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Supreme Court May, But Probably Won't, Legalize Sports Betting

JURIST Guest Columnist I. Nelson Rose of Whittier Law School discusses a recent Supreme Court opinion concerning sports betting in the United States...

In a surprise move, the US Supreme Court blew a little life into the dying embers of state-authorized sports betting. New Jersey has been trying unsuccessfully for years to overcome a federal law that prevents the state from allowing its casinos and racetracks to take bets on sporting events. Rather than just deny cert., the high Court asked the Solicitor General of the US to file a brief. Proponents rejoiced at the reprieve. But the odds of New Jersey winning this bet are slim indeed.

The state's problem is the federal Professional and Amateur Sports Protection Act. Although PASPA is one of the most radical federal laws ever enacted, it has been consistently upheld by the courts.

PASPA is the only statute ever passed by Congress which prevents states from legalizing a form of betting. Because states, and not the federal government, have always had the sole power to determine what they want their public policies to be toward gambling within their borders, the statute is an open affront to "Our Federalism." But the State Legislature and their lawyers have not been able to figure out how to get a court to recognize that.

PASPA makes it unlawful for "a governmental entity to . . . authorize by law" any form of gambling based on real-world sports events. It grandfathered-in a half-a-dozen states that had some sports betting in 1991.

The issue of gambling should be one of the easiest questions to answer under Our Federalism. Gambling falls under the states' police power. This is the right, and obligation, of local governments to protect the health, safety, welfare and morality of their residents.

There has never been any doubt that gambling has always been a state police power issue. The federal government only becomes involved when the U.S. Constitution gives Congress and not the states the exclusive power over an issue, as with Indian gaming, or when the states ask the central government for help. PASPA changed all that for sports betting.

Federal courts ruled that even states that had sports betting could not change their games. The Delaware Lottery was stuck with parlay bets, and could not start taking straight head-to-head bets like Nevada sports books do, because it didn't offer that particular form of sports betting during the magic years.

New Jersey first tried a direct attack on PASPA. The state's voters amended the State Constitution and the Legislature enacted a complete regulatory system.

PASPA is also the first Act of Congress giving private organizations the power to enforce a federal law against a state. States cannot be sued without their consent. If a state cannot be sued by an Indian tribe or its own state employees, it is unclear why suits by amateur and professional sports organizations should be allowed.

Unfortunately, when the system was attacked by the NCAA, NFL and other sports leagues, the big question of whether the federal government could invade an area reserved to the states was lost in an esoteric discussion of commandeering. It is not surprising that the state lost in the trial court and court of appeal, since almost no one had ever heard of the anti-commandeering doctrine, and the US Supreme Court had only used it twice in 250 years to invalidate a federal law.

Proponents then tried an end-run. Instead of creating a system to regulate betting on sports events, the Legislature passed a statute repealing all of the state's anti-sports-gambling laws!

This would have created interesting problems for federal prosecutors, since almost all anti-racketeering laws require that there be a violation of state anti-gambling laws. I asked an F.B.I. agent at the time how many federal investigations were pending involving violations of New Jersey state anti-sports-betting laws. He said there were three.

Of course, the New Jersey statute only repealed the state's prohibitions on sports pools in licensed casinos and racetracks.

The easy answer to this attempted end-run would have been to look at the reality of how state-licensed gambling operations are regulated. It is impossible to believe that the New Jersey Division of Gaming Enforcement, a part of the State Attorney General's office, would allow known organized crime figures to set up sports pools among the slot machines in Atlantic City.

The Nevada Supreme Court has ruled that state gaming regulators could require the owner of a dress shop to be examined for suitability. Planet Hollywood had to pay a large fine and agree to police a private nightclub on the casino's grounds.

If a casino and its state regulators were not responsible for activities taking place in the casino, what would sports betting in Atlantic City look like? If the 2014 Act truly eliminated all laws and regulations related to sports betting, then anyone could take a bet from anyone else on a sports event. That might be acceptable. But if a company wanted to set up a sports book, it would have to be treated like any other retail business that wished to operate on the casino floor. If a casino has an agreement with Burger King, it is not going to sit by if McDonalds tries to set up a competing operation in the casino building. Any sports book would have to have the approval of the casino's executives. And those executives would have to report the operation to state regulators. The regulators in turn would have to investigate and oversee the sports book, to ensure that the casino company was not doing business with individuals who were unsuitable.

Unfortunately, the Court of Appeals once again got hung up in technicalities. The end-run was ruled to still violate PASPA, because it pretty blatantly was actually authorizing sports betting in the state's casinos and tracks. But the panels have been split, because another esoteric question had been raised: If a legislature truly does repeal all of its laws in an area, is that the same as if those laws had never existed?

The legal mess was reheard en banc. The majority, again, decided that the State Legislature could call this a repeal; but, the reality was it was authorizing sports betting with restrictions, such as not being able to bet on New Jersey teams, and only in a few licensed locations.

So, why is the US Supreme Court considering hearing the case. Asking the Solicitor General to submit a brief usually indicates the Court wants to know how the federal government construes a federal law. Here, the question is probably whether PASPA does require states to act to outlaw sports betting.

The Court will probably read whatever brief is submitted and deny cert. This end-run law in this case too clearly does authorize sports betting in violation of PASPA.

But there is a slim chance that the high Court will see that there really is a bigger issue involved. The amicus brief from the American Gaming Association, the lobbying group for casinos, has raised "The fundamental legal question . . . whether a federal court can, consistent with federalism and dual sovereignty, enjoin a State from passing a law that neither violates the Constitution nor addresses any matter preempted by federal law." Congress cannot order a state to outlaw sports betting. Does it have the power to prevent that same state from changing the state laws it does have?

There is also the issue of discrimination in favor of those few states that were grandfathered-in and can have sports betting.

If Congress had outlawed movies with sound in 1929, would there now be only a few states with "talkies"?

Professor I. Nelson Rose is recognized as one of the world's leading authorities on gambling law and is a consultant and expert witness for governments and industry. His latest books, GAMING LAW IN A NUTSHELL, INTERNET GAMING LAW and GAMING LAW: CASES AND MATERIALS, are available through his website, www.GAMBLINGANDTHELAW.com.

Suggested citation: I. Nelson Rose, Supreme Court May, But Probably Won't, Legalize Sports Betting, JURIST - Academic Commentary, Feb. 2, 2017, http://jurist.org/forum/2017/02/I-Nelson-Roses-sports-betting.php



This article was prepared for publication by Ben Cohen, an Assistant Editor for JURIST Commentary. Please direct any questions or comments to him at commentary@jurist.org

Opinions expressed in JURIST Commentary are the sole responsibility of the author and do not necessarily reflect the views of JURIST's editors, staff, donors or the University of Pittsburgh.
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