HomePublicationsNewsletter ArchiveNewslettersVolume 20Issue 30Judge Grants Temporary Restraining Order to Stop New Jersey Sports Wagering Law

On Friday, October 24, 2014, a federal judge granted a temporary restraining order to stop New Jersey from allowing legalized sports betting, after a request by the NFL, the NBS, the NHL, Major League Baseball and the NCAA. U.S. 

The NCAA, NHL, NBA, MLB, and NFL filed a complaint in the US District Court for the District of New Jersey on Monday, October 20, 2014 seeking a declaratory ruling that S2460 is in violation of PASPA and the Third Circuit’s 2013 ruling, as well as seeking an injunction against S2460’s implementation. The complaint claims that “[w]hile styled as a “repeal,” [S2460] is nothing more than a de facto authorization of sports gambling” and that New Jersey’s “attempts to authorize sports gambling is just as unlawful as its previous attempts.” (Case No. 3:14-cv-06450-MAS-LHG, Complaint, Par. 5, 9). Furthermore, the leagues claim that by only allowing sports wagering in licensed and regulated gaming establishments, the law in fact regulates gambling activity despite claiming the opposite. A hearing has yet to be scheduled in the matter.Notably, on Friday, October 17, 2014, New Jersey Governor Chris Christie signed into law legislation that would allow for sports wagering to occur in the state’s casinos and horse racetracks. The bill, Senate Bill 2460 (“S2460”), would effectively repeal the state’s gaming licensing and authorization laws as it relates to sports wagers placed in a casino or horse racetrack by individuals who are 21 years or older. 

The legislation was enacted in response to the decision of the Third Circuit Court of Appeals in National Collegiate Athletic Association v. Governor of New Jersey, 730 F.3d 208 (Sept. 17, 2013). The case involved a constitutional amendment and state law, the Sports Wagering Act, passed in New Jersey which repealed a ban and authorized sports wagering in New Jersey gaming establishments. Shortly after the Sports Wagering Act was passed into law, the major sports leagues filed a complaint in the US District Court for the District of New Jersey to prevent the law from being implemented. The district court subsequently found in favor of the sports leagues, dismissed the case, and issued a permanent injunction against the law.

New Jersey subsequently appealed this decision to the Third Circuit Court of Appeals. In the Third Circuit case, New Jersey argued that the Professional and Amateur Sports Protection Act (“PASPA”), the federal statute banning all sports wagering in all states except Nevada, Oregon, Delaware, and Montana, was unconstitutional because it violated the 10thAmendment by favoring these states over all others. Therefore, PASPA was invalid and could not preempt states from enacting their own forms of sports wagering. The Third Circuit, however, upheld the district court’s ruling, finding that PASPA was constitutional and therefore preempted New Jersey’s previous attempts to authorize and regulate sports wagering in its casinos. In accordance with its ruling, the Third Circuit affirmed the district court’s injunction preventing New Jersey from authorizing and regulating sports wagering in the state.

The new legislation has been crafted to avoid authorizing and regulating sports wagering by repealing the state’s prohibitions on sports wagering in certain instances. Under S2460, sports wagering is not prohibited in casinos and horse racetracks (including former tracks that were in operation within 15 years of the law’s effective date). However, college sporting events occurring in New Jersey or involving a New Jersey college team, regardless of the location of the event cannot be wagered upon.

S2460 goes so far as to cite the Third Circuit case documents, quoting the opinion and briefs filed by the US Government in support of PASPA that state that a state government is free to repeal any state laws that prohibit sports wagering. Further, the legislation is premised on the language of PASPA itself, which makes it illegal for a government entity “to sponsor, operate, advertise, promote, license, or authorize by law or compact” gambling based on sporting events or for individuals to do the same in accordance with a state law or compact. 28 USC §3702. The state claims that since S2460 merely decriminalizes sports wagering in specific instances, there is no government authorization or regulation of the activity and thus no violation of PASPA.

In addition to S2460, the state attorney general issued a Law Enforcement Directive (No. 1-2014) and Formal Opinion (No. 1-2014) stating that the “Sports Wagering Act’s repeal of prohibitions against sports wagering in casinos and racetracks can be given effect without licensing or otherwise authorizing by law sports wagering, as prohibited by the Third Circuit’s decision, and, accordingly, must be given effect.” (September 8, 2014, p. 4) Under this rationale, the attorney general directed law enforcement officials and state prosecutors to enforce the Sports Wagering Act by allowing sports wagering in accordance with the law.

This argument has not been tested or evaluated by a court, but the NCAA, NHL, NBA, MLB, and NFL filed a complaint in the US District Court for the District of New Jersey on Monday, October 20, 2014 seeking a declaratory ruling that S2460 is in violation of PASPA and the Third Circuit’s 2013 ruling, as well as seeking an injunction against S2460’s implementation. The complaint claims that “[w]hile styled as a “repeal,” [S2460] is nothing more than a de facto authorization of sports gambling” and that New Jersey’s “attempts to authorize sports gambling is just as unlawful as its previous attempts.” (Case No. 3:14-cv-06450-MAS-LHG, Complaint, Par. 5, 9). The court has scheduled an oral argument on the restraining order for November 20, 2014.

 

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