Legal sports wagering in America could have a steep hill to climb after oral arguments Wednesday in a federal appellate court, where a New Jersey sports betting law faced tough scrutiny from 12 justices, potentially signaling the need for a new federal sports wagering framework.
The arguments pitted two former U.S. Solicitors General against one another, with Ted Olson arguing for New Jersey and Paul Clement arguing on behalf of the four major sports leagues and the NCAA. The two sides have been locked in a court battle with New Jersey over the wagering issue since 2012.
The 90-minute session at times resembled a star-studded event, with a packed courtroom abuzz to watch two of the nation’s leading appellate litigators take part in an intellectual duel. U.S. Courts of Appeal almost never grant “en banc hearings,” which refer to when all or most of the judges on an appeals court rehear an earlier decision by three of its judges. Yet, as any bettor would tell you, “almost never” isn’t the same as “never.” Last October the U.S. Court of Appeals for the Third Circuit granted New Jersey Gov. Chris Christie’s petition for an en banc hearing of his longstanding lawsuit with the leagues.
At the crux of Wednesday’s en banc hearing on the future of sports betting—and indeed the entire multi-year litigation—is whether New Jersey can implement the New Jersey Sports Wagering Law. This law seeks to repeal the state’s prohibitions against sports betting and also removes wagering restrictions on specific racetracks and casinos in New Jersey.
But New Jersey has been unable to execute this plan. A 1992 federal law called the Professional and Amateur Sports Protection Act (PASPA) prohibits 46 states from licensing, sponsoring or authorizing sports betting. New Jersey is one of those 46 states (Delaware, Oregon, Montana and most significantly Nevada were grandfathered out of PASPA). The sports leagues sued New Jersey, saying its wagering law violates PASPA. The only way New Jersey can overcome the federal ban is by convincing a court that the ban is unlawful as it applies to New Jersey’s plan.
New details revealed in Manning litigation with ex-Tennessee trainer by Michael McCann At first glance it may seem surprising that leagues would sue a state over its desire to allow forms of sports betting. Betting on sports increases interest in those sports. Sports league officials—especially NBA commissioner Adam Silver—have signaled a desire for Congress and President Obama to lift the federal ban on sports betting and adopt a regulatory scheme. Nevertheless, leagues, along with the NCAA, are categorically opposed to New Jersey’s plan. They believe if it was authorized by a court, it would make their leagues vulnerable to worrisome aspects of sports gambling, such as athletes and coaches potentially “throwing” games. A concern about the relationship between sports betting and the outcome of games separates sports betting from lotteries, slot machines, card games and other gambling activities that bear no relationship with sports and are subject to regulatory schemes.
While a victory for New Jersey would only directly affect the state, other places could benefit from it as well. Delaware, Pennsylvania and the U.S. Virgin Islands would be guided by the binding precedent created by the Third Circuit, and likely move forward with their own state-based wagering efforts. A victory for the sports leagues, on the other hand, would ensure the continuation of Nevada’s dominance over legal sports wagering and would squelch Atlantic City’s long coveted aspirations for sports betting enterprises.
With that backdrop in mind, Olson appeared to face a skeptical bench. The judges seemed less concerned with whether the state could repeal its own restrictions than they were with the unregulated nature of sports betting the repeal would lead to. Olson also partook in an ostensibly semantic yet substantively important argument over what it means to “authorize” sports betting.
“I think we’re headed to federal regulation, and that’s O.K.,” said N.J. Sen. Raymond Lesniak, the architect of New Jersey’s 2014 law. “Any state that wants [wagering] can have it. New Jersey is happy with that. There’s plenty of action to go around.”
Breaking down N.Y.’s investigation into NFL ticket sale practices by Michael McCann In order to get a piece of that action, the state must convince the judges that its proposed repeal of anti-wagering laws is not the same thing as an active authorization of betting, even if it would result in sports betting taking place in New Jersey. As explored more fully below, Olson on Wednesday emphasized that no elements of PASPA technically prevent New Jersey from repealing any gambling laws. For his part, Clement conceded that the state is free to repeal any existing state gaming laws. Yet Clement also argued that by demarcating where and how sports wagering can take place, New Jersey’s law implicitly authorizes a federally banned activity even if it doesn’t explicitly say so.
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