HomePublicationsNewsletter ArchiveNewslettersVolume 23Issue 39SUPREME COURT HEARS ARGUMENTS IN SPORTS WAGERING CASE

On December 4, 2017, the United States Supreme Court heard oral arguments in a case challenging the federal law prohibiting sports gambling under state law (the Professional and Amateur Sports Protection Act, “PASPA”).  PASPA, passed in 1992, prohibits states from authorizing “a lottery, sweepstakes, or other betting, gambling, or wagering scheme based” “on one or more competitive games in which amateur or professional athletes participate.”  PASPA did allow the sports betting already offered in Delaware, Montana, Nevada and Oregon in 1992 to continue unchanged.  PASPA also permitted New Jersey to pass a law allowing sports betting in its casinos so long as New Jersey did so within one year of PASPA’s passage.  New Jersey did not take advantage of that one-year window. 

Instead, New Jersey passed a 2014 law that repealed the existing ban on sports wagering, but did not simultaneously permit sports wagering.  In the case before the Supreme Court, the state of New Jersey as well as members of New Jersey’s horse-racing industry argued that PAPSA violated the constitutional prohibition against the federal government “commandeering” states into enforcing federal law.  In opposition, the National Collegiate Athletic Association (“NCAA”) and the four professional sports leagues (NFL, MLB, NBA and NHL) argued that PAPSA doesn’t require the states to do anything; it merely prohibits them from authorizing sports betting.

Mr. Olson, attorney for New Jersey, argued that the statute impermissibly commandeered regulatory authority from the states: “because the Congress didn't attempt to regulate interstate commerce directly, and it could then, if it did so, which it did not do so, quite obviously, it could then regulate the state as a market participant to the same degree it was regulating private citizens as a market participant.” 

Justice Breyer appeared receptive to the argument, stating: “Now, I think what you actually say is the federal government makes a determination of what interstate commerce will be like in respect to this particular item. It can do that, we -- including a determination, it shouldn't be -- that's a determination, okay?  Once it makes that determination, it can forbid state laws inconsistent with that determination. That's called preemption. But what it can't do is say that our determination is that the states roughly can do it as they want, but they can't do it that way; for to do that is to tell the state how to legislate, in which case, it is the state and not the person who becomes the subject of a federal law.”

Mr. Olson agreed, arguing: “If PASPA said we prohibit sports betting, gambling on sports, then it could address the state as a participant in that same activity.  It did not do so. This statute does -- attempted to have the states…to prohibit sports gambling, it didn't stop there. It said sports gambling under state law.  And what it intended to do…is it put the accountability, the expense, the responsibility, the burdens on the states and basically said, as the -- as the Congressional Budget Office says, it won't have any effect on the federal budget because the federal government is doing nothing.”

Justice Kagan took issue with that line of reasoning, noting: “the federal government is saying to the states you can't do something -- so that sounds to me the language of preemption. All the time the federal government takes some kind of action, passes a law, and then says to the states: you know what, we've got this; you can't do anything.”  She asked Mr. Olson: “So do you see no difference between the federal government saying to a state, look, you can't take some preferred policy option that you would like to take, and, on the other hand, the federal government saying to a state, you must help us do something?”  Mr. Olson replied: “…[Yes] in many ways. New Jersey is being told it may not regulate in the way it chooses -- its legislature chooses to exercise its discretion with respect to an activity taking place in that state.  It must enforce a law and keep a law on the books that has attempted to repeal the -- the executive branch and the legislative branch of the state of New Jersey have been conscripted.”

Mr. Clement, attorney for the NCAA, opened by stating: “PASPA does three basic things. First, it tells the states that they may not themselves operate or advertise sports gambling schemes such as a sports-based lottery or a sports book.  Second, it tells private parties…that they may not operate or advertise a sports gambling scheme pursuant to state law.  And, thirdly, it tells states that they may not authorize or license third parties to conduct those sports gambling schemes that would violate federal law.”  Chief Justice Roberts noted: “In other words, if the state law says you can do it, that's the only situation in which it's illegal. If the state law doesn't say anything about it, well, feel free, you can do it.”

The Supreme Court will issue an opinion prior to the end of its term in June 2018.  Should it strike down PAPSA and side with the State of New Jersey, it opens the doors to state-by-state regulation of sports betting, assuming that Congress does not respond to the decision by enacting substitute legislation.


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