S. Supreme Court before the high court declined to hear the state’s appeal—thereby affirming the U.S. 3rd Circuit Court of Appeals ruling that New Jersey’s program violated PASPA. In the current case, New Jersey’s lawyers have targeted PASPA itself as unconstitutional federal commandeering over state government.
At the heart of New Jersey’s argument is that PASPA violates the core federalist principles of the U.S. Constitution by indirectly forcing a state to regulate on behalf of the federal government. Since PASPA directs states to prohibit sports betting within their borders without declaring sports betting itself illegal, it constitutes illegal commandeering, according to New Jersey’s position.
Some of the justices seemed receptive to this position during oral arguments last week, and appeared to reject arguments by Paul Clement on behalf the leagues and Jeff Wall, U.S. deputy solicitor general, on behalf of the government—which centered on the position that federal law preempts any state law. New Jersey’s lawyers, headed by Ted Olson of Gibson, Dunn & Crutcher, countered that PASPA does not preempt any state law, but in fact orders the state to initiate laws prohibiting sports betting.
Justice Anthony Kennedy noted at the hearing that the leagues’ position “seems like commandeering,” and Justice Stephen Breyer also noted that “the subject matter of the law falls into commandeering.”
Chief Justice John Roberts noted the fact that PASPA orders states to prohibit sports betting without declaring sports betting itself illegal. “if the goal was to ban sports betting, why not phrase it as such?” he said. In questioning the leagues’ attorneys, Justice Samuel Alito followed the same logic, saying the passing-off of regulatory responsibility in PASPA “blurs accountability; this is precisely what federalism seeks to avoid.”
Initial analysis of the reactions and questioning from the high court justices indicates that the state’s arguments assailing PASPA are meeting receptive ears. International consultancy Global Market Advisors opined that if the justices held a vote today, New Jersey would win the case.
“Based on the arguments, Global Market Advisors believes that if a vote were held today, SCOTUS would vote 6-3 in favor of New Jersey, thereby repealing PASPA and overruling the lower court decision,” wrote GMA Director of Government Affairs Brendan Bussman. “The majority opinion would include Chief Justice Roberts and Justices Alito, Breyer, Gorsuch and Kennedy. Those five, in addition to Justice Thomas, who seldom asks questions within the court, but tends to side with the more conservative judges, appeared skeptical of the argument presented by the NCAA.
“The three remaining justices, Bader Ginsburg, Kagan and Sotomayor, peppered Olson during his time before the court. Their questions focused on the federal government’s ability to regulate and prohibit certain commercial acts, with much of the questioning on the act of casino gaming or sports betting, not states’ rights as Olson reiterated.
“Olson argued that the constitution allows for interstate commerce by the states and that the federal government can set policy in the act. However, on behalf of New Jersey, Olson put forth that PASPA does not allow states to regulate the illegal market that currently occurs with sports betting. Olson argued that the federal government cannot put the burden on the states to assume the cost of that task and restrict their ability to regulate within their state lines.”
The New Jersey governor was optimistic immediately following the hour-long hearing. At a press conference on the steps of the Supreme Court, Christie and Olson repeated the state’s arguments that the U.S. Constitution does not permit the federal government to nullify the laws of an individual state, and the accompanying point that PASPA violates the 10th Amendment protection of states’ rights. “Today is sports betting, tomorrow it is something else,” Christie said.
Christie added that the state is ready to implement sports betting immediately following a New Jersey SCOTUS win. “If we’re successful here, we could have bets being taken in New Jersey within two weeks of a decision (by the court),” he said. “We are like a Boy Scout. We are always prepared; we are ready to go.”
Christie also praised the performance of Olson, who is a former U.S. solicitor general. “I thought the hearing went great,” said Christie, “The state of New Jersey was fortunate; we were represented by the best appellate advocate in America. You all saw, in regard to today, why we hired him in the first place and why we have stuck with Mr. Olson all the way through for the last nearly five-plus years that we’ve been doing this.”
The optimism carried over from a media briefing held three days before arguments, in which Daniel Wallach, an expert on sports and gaming law for Florida-based Becker & Poliakoff, predicted sports betting will be up and running for next year’s NFL season.
“The gold rush is ready to begin,” Wallach said. “I believe New Jersey will end up with sports betting at Monmouth Park racetrack and any other participating casinos that want to have it by Week 1 of the NFL season of 2018.”
He added that should the court find for New Jersey, “we could be looking at sports betting in New Jersey by the Final Four.”
Also at that briefing, Matthew McGill, Olson’s partner at Gibson, Dunn & Crutcher, highlighted the state’s argument that PASPA constitutes a violation of the anti-commandeering principles in the U.S. Constitution.
“Rather than the federal government directly regulating sports wagering, PASPA requires states to prohibit sports wagering for the federal government,” McGill said. “A command to prohibit sports wagering can be restated as a prohibition against repealing state law prohibitions.”
Praise also was heard from American Gaming Association President and CEO Geoff Freeman, who has championed the effort to repeal PASPA either through the courts or via Congress.
“Today is a positive day for the millions of Americans seeking to legally wager on sporting events,” Freeman said. “While we can’t predict the intentions of Supreme Court justices, we can accurately predict the demise of the Professional and Amateur Sports Protection of 1992.
“The justices of the court expressed deep interest in the role of the federal government—a role that we believe has created a thriving illegal market that has driven trillions of dollars to offshore websites and corner bookies. States and tribal sovereign nations have proven to be effective regulators of gaming, and today’s oral arguments before the Supreme Court moved them one giant step closer to offering a new product that Americans demand.”
A Supreme Court’s decision in the case is expected by the end of June.
Meanwhile, as the focus of the industry was on the Supreme Court case last week, the possibility of a legislative repeal of PASPA reappeared, as Nevada Congresswoman Dina Titus wrote a letter to congressional leaders calling for a renewed examination of the issue.
“Members of Congress need to be prepared should action at the Supreme Court open the door for sports betting in their home state or warrant federal legislation,” she wrote in a letter to the Republican and Democratic leaders of the panel with jurisdiction over the issue. “Accordingly, I respectfully request that the Energy and Commerce Committee hold a hearing on the future of sports betting in the United States.”
And if the court rules for New Jersey, every state would be allowed to legalize sports gambling. And if that happens, the Iowa Gaming Association will be prepared, said President and Chief Executive Officer Wes Ehrecke. “I think there’s a great deal of interest among people who have a great deal of interest in sports and betting on sports, and want the opportunity to bet on a game in a fun, regulated environment,” he said.
Iowa’s casinos plan to draft a bill and introduce it in the upcoming legislative session, if the Supreme Court makes legalizing sports gambling possible in the state, Ehrecke said. He added even if the high court hasn’t ruled before the session ends, legislators could approve a bill that includes language legalizing sports gambling once the Supreme Court rules, hopefully in favor of the states. “We would be interested in getting legislation adopted to legalize sports betting in Iowa at our casinos and regulated by our gaming commission,” Ehrecke stated.
According to a report by Eilers & Krejcik Gaming, a California research firm, Iowa would be included among 32 states that would legalize sports gambling within five years of a favorable Supreme Court ruling for the states. The report noted a legal sports gambling market in Iowa would be worth more than $6 billion, providing enormous financial benefits to Iowa’s casinos and the state. “It’s going to generate revenue for the state as well. That would go to more worthwhile causes, like our gaming revenue, and tax revenue, does now,” Ehrecke said.
State Rep. Ken Rizer, chair of the House State Government Committee, said, “I don’t want to get ahead of ourselves here. Once we find out what the Supreme Court says, then we really need to assess what the people of Iowa want, do they want sports betting or not. That’s something that I’d need to talk to my constituents, need to talk to my colleagues in the House and Senate and get a better sense of what exactly do Iowans want.”
Rizer noted lawmakers have debated legalizing online daily fantasy sports websites in the past two sessions. He said he supports the legislation but wants more information before deciding whether to support legalized gambling on games.
In Massachusetts, casino owners are watching the U.S. Supreme Court’s handling of a sports betting case in which New Jersey.
Robert DeSalvio, president of the Wynn Boston Harbor, which will open in two years, told the Boston Herald: “We at Wynn Boston Harbor are watching the court case with interest. Our industry supports legalized and regulated sports betting but the ultimate decision rests with the courts, state and federal lawmakers and the Massachusetts Gaming Commission.”
If the Supreme Court were to rule the law unconstitutional then that would probably open it up to the states to address the issue. Mark Hichar, an attorney specializing in gaming who practices in New England, told the Herald, “If it were struck down, each state would be allowed to authorize sports betting on a state-by-state basis. Certainly, the casinos that are licensed in Massachusetts would want sports books. They bring in traffic.”
The Massachusetts Gaming Commission discussed the issue last week, including the recent verbal arguments that were made before the High Court.
A spokesman for the commission said that the panel is “following any developments closely,” but that the commission has not taken a position.
The state Attorney General Maura Healey’s office said she was also watching the case closely.
If the Supreme Court tosses out the law, Massachusetts is expected to move quickly to legalize sports betting.
