JURIST Guest Columnist Keith Miller of Drake University Law School discusses the future of sports gambling in the United States…
In a move that caught many people by surprise, on January 16 the United Supreme Court invited the Solicitor General to set forth the government’s view of the validity of a federal law that prohibits states other than Nevada from offering sports betting. Although the significance of the Court’s order won’t be known for some time, it raises tantalizing questions about the future of sports gambling in the United States. Could nationwide sports betting lie over the horizon?
The Background of Sports Betting Law in the US
Sports betting in the US is immensely popular. Nevada sports books handled over $4 billion in bets in 2015. In addition, it is estimated that nearly $200 billion is bet illegally on sports annually with bookies and through online sports books based outside the US.
The reason for the financial disparity between legal and illegal betting is the fact that federal law makes Nevada the only state where single game sports betting is legal. The 1992 Professional and Sports Betting Act (PASPA) prohibited sports betting but granted exceptions to states that had operated forms of sports betting before PASPA’s passage. Nevada was the only state with single game sports betting, and when New Jersey failed to take advantage of a provision in PASPA giving them one year from the law’s effective date to adopt sports betting, PASPA essentially codified Nevada’s sports betting monopoly.
The wisdom of PASPA has been debated since its inception. Supporters assert that PASPA protects the integrity of sports contests from the potential corruption of nationwide sports betting and limits the spread of problem gambling.
On the other hand, PASPA’s critics contend that legalized betting actually promotes the integrity of sports contests by establishing a transparent regulatory framework. They further argue that legalization would drive out the criminal elements of illegal betting, and states would benefit from taxing the gambling revenues. Whatever the merits of these arguments, the fact is Congress has not amended the law since its passage.
New Jersey’s Attack(s) on PASPA
In 2012, after voters overwhelmingly approved a constitutional amendment, New Jersey stopped waiting for a change in PASPA and enacted a sports betting framework in the state. The state contended that PASPA violated constitutional principles relating to states’ rights.
In Christie I, the 3rd Circuit Court of Appeals ruled that PASPA was valid. The court held that PASPA did not “commandeer” the legislative processes in New Jersey because it doesn’t require a state to do anything. Rather, as a valid expression of Congress’s authority under the Commerce Clause, PASPA simply prevents a state from authorizing sports betting and therefore does not violate principles of states’ rights.
Moreover, the court ruled that Congress did not violate the Constitution by permitting Nevada to offer sports betting when other states could not. PASPA was designed to stop the spread of sports betting so it was inevitable that some states would be treated differently.
Nevertheless, New Jersey was undaunted by this defeat. It seized on language in the court’s opinion that said PASPA did not preclude New Jersey from repealing its laws forbidding sports betting, because a repeal did not constitute an authorization. So in 2014, New Jersey repealed its laws forbidding sports betting at horse tracks and in casinos. In other words, sports betting could be conducted at those facilities because there was no longer a law forbidding it. Once again, the leagues claimed this was in violation of PASPA
It is here that the case began the path of twists and turns that has led to the Supreme Court’s recent order. In en banc rehearing of the case. Because granting such a motion is extremely rare, many believed that the 3rd Circuit was poised to reverse course and strike down PASPA.
These suspicions were reinforced when questions from the bench on oral argument in February 2016 suggested the court might be reconsidering PASPA’s constitutionality, and by a long delay in the court announcing its decision. But the 3rd Circuit’s 9-3 decision announced in August 2016 was anti-climactic. The court reaffirmed its belief that PASPA was constitutional and clarified some of the analysis from Christie I. All that was left was for the Supreme Court, as it did in Christie I, to deny cert sending New Jersey back to the drawing board, or to Congress to seek to have PASPA changed. But then came the Court’s order on January 16.
What is the Significance of the Court’s “Invitation” to the Solicitor General?
The Court’s order inviting the Solicitor General to express the views of the United States may suggest the Court believes the case has some merit. It is misleading to call this an “invitation” given that the Solicitor General’s office views it as a command appearance.
The Solicitor General’s opinion will be taken very seriously by the Court. A 2009 empirical analysis concluded that a petition for cert is over 37 times more likely to be granted in cases where the Court solicits the views of the Solicitor General. This is the case even when the Solicitor General’s recommendation is not to grant the cert petition.
Of course, a grant of cert does not necessarily mean the Court would strike down PASPA. The 3rd Circuit’s action vacating the panel decision in Christie II and ordering a rehearing by the full court was also highly unusual, but it led to a reaffirmation of the law rather than its invalidation. Predicting how the Supreme Court would rule is thus a precarious undertaking.
Moreover, there are other reasons why a grant of cert by the Court would be unusual. The federal law has been upheld against constitutional attack in five different federal court decisions. There is no “circuit split” that needs to be resolved. Indeed, the 3rd Circuit is the only federal court that has ruled on the validity of PASPA so there has been no “percolation” of the issue among other intermediate appellate courts.
However, the constitutional attack on PASPA has emphasized issues of federalism and overreach by the federal government in an area of law—gambling—that is typically viewed as being in the domain of state regulation. If the Court grants cert these issues will be front and center.
What Would Happen if the Court Struck Down PASPA?
Even if the Supreme Court were to grant cert, hear the case on its merits, and strike down PASPA, it would not resolve the sports betting controversy. In fact, it would be just the beginning. Invalidation of PASPA would almost certainly trigger a Congressional response, as the major sports leagues would likely press for Congress to intervene. Possible actions include:
(A) Congress could directly prohibit sports betting in the states. Indeed, that is the core of the “commandeering” attack on PASPA; Congress didn’t want to take the responsibility for prohibiting sports betting, so it prevented the states from authorizing it. Congress probably has authority under the Commerce Clause to pass a federal law banning sports betting; or
(B) Congress could pass a law establishing a template for states to follow if they wanted to allow sports betting. That is, states would have to “opt-in” to such a system. This approach would address the concerns that a state-by-state system of sports betting would be unwieldy and inefficient, concerns that have driven some of the opposition to New Jersey’s challenge. The major sports leagues would most certainly seek some “monetization” of sports betting to their benefit.
There are several reasons why Congress would be unlikely to take the former path.
First, sports betting is a popular activity that has increasingly entered the mainstream. Betting lines are openly discussed on sports programs and published in media outlets.
Second, while the major sports leagues have vigorously opposed legalized sports betting, their opposition has markedly softened in recent years. NBA Commissioner Adam Silver has called for a transparent, regulated system of sports betting. The NHL has established an expansion team in Las Vegas. And most importantly, the NFL seems ready to allow the Oakland Raiders to relocate to Las Vegas. While these actions don’t necessarily suggest support for wider sports betting, they would have been unthinkable even a few years ago.
Third, it may be that the leagues’ embrace of daily fantasy sports, and their disingenuous insistence that the activity does not constitute sports betting, has worn thin with policy-makers. A regulatory system that integrates fantasy sports within traditional sports betting may be an idea whose time has come.
The Sports Betting Issue Refuses to Go Away
The 3rd Circuit decisions emphasized that states needed to take their plea to Congress. Perhaps it takes a Supreme Court decision to force the issue for the major sports leagues and Congress. While a lot would need to happen before it comes to this, the Court’s request for the Solicitor General’s opinion raises fascinating issues.
President Trump, a casino owner, will soon be appointing a new Solicitor General who will weigh in on the issue for the Supreme Court. This means it will likely be some time before the Court benefits from the Solicitor General’s perspective. It also illustrates the intensely political nature of debates in our country over gambling.
Keith Miller is an Ellis and Nelle Levitt Distinguished Professor of Law at Drake University Law School. His areas of expertise include Gaming Law, Torts, Product’s Liability, and Worker’s Compensation. He is the Vice Chair of the Gaming Law Committee for the ABA Business Law Section and the Vice President for Educator Affiliates of the International Masters of Gaming Law.
Suggested citation: Keith Miller, Sports Betting and the Supreme Court, JURIST – Academic Commentary, Jan. 25, 2017, http://jurist.org/forum/2017/01/Keith-Miller-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 firstname.lastname@example.org
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