Narrow Ruling in New Jersey Sportsbook Case Could Be a Boon
With the word that the US Supreme Court could rule on New Jersey’s sports betting appeal as early as Tuesday, America’s gambling law experts are giving their predictions and analysis. Daniel Wallach of the Wall Street Journal predicted a so-called complete repeal, though he gave a second scenario that might be more advantageous for New Jersey.
A “narrow ruling” based on New Jersey’s legal arguments would mean states that embrace unregulated sports betting could host sportsbooks, while those who want fully legal and regulated sportsbooks could take no solace from the US Supreme Court decision.
To understand the difference, one must look at New Jersey’s “regulation-free” approach to its challenge of the Professional and Amateur Sports Protection Act (PASPA). The best way to do so is to trace New Jersey’s various challenges to PASPA over the past 6 years.
New Jersey’s Sports Betting Appeal
When the voters of New Jersey first approved legal sports betting in 2012, former Gov. Chris Christie and the New Jersey state legislature moved to legalize, license, regulate, and tax land-based sports betting. The NFL, NBA, NHL, Major League Baseball, and NCAA sued New Jersey, beginning a two-year legal battle.
In US District Court in Trenton, Judge Michael Shipp ruled that New Jersey’s challenge of the PASPA violated federal law. When New Jersey appealed Shipp’s decision to the 3rd Circuit Court of Appeals in Philadelphia, the state once again lost on a 2-1 appellate decision. New Jersey appealed that ruling to the US Supreme Court, which rejected its appeal in June 2014.
Dual Sovereignty and the Commandeering Clause
The dissenting judge in the appellate decision wrote an opinion which stated New Jersey could successfully challenge PASPA by repealing its regulations and simply decline to enforce the PASPA in practice. Due to the dual sovereignty principle, US states are said to share sovereignty with the US federal government.
That means the US states cannot directly challenge federal laws. At the same time, the US federal government cannot force individual state law enforcement agencies to enforce federal laws. In short, the federal government cannot commandeer state law enforcement resources.
If New Jersey was willing to repeal its regulations and forego collecting taxes on New Jersey sportsbooks, it could legalize sports betting in Atlantic City and Monmouth Park simply by declining to enforce the PASPA. That is how New Jersey proceeded in October 2014, which led to a new round of lawsuits by the sports leagues. The leagues won in US district court and appellate court once again, but the Supreme Court surprisingly agreed to hear New Jersey’s appeal on December 4, 2017 — causing many experts to predict New Jersey would win the case and repeal PASPA.
Daniel Wallach Discusses Limited Victory
Daniel Wallach, a sports and gaming lawyer based in South Florida, wrote in the Wall Street Journal this week said the likeliest outcome would be a resounding legal victory for New Jersey.
Wallach wrote, “From my vantage point, the most likely outcome in the case — based on the justices’ questions and comments from the bench during the Dec. 4 oral argument — is that the Supreme Court will issue a ruling declaring PASPA to be unconstitutional.”
“A decision along those lines — which many inaccurately refer to as a “complete repeal” (courts invalidate or strike down statutes; they don’t “repeal” them) — would likely be predicated on a finding that PASPA impermissibly commandeers state legislatures in violation of the 10th Amendment. Such a decision would allow New Jersey, and scores of other states, to enact laws authorizing sports gambling free from any federal interference.”
Narrow Ruling on Legal Sportsbooks
Mr. Wallach added that another possibility exists which would be less definitive. The gaming lawyer said that even a narrow ruling in the case could give New Jersey the legal justification to allow private operators to open sportsbooks.
In the WSJ article, Wallach wrote, “But there is another path for a New Jersey victory other than a complete invalidation of PASPA. As previously highlighted in my analysis of the Dec. 4 oral argument, the Supreme Court could decide the case on narrow grounds.”
“It could rule as a matter of statutory interpretation that New Jersey’s partial repeal law (which lifts state prohibitions against sports gambling at casinos and racetracks) does not constitute a violation of PASPA because the state would not be ‘authorizing’ sports gambling when it merely decriminalized such activity. Or, alternatively, the Court could hold that PASPA is unconstitutional but only to the extent that it prohibits states from repealing their sports betting prohibitions.”
Will New Jersey Thread the Needle?
In a way, that narrow ruling might be a bigger boon for New Jersey. That would allow New Jersey’s casinos and racetracks to proceed with unregulated sportsbook gambling. At the same time, it might not help most of the 20 other states who signed West Virginia’s amicus brief.
The reason is because most of those states probably would not be comfortable with the “regulation-free” approach that New Jersey embraced. Some have assumed that New Jersey would not benefit as much as expected from legal sports gambling, because all other nearby states with racetracks and casinos also would open sportsbooks. New York, Pennsylvania, and Maryland might not be as willing to open unregulated sportsbooks, though, which could leave New Jersey as the sportsbook destination in the northeast.
Monmouth Park could be the biggest winner in a narrow ruling scenario. As Daniel Wallach noted, Monmouth Park is an Uber-ride from New York City. If NYC sports bettors could not place sports bets in New York state casinos, their best option would be to ride out to Monmouth Park each weekend for NFL betting or make day trips for MLB games.