N.J. Files Brief Supporting Sports Betting Law in Key Gambling Litigation

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The state of New Jersey filed its opening brief on April 29 in the U.S. Court of Appeals for the 3rd Circuit, in a case that could ultimately decide the fate of sports betting in the United States.

In February, U.S. District Court Judge Michael Shipp struck down New Jersey’s new sports betting law, finding it invalid as conflicting with federal law. The federal law at issue is the Professional and Amateur Sports Betting Act of 1992 (PASPA), which prohibits any state from offering sports betting unless the state had a sports betting scheme in place between 1976 and 1990.

In 2011, New Jersey voters approved a referendum by a 2-1 margin to amend the state’s constitution to allow sports betting in the state’s casinos and racetracks. The state legislature then passed a bill legalizing sports betting in the state and it was signed into law by Gov. Chris Christie (R). The New Jersey law would allow wagering on all major professional and collegiate sporting events, except collegiate sporting events involving New Jersey colleges, and on all sporting events, professional or collegiate, taking place in the state.

In August, the four major professional sports leagues and the National Collegiate Athletic Association (NCAA) filed suit against New Jersey arguing that the sports gambling law violated federal law. The U.S. Department of Justice (DOJ) later intervened as a plaintiff in the suit, joining the leagues.

The district court agreed with the plaintiffs and held that PASPA was a rational exercise of congressional power.

There have been prior challenges to PASPA in federal court, but none of those cases directly addressed the constitutionality of the statute, which the Third Circuit is being asked to do in this case.

New Jersey argues that PASPA is unconstitutional because it violates the anti-commandeering principle that Congress may not “require the States in their sovereign capacity to regulate their own citizens.” The Third Circuit’s view on the application of the anti-commandeering principle to PASPA is likely the key to this case for both sides. The district court held that PASPA did not violate the anti-commandeering principle because the doctrine is limited to laws that require some affirmative act by a state, and here New Jersey does not have to affirmatively take any action under the law.

New Jersey argues in its brief that there is no doctrinal basis for this requirement of affirmative conduct for “commandeering,” and that PASPA’s requirement to maintain existing laws is indistinguishable from a requirement to pass new laws. New Jersey cites case law stating that the anti-commandeering precedent turns on whether a law seeks “to control or influence that manner in which States regulate private parties.”

New Jersey also argues that PASPA violates the principle of equal sovereignty, which requires any discrimination among the states to be justified by “a showing that a statute’s geographic coverage is sufficiently related to the problem that it targets.” New Jersey argues that PASPA plainly discriminates among the states and that sports wagering is not the type of “local problem” that justifies different treatment among them. The justification in PASPA for the different treatment of the states was that some states already permitted sports wagering, a difference that does not justify the different treatment between the states.

New Jersey also challenged the leagues’ standing to bring the suit, arguing that although PASPA granted the leagues a right of action to enforce PASPA, “that act does not alter Article III’s jurisdictional requirements.” A separate hearing on just the standing issue was held by the district court in December, and the court found that the leagues did have standing to bring the suit. New Jersey argued that the district court relied on the general harm caused by illegal sports wagering, but that this harm was not traceable to the legalization of sports wagering in New Jersey. New Jersey also noted that the district court placed heavy emphasis on the 3rd Circuit decision in Office of the Commissioner of Baseball v. Markell, a decision that did not address the issue of standing.

The state argues that the standing of DOJ to enforce the law is irrelevant here because “intervention will not be permitted to breathe life into a ‘nonexistent’ law suit.” The court will sometimes treat the pleadings of an intervenor such as DOJ as a separate action, but New Jersey argues that this would not be justified here since DOJ’s intervention cannot be construed as a separate action because it did not sue to enforce the law; rather, DOJ intervened to defend PASPA’s constitutionality.

Intervenor defendants, the New Jersey Thoroughbred Horseman’s Association, Inc. as well as State Senate President Stephen Sweeney and Speaker of the New Jersey General Assembly Sheila Y. Oliver, also filed briefs arguing that PASPA is unconstitutional.

The deadline for the response from the leagues is May 23 and New Jersey will have an opportunity to file a reply brief by May 30. Oral arguments are scheduled in the appeals court on June 26.

The ruling in this case will have very far-reaching implications. A decision in favor of New Jersey will allow states to offer sports betting within their borders. It was not surprising that the district court ruled that New Jersey’s sports wagering law was invalid, but the law may have a different fate in the 3rd Circuit. New Jersey has some very compelling arguments that PASPA is unconstitutional and later this year we will find out if the appeals court agrees.