Ball’s in the Supreme Court’s Court: Update on New Jersey’s Sports Betting Lawsuit
I. Introduction and Background
During the 2014 Super Bowl between the Seattle Seahawks and the Denver Broncos, it is estimated that sports fans around the world bet upwards of $8 billion.[1] Of this amount, only $98.9 million was legally wagered at Nevada casinos, where gambling on sports is legally permitted.[2] March Madness, the ubiquitous nickname for the NCAA Men’s Division I National Tournament, is now once again upon the Nation. It is estimated that more than $2.5 billion is illegally wagered during this three-week period, which accounts for only 25% of illegal wagers placed on college basketball annually.[3]
In 2011, New Jersey voters approved an amendment to the New Jersey Constitution that legalized sports gambling at state casinos and horse racetracks.[4] This legalization is contrary to a federal law, the Professional and Amateur Sports Protection Act (PASPA),[5] which prohibits States from sanctioning sports betting schemes, with some notable exceptions.[6] PASPA made it unlawful for any “governmental entity . . . or a person to sponsor, operate, advertise, or promote . . . a lottery, sweepstakes, or other betting, gambling, or wagering scheme based . . . on one or more competitive games in which amateur or professional athletes compete or intend to participate. ”[7] Furthermore, PASPA enabled the Attorney General of the United States or any professional sports organization or amateur sports organization “whose competitive game is alleged to be the basis” of a violation of PASPA, to commence a civil action to enjoin any violator in a United States District Court.[8] While PASPA is neutral on its face, it did create special exemptions for states that already had sports gambling schemes that met certain criteria.[9] These exemptions applied implicitly to the states of Nevada, Oregon, Montana, and Delaware.[10] In addition, New Jersey was given an opportunity to “opt-in” to the exception in PASPA, but failed to do so.[11]
Due to the passage of the state constitutional amendment, in August of 2012, the National Collegiate Athletic Association (NCAA), Major League Baseball (MLB), the National Football League (NFL), the National Basketball Association (NBA), and the National Hockey League (NHL) filed suit in federal court under PASPA to enjoin New Jersey from implementing sports gambling.[12] With the history as a backdrop, this article provides an update on the various court decisions handed down regarding New Jersey’s efforts to have PASPA voided.
II. The Procedural History
In response to the suit, New Jersey filed a motion to dismiss, initially challenged the various sports leagues’ standing to bring a suit to enjoin the State.[13] However, Judge Michael Shipp of the United States District Court for the District of New Jersey found that the leagues did have standing to sue.[14] After hearing oral argument in February 2014, Judge Shipp issued an opinion upholding the constitutionality of PASPA.[15] Specifically, Judge Shipp held that PASPA did not violate, inter alia, the Tenth Amendment, and that PASPA was a valid exercise of Congress’ Commerce Clause power, thereby preempting New Jersey’s sports betting law via the Supremacy Clause.[16]
On appeal to the Third Circuit, a three-judge panel upheld the constitutionality of PASPA in a 2-1 decision.[17] The panel heard oral argument only days after the United States Supreme Court released its decision in Shelby Cnty., Ala. v. Holder, which struck down portions of the Voting Rights Act on equal state sovereignty grounds.[18] In her dissent in Shelby Cnty., Justice Ginsburg specifically mentioned PASPA as one law that must fall if the majority’s reasoning was accepted.[19] However, all three judges on the panel agreed that PASPA does not violate principles of equal state sovereignty.[20]
Nevertheless, Judge Thomas Vanaskie dissented in part, finding that PASPA violates the Tenth Amendment, and therefore would strike down the federal law.[21] Judge Vanaskie concluded that:
Here, it cannot be disputed that PASPA ‘regulate[s] state governments’ regulation of interstate commerce.’ States regulate gambling, in part, by licensing or authorizing such activity. By prohibiting states from licensing or authorizing sports gambling, PASPA dictates the manner in which states must regulate interstate commerce and thus contravenes the principles of federalism set forth in New York [v. United States][22] and Printz [v. United States].[23] [24
The Third Circuit later denied New Jersey’s request for a rehearing en banc, leaving New Jersey with only one option: appeal to the United States Supreme Court.[25] On February 12, 2014, New Jersey appealed the ruling of the Third Circuit to the Supreme Court.[26]
III. Waiting on the Supreme Court
On appeal, New Jersey raises two questions:
1. Does PASPA’s prohibition on state licensing or authorization of sports wagering commandeer the regulatory authority of the States, in violation of the Tenth Amendment?
2. Does PASPA’s discrimination in favor of Nevada and other exempted States violate the fundamental principle of equal sovereignty?[27]
The State is essentially making the argument that Judge Vanaskie made in his dissent—that there is no difference between the federal government affirmatively requiring the States to do something and affirmatively prohibiting the States from doing something. Since PASPA affirmatively prohibits States from authorizing gambling, the State argues, it is violative of the Tenth Amendment. The State also put forward the question of equal sovereignty. It will be interesting to see if Justice Ginsburg’s prediction from Shelby Cnty. holds true, i.e. that PASPA is also a law that impermissibly discriminates between the States.[28] In its petition, New Jersey concludes that “left undisturbed, the Third Circuit’s doctrinal innovation will drive a truck-sized hole through the anti-commandeering doctrine. In any of the myriad areas of activity subject to state licensure, Congress could commandeer the legislative authority of the States simply by prohibiting States from issuing a license outside defined circumstances.”[29]
It is always difficult to predict whether the Supreme Court will grant certiorari in any case. Given the lack of a circuit split in this case, it may be even more of a gamble on New Jersey’s part, but the promise of more revenue and the protection of people participating in sports gambling make the effort worthwhile. However, only four votes are needed to grant certiorari,[30] and the Court’s recent anti-commandeering doctrine jurisprudence in New York,[31]Printz,[32] and Nat’l Fed’n of Indep. Bus. v. Sebelius,[33] as well as Justice Ginsburg’s dissent in Shelby Cnty.,[34]suggest there might be four votes there to take up the case. However, the Supreme Court granted an order extending the time to file responses from March 17, 2014 to April 21, 2014.[35] This means that it is unlikely the Court will act on the petition during the current term. If the Court takes no action on this petition by the end of June, the earliest date that action could be taken is September 2014.[36] In the meantime, New Jersey will be prevented from implementing the will of its citizens and illegal sports gambling will continue to occur unabated and unregulated. Brackets anyone?
* Jordan Hollander is a May 2014 J.D. candidate at Rutgers School of Law – Camden and serves as the Submission and Symposium Editor for the Rutgers Journal of Law & Public Policy. During the Spring of 2012, the author externed with the New Jersey Division of Gaming Enforcement, Office of the Attorney General, where he worked on casino and employee licensing, bankruptcy matters, and gaming regulations.
[1] Think Sports Gambling Isn’t Big Money? Wanna Bet?, NBCNEWS (July 15, 2013, 4:16 AM), http://www.nbcnews.com/news/us-news/think-sports-gambling-isnt-big-money-wanna-bet-v19439242.[2] Id.
[3] Id.
[4] New Jersey Election Results – Other, STAR-LEDGER (Nov. 9, 2011, 3:55 PM), http://www.nj.com/starledger/results-ballot/.
[5] P.L. 102-559, 106 Stat. 4227 (1992) (codified at 28 U.S.C.A. §§ 3701–3704 (West, Westlaw through P.L. 113-74 approved 1-16-14)).
[6] 28 U.S.C.A. § 3702.
[7] Id.
[8] § 3703.
[9] See § 3704. PASPA does not apply to “a lottery, sweepstakes, or other betting, gambling, or wagering scheme in operation . . . to the extent that the scheme was conducted . . . at any time during the period beginning January 1, 1976, and ending August 31, 1990,” or where such a scheme was “authorized by a statute as in effect on October 2, 1991” and “actually was conducted . . . at any time during the period beginning September 1, 1989 and ending October 1, 1991 . . . .” Id. §3704(a)(1)–(2).
[10] Joe Asher, Why Chris Christie is Right About Sports Betting, US NEWS (June 26, 2012), http://www.usnews.com/opinion/articles/2012/06/26/why-chris-christie-is-right-about-sports-betting.
[11] § 3704(a)(3); see also Larry Josephson, Righting a Wrong: A History in New Jersey Sports Betting, COVERS (Nov., 2, 2011), http://www.covers.com/articles/columns/articles.aspx?theArt=251825.
[12] Statehouse Bureau Staff, 4 Major Pro Sports Leagues, NCAA Sue to Stop N.J. From Allowing Betting, STAR-LEDGER (Aug. 8, 2012, 6:17 AM), http://www.nj.com/politics/index.ssf/2012/08/4_major_pro_sports_leagues_sue.html.
[13] Francis Baker and Elisabeth Ulmer, Despite NCAA Protests, New Jersey Likely to Succeed in Legalizing Sports Gambling, JEFFREY S. MOORAD SPORTS L.J. BLOG (Oct. 6, 2012), http://lawweb2009.law.villanova.edu/sportslaw/?p=837 (citing Motion of Defendant, NCAA v. Christie, 2012 WL 6698684 (D.N.J. Dec. 21, 2012) (No. 12–4947 (MAS)(LHG)), 2012 WL 3964552, at *4).
[14] NCAA v. Christie, No. 12–4947 (MAS)(LHG), 2012 WL 6698684, at *9 (D.N.J. Dec. 21, 2012).
[15] NCAA v. Christie, 926 F. Supp. 2d 551 (D.N.J. 2013).
[16] Id. at 577, 579.
[17] NCAA v. Governor of N.J., 730 F.3d 208 (3d Cir. 2013), petition for cert. filed, 2014 WL 572929 (U.S. Feb., 12, 2014) (No.13-967).
[18] 133 S. Ct. 2612 (2013).
[19] Shelby Cnty., 133 S. Ct. at 2649 (Ginsburg, J., dissenting).
[20] Governor of N.J., 730 F.3d at 240 (Vanaskie, J., concurring in part and dissenting in part).
[21] Id. at 241.
[22] 505 U.S. 144 (1992).
[23] 521 U.S. 898 (1997).
[24] Governor of N.J., 730 F.3d at 245 (Vanaskie, J., concurring in part and dissenting in part).
[25] Christopher L. Soriano, United States: Third Circuit Denies Rehearing in Sports Betting Case, DUANE MORRIS LLP (Nov. 16, 2013), http://www.mondaq.com/unitedstates/x/275164/Gaming/Third+Circuit+Denies+Rehearing+In+Sports+Betting+Case.
[26] Ryan Hutchins, NJ Appeals Sports Betting Case to U.S. Supreme Court, STAR-LEDGER (Feb. 18, 2014, 1:17 PM), http://www.nj.com/politics/index.ssf/2014/02/nj_appeals_sports_betting_case_to_us_supreme_court.html; see also Petition for a Writ of Certiorari, Governor of N.J., 730 F.3d 208 (No. 13-967).
[27] John Brennan, BREAKING: Details on New Jersey Filing a Sports Betting Appeal to U.S. Supreme Court, NORTHJERSEY.COM (Feb. 18, 2014, 9:21 AM), http://blog.northjersey.com/meadowlandsmatters/7836/new-jersey-files-sports-betting-appeal-to-u-s-supreme-court/; see also Petition for a Writ of Certiorari, supra note 26, at 4.
[28] 133 S. Ct. at 2649 (Ginsburg, J., dissenting).
[29] Petition for a Writ of Certiorari, supra note 26, at 27. See The Second Annual Sports and Entertainment Law Symposium, 10 RUTGERS J.L. & PUB. POL’Y 115 (2013), for more information on the constitutionality of PASPA.
[30] Donnelly v. DeChristoforo, 416 U.S. 637, 648 (1974) (Stewart, J., concurring) (“We are bound here, however, by the ‘rule of four.’ That rule ordains that the votes of four Justices are enough to grant certiorari and bring a case before the Court for decision on the merits.”)
[31] 505 U.S. 144.
[32] 521 U.S. 898.
[33] 132 S. Ct. 2566 (2012).
[34] 133 S. Ct. 2612 (Ginsburg, J., dissenting).
[35] John Brennan, NJ Sports Betting Case Backed Up For Another Month, NORTHJERSEY.COM (Mar. 3, 2014, 11:48 AM), http://blog.northjersey.com/meadowlandsmatters/7957/nj-sports-betting-case-backed-up-for-another-month/.
[36] Id.