By: Andrew Saba
In 1992, Congress passed the Professional and Amateur Sports Protection Act (“PAPSA”), prohibiting states from authorizing, licensing, regulating, and controlling sports betting. The Act grandfathered in states that had previously legalized sports betting – Nevada, Oregon, and Delaware – and offered an exemption to New Jersey if they enacted legislation within a year. The state failed to do so, and continued to prohibit sports betting within its borders.
In 2010, the state changed course and initiated a referendum among its voters asking whether sports betting should be legalized in the state. The referendum was approved by a wide margin. In response, the Legislature passed the Sports Wagering Act in 2012, which legalized sports betting in private casinos and racetracks across the state. The NCAA, NFL, NHL, and MLB (“NCAA”) sued the Governor of New Jersey and various state officials (Christie I), alleging that the Act violated PAPSA. The state admitted that the Sports Wagering Act violated PAPSA, but argued that PAPSA was unconstitutional because it violated the anti-commandeering doctrine of the Tenth Amendment. The doctrine prohibits the federal government from requiring states or state officials to adopt or enforce federal law. The NCAA argued that PAPSA did not require the state to do anything, it just prohibited them from passing certain legislation. The Third Circuit agreed, drawing a distinction between repeals (of a law) and affirmative authorizations (a state enacting legislation). The Court reasoned that PAPSA did not violate the anti-commandeering doctrine because it only prohibits affirmative authorizations, but not repeals. Not a single case the Court referenced in its opinion had invalidated a law that, like PAPSA, simply operated to invalidate state laws. Therefore, it struck down the Sports Wagering Act. The state filed a petition for writ of certiorari to have the Supreme Court review the case, but the Court denied the petition.
Upon this directive, New Jersey legislators passed SB 2460 in 2014, which repealed longstanding state prohibitions on sports gambling. It effectively allowed sports gambling in casinos and racetracks and also required sports bettors to be twenty-one years old. The NCAA and other leagues filed suit once again (Christie II), alleging the repeal of these laws was in effect an affirmative authorization which violated PAPSA. Once again, the Third Circuit agreed with the NCAA’s argument, ruling that the state had affirmatively authorized sports gambling in violation of PAPSA by repealing the laws prohibiting sports gambling. The Court did disclaim the formal distinction between repeals and affirmative authorizations in Christie I, but still confirmed that PAPSA does not violate the anti-commandeering doctrine. The state filed another petitioner for writ of certiorari, and this time the Supreme Court agreed to hear the case. Oral arguments were held on December 4, 2017, and the Court is expected to render a decision by the end of June.
The crux of the state’s argument is that Congress cannot commandeer state law in pursuit of federal legislative goals. The state argues that the Third Circuit’s holding is an overly formalistic view of the anti-commandeering doctrine and incompatible with the principles of the Tenth Amendment. To support the argument, it relies on cases that have held anti-commandeering analysis turns on whether a federal law effectively controls or influences how states govern, and not on whether the law requires an affirmative act. The NCAA disagrees, relying on their previous argument that PAPSA does not obligate New Jersey to adopt any regulatory scheme whatsoever, but simply prevents them legalizing sports betting.
The fact that the Supreme Court decided to hear the case is telling. The Court accepts to hear around one percent of cases each year, meaning the Court believes the state’s argument has real merit. Additionally, the current Court is arguably conservative and at times skeptical of federal government power. If New Jersey wins, it would cause an influx of revenue that could be used for various state programs and initiatives considering “the house” usually wins bets. Additionally, if the Court overrules PAPSA, it would open the door for other states to adopt sports betting laws. To that effect, representatives in Michigan, New York, and South Carolina have introduced legislation adopting various sports betting models. A big gamble by New Jersey may pay off in the next couple weeks, changing the landscape of the sports betting world forever.