Sports Betting: New Jersey Bucks the Federal Government

In 1992, with former NBA star and then-Senator Bill Bradley leading the way, and the sports industry offering its support, Congress passed PASPA, the Professional and Amateur Sports Protection Act. PASPA prohibits states from “authorizing” sports betting. Following Pete Rose’s betting activities, there was strong support from the industry to halt the spread of sports gambling (except in Nevada, which was grandfathered in by PASPA). All of this was done in the pre-Internet days.  Since then, estimates are that there are $150 billion bet online annually on sporting events. 

In 2012, New Jersey, eyeing a potential revenue pot in gambling dollars, passed a statute that opened up sports betting in New Jersey. The NCAA and professional sports teams came together to challenge the New Jersey expansion of Internet gambling. NCAA v. Christie, 926 F. Supp. 2d 551 (2013).  The federal district court enjoined New Jersey Sports wagering law on the grounds that it was preempted by Congressional domination of sports betting. The court also held that PASPA was a legitimate exercise of congressional authority under the Commerce Clause. The court also found that New Jersey’s wagering law and PASPA could not coexist, thus, the New Jersey law was preempted. The court of appeals affirmed.  730 F.3d 208 (3rd Cir. 2013) The U.S. Supreme Court denied certiorari in this case.

As a result of these judicial defeats, New Jersey tried a new approach and passed a new statute that exempted casinos and racetracks from the ban and then established a regulatory mechanism for limited online gambling through these venues in New Jersey. The case went to court again with the same results, and New Jersey appealed to the U.S. Supreme Court, which in this case granted certiorari. 799 F.3d 259 (N.J. 2015); 832 F.3d 389 (3rd Cir. 2016); and 137 S.Ct. 2326 (2017). 

The U.S. Supreme Court held oral argument in the case on December 4, 2017, and several of the judges seemed to be skeptical. Adam Liptak, “Skepticism From Court Over Ban On Betting,” New York Times, December 5, 2017, p. A20.  Some of the judges saw PASPA as a federal law requiring states to keep a prohibition against sports betting on the books.  Referred to as commandeering, the justices expressed concerns about the federal government telling the states how to legislate. If the federal government has undertaken regulation and the states interfere with that regulation it is preemption that permits the federal government to override the state legislation.  However, the federal government must regulate in order to invoke preemptive rights.  The judges were concerned about prohibitions on state legislation.

The oral arguments revealed justices with differing views, but also questioning attitudes that did not tip their hands on which way the case will go.  However, with the decision (expected in June 2018), there will be new clarification on the powers of preemption and the doctrine of commandeering. And, depending on the result, new opportunities for sports betting.

DISCUSSION STARTERS

Discuss the judicial history of the New Jersey statutes.

Explain the difference between preemption and commandeering.