By Jordan Hollander, Esq.*

June 22, 2015

Photo credit: https://www.flickr.com/photos/design-dog/

Photo credit: https://www.flickr.com/photos/design-dog/

By: Jordan Hollander, Esq.*

June 22, 2015

Baseball has long been considered America’s pastime. Betting on professional baseball, and on college and professional sports in general, seems to be a close second. It is estimated that 99 percent of sports betting in the United States is placed illegally, and the National Gambling Impact Study Commission report in 1999 estimated that $380 billion worth of sports wagers are placed in the United States annually.[1] In 2014, only $3.9 billion was wagered legally on sports in Nevada.[2] This is because betting on sports is illegal in 46 of 50 states under a federal law, the Professional and Amateur Sports Protection Act (“PASPA”).[3] PASPA does not directly prohibit wagering on sports. Rather, the law prohibits states from sanctioning sports betting schemes, with some notable exceptions. Despite this federal prohibition, New Jersey has been trying to implement sports gambling in the state since 2011. This article will provide an update on the status of this effort.

PASPA makes it unlawful for any “governmental entity to sponsor, operate, advertise, promote, license, or authorize by law or compact” and further prohibits any “person to sponsor, operate, advertise, or promote pursuant to the law or compact of a governmental entity a lottery, sweepstakes, or other betting, gambling, or wagering scheme based . . . on one or more competitive games in which amateur or professional athletes participate, or are intended to participate.”[4] Furthermore, PASPA enables the Attorney General of the United States or any professional sports organization or amateur sports organization “whose competitive game is alleged to be the basis” of a violation of PASPA, to commence a civil action to enjoin any violator in a United States District Court.[5] While PASPA is neutral on its face, it did create special exemptions for states that already had sports gambling schemes that met certain criteria.[6]  These exemptions applied implicitly to the states of Nevada, Oregon, Montana, and Delaware.[7]  In addition, New Jersey was given an opportunity to “opt-in” to the exception in PASPA, but failed to do so.[8]

In 2011, New Jersey voters approved an amendment to the New Jersey Constitution that legalized sports gambling at state casinos and current and former horse racetracks.[9] In response, the National Collegiate Athletic Association (NCAA), National Football League (NFL), Major League Baseball (MLB), National Hockey League (NHL), and the National Basketball Association (NBA) filed a lawsuit to enjoin New Jersey from implementing the law.[10] The sports leagues prevailed at the district court level, and a divided panel of judges on the Third Circuit Court of Appeals affirmed.[11] New Jersey’s petition for writ of certiorari was denied.[12]

Following the denial by the Supreme Court, New Jersey was not deterred in its efforts to bring legal sports wagering to the state. State officials and proponents of sports gambling were buoyed by a line in the Third Circuit majority opinion, where the court stated that nothing in the words of PASPA “requires that the states keep any law in place” prohibiting sports gambling.[13] In the Third Circuit, the sports leagues and the United States Government had argued that, to the extent a state may choose to repeal an affirmative prohibition of sports gambling, that is the same as “authorizing” that activity, and therefore PASPA precludes repealing prohibitions on gambling just as it bars affirmatively licensing it.[14] However, the Third Circuit found this argument to be “problematic in numerous respects.”[15]

On September 8, 2014, John J. Hoffman, Acting New Jersey Attorney General, issued a directive exempting casinos and racetracks from criminal liability for operating sports pools so long as no wagering takes place on a college sport or athletic event that takes place in New Jersey or in which any New Jersey college team participates regardless of where the event takes place.[16] Along with the directive, New Jersey filed a motion with the United States District Court for the District of New Jersey to make clear that the state’s action was in line with its previous injunction.[17] Following the Attorney General’s directive, Governor Christie signed into law a new measure, partially repealing certain provisions of laws that ban betting on sports in New Jersey.[18] The sports leagues again filed a lawsuit to enjoin New Jersey from implementing the new law, and Judge Michael Shipp again sided with the leagues and enjoined the state from permitting sports wagering.[19]

On appeal to the Third Circuit, the argument predictably centered around the meaning of “authorized” under PASPA and whether New Jersey’s partial repeal of its sports betting ban violated PASPA.[20] During the oral argument before Circuit Judges Julio Fuentes,[21] Maryanne Trump Barry, and Marjorie Rendell on March 17, 2015, the judges repeatedly questioned the attorneys for both sides to define the terms “affirmative” and “authorize.”[22] Former United States Solicitor General Ted Olson, representing the state, argued that New Jersey was simply following what the Third Circuit said it could do and what the leagues and the Department of Justice conceded the state could do in the prior hearing in this case.[23] Former United States Solicitor General Paul Clement, arguing on behalf of the leagues, argued that New Jersey was simply trying to backdoor its way to implementing sports gambling, and that this partial repeal simply amounted to an authorization that violates PASPA.[24] A decision by the Third Circuit is expected any day.

While it is far from certain how the Third Circuit will rule in this case, two things are clear. First, the losing side will appeal the decision to the United States Supreme Court, further prolonging the inevitable legalization of sports wagering. Second, it is clear that federal sports gambling policy is broken and badly in need of reform.[25] The vast majority of sports wagering in the United States is done illegally, in the shadows, and outside the protection of the law. PASPA may have achieved its goal of preventing the spread of legal sports gambling, but it has only hastened the spread of illegal sports gambling. Even NBA Commissioner Adam Silver has recognized that PASPA is outdated and that sports gambling needs to be brought out of the “underground” in which it currently operates.[26] For now however, sports gambling remains illegal and we must wait to see how the cards will be dealt.

Update 9/4/2015: The Third Circuit has struck down New Jersey’s partial repeal on the ban of sports gambling. Jordan Hollander analyzes the Court’s decision and examines the future of this issue here


 

* Jordan Hollander, Esq., graduated in 2014 with a J.D., summa cum laude from Rutgers-Camden School of Law, and is admitted to practice in New Jersey and New York. While at Rutgers, the author served on the Rutgers Journal of Law and Public Policy as the Submissions and Symposium Editor and was the recipient of the Rutgers School of Law-Camden Outstanding Achievement Award and the 2014 Blaine E. Capehart Award for Legal Writing Excellence. Mr. Hollander presently serves as the law clerk to the Honorable Francis J. Vernoia, P.J.Cr. in the New Jersey Superior Court.

[1] See Joe Asher, Why Chris Christie is Right About Sports Betting, US News (June 26, 2012, 9:15 AM), http://www.usnews.com/opinion/articles/2012/06/26/why-chris-christie-is-right-about-sports-betting.

[2] See Howard Stutz, How Would Legalizing U.S. Sports Betting Change Nevada’s Industry?, Las Vegas review-Jounal (Feb. 21, 2015, 8:07 PM), http://www.reviewjournal.com/columns-blogs/inside-gaming/how-would-legalizing-us-sports-betting-change-nevada-s-industry.

[3] Professional and Amateur Sports Protection Act, 28 U.S.C. §§ 3701–3704 (2012).

[4] 28 U.S.C. § 3702.

[5] 28 U.S.C. § 3703.

[6] See 28 U.S.C. § 3704.  PASPA does not apply to “a lottery, sweepstakes, or other betting, gambling, or wagering scheme in operation . . . to the extent that the scheme was conducted . . . at any time during the period beginning January 1, 1976, and ending August 31, 1990,” or where such a scheme was “authorized by a statute as in effect on October 2, 1991” and “actually was conducted . . . at any time during the period beginning September 1, 1989, and ending October 2, 1991.” 28 U.S.C. § 3704(a)(1)–(2).

[7] See Asher, supra note 1.

[8] See 28 U.S.C. § 3704(a)(3); see also Larry Josephson, Righting a Wrong: A History in New Jersey Sports Betting, Covers (Nov. 2, 2011), http://www.covers.com/articles/columns/articles.aspx?theArt=251825.

[9] See New Jersey Election Results – Other, Star-Ledger (N.J.) (Nov. 9, 2011, 3:55 PM), http://www.nj.com/starledger/results-ballot/.

[10] See Statehouse Bureau Staff, 4 Major Pro Sports Leagues, NCAA Sue to Stop N.J. From Allowing Betting, Star-Ledger (N.J.) (Aug. 8, 2012, 6:17 AM), http://www.nj.com/politics/index.ssf/2012/08/4_major_pro_sports_leagues_sue.html.

[11] NCAA v. Christie, 926 F. Supp. 2d 551 (D.N.J. 2013); NCAA v. Governor of N.J., 730 F.3d 208 (3d Cir. 2013).

[12] Christi v. NCAA, 134 S.Ct. 2866 (2014). For a more complete discussion of New Jersey’s constitutional challenge to PASPA, see Jordan Hollander, New Jersey and Sports Gambling: Perfect Together? A Look at Two Challenges to the Professional and Amateur Sports Protection Act and New Jersey’s Effort to Implement Sports Gambling, 18 Gaming L. Rev. & Econ. 799 (2014).

[13] Governor of N.J., 730 F.3d at 232 (emphasis in original).

[14] Id.

[15] Id.

[16] Formal Opinion Addressing the Effects of Law Enforcement Directive 2014-1 on the Sports Wagering Act’s Exemption from Civil Liability for the Operation of Sports Pools by Casinos and Racetracks, N.J. Formal Opinion No. 1-2014 (N.J. Att’y Gen.) (Sept. 8, 2014), 2014 WL 4659382, available at http://www.nj.gov/lps/oag/AG-Directive-Opinion-Sports-Wagering.pdf.

[17] See Christopher Baxter, Sports Betting at N.J. Casinos, Racetracks Will Not Be Prosecuted, Acting AG Says, NJ.Com (Sept. 8, 2014, 1:18 PM, updated Sept. 9, 2014, 6:31 AM), http://www.nj.com/politics/index.ssf/2014/09/nj_casinos_racetracks_will_not_be_held_liable_for_sports_betting.html.

[18] See Brent Johnson, Christie Signs Law Allowing Sports Betting in N.J., NJ.Com (Oct. 17, 2014, updated Oct. 27, 2014), http://www.nj.com/politics/index.ssf/2014/10/chris_christie_signs_law_allowing_for_sports_betting_in_nj.html.

[19] NCAA v. Christie, Nos. 14-6450 (MAS) (LHG), 12-4947 (MAS) (LHG), 2014 U.S. Dist. LEXIS 163850 (D.N.J. Nov. 21, 2014).

[20] See, e.g., Oral Argument, NCAA v. Governor of N.J., No. 14-4546 (3d Cir. argued Mar. 17, 2015), available at http://www2.ca3.uscourts.gov/oralargument/audio/14-4546NCAAv.GovernorNJ.mp3.

[21] Judge Fuentes wrote the majority opinion upholding the constitutionality of PASPA in the 2013 decision.

[22] See John Brennan, Backstory On Today’s New Jersey Sports Betting Hearing, NorthJersey.Com (March 17, 2015), http://blog.northjersey.com/meadowlandsmatters/11256/backstory-on-todays-new-jersey-sports-betting-hearing/.

[23] See id.

[24] See id.

[25] Two United States Representatives from New Jersey, Frank Pallone (D) and Frank LoBiondo (R), whose districts include Monmouth Park Racetrack and Atlantic City, respectively, have introduced separate legislation that would change PASPA to permit sports betting in New Jersey. No action has been taken on either bill. See Christie Rotondo, LoBiondo, Pallone Again Introduce Sports-Betting Legislation, PressofAtlanticCity.Com (Jan. 22, 2015, 12:49 PM), http://www.pressofatlanticcity.com/news/lobiondo-pallone-again-introduce-sports-betting-legislation/article_01083368-a25f-11e4-b0d9-2f8039861572.html.

[26] See Adam Silver, Legalize and Regulate Sports Betting, N.Y. Times (Nov. 13, 2014), http://www.nytimes.com/2014/11/14/opinion/nba-commissioner-adam-silver-legalize-sports-betting.html?_r=0.

 

Comments are closed.



Sports Law Publications

From the newest issues of the Jeffrey S. Moorad Sports Law Journal to insightful books by Villanova Law Faculty, there’s something for everyone. View...

Annual Jeffrey S. Moorad Sports Law Symposium

Every Spring, the Jeffrey S. Moorad Sports Law Journal holds its annual symposium on current issues and hot topics in the world of sports law. Past Symposia have covered issues with concussions in sports, agent representation, and more. Check back in the Spring for more information on the next symposium.

Events

Be sure to keep up with Sports Law events at Villanova School of Law and other Philadelphia-area law schools on our events page. View...