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Supreme Court strikes down ban on sports betting in victory for New Jersey

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  • Supreme Court strikes down ban on sports betting in victory for New Jersey

    Richard Wolf, USA TODAY Published 10:12 a.mT May 14, 2018 | Updated 11:49 a.m. ET May 14, 2018
    (Photo: Brendan Smialowski, AFP/Getty Images)

    WASHINGTON — New Jersey won a landmark ruling from the Supreme Court Monday that could lead many states to legalize betting on college and professional sports.
    The justices ruled 7-2 that a 25-year-old federal law that has effectively prohibited sports betting outside Nevada by forcing states to keep prohibitions on the books is unconstitutional. The ruling could set the stage for other states to expand legalized gambling as a source of government revenue.
    Justice Samuel Alito, a New Jersey native, wrote the court's opinion in the case. Justices Ruth Bader Ginsburg and Sonia Sotomayor dissented.
    It was a victory for the state's recently departed governor, Chris Christie, who had challenged the Professional and Amateur Sports Protection Act, passed by Congress in 1992 to preserve the integrity of the nation's most popular sports. He and other proponents sought the ruling in order to help the state's ailing casinos and racetracks.

    It was a defeat for the National Collegiate Athletic Association and the four major professional sports leagues -- baseball, football, basketball and hockey -- that had successfully blocked New Jersey in lower courts.
    "Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own," Alito said. "Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not."
    The court's action could jump-start action in Congress to pass legislation calling for federal regulation of sports betting -- something the sports leagues would prefer over separate rules from state to state.

    "Now that the Supreme Court has struck down this unlawful and confusing law, it is time for Congress to move the GAME Act forward to ensure that consumer protections are in place in any state that decides to implement sports betting,” said Rep. Frank Pallone, D-N.J.
    Congress passed the 1992 law to preserve what lawmakers at the time felt was the integrity of the games. But New Jersey and its allies argued that it ran afoul of the 10th Amendment, which reserves for the states all powers not delegated to the federal government.
    Alito and six colleagues agreed, including all the court's conservatives as well as Justice Elena Kagan.

    "It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals," Alito said. "A more direct affront to state sovereignty is not easy to imagine."
    Justice Stephen Breyer agreed that the provision directing states to maintain sports betting bans should be stricken, but he said the whole federal law should not have been declared unconstitutional.
    Ginsburg and Sotomayor went further, saying the the law should stand. "The court wields an ax to cut down (the law) instead of using a scalpel to trim the statute," Ginsburg said. "It does so apparently in the mistaken assumption that private sports-gambling schemes would become lawful in the wake of its decision."
    Christie, who left office in January, signed the state's first law legalizing sports betting in 2012 after voters in 2011 overwhelmingly approved an amendment to the state Constitution to allow it.
    That law was overturned by federal district and appeals courts, but the state tried again in 2014 with a law that stopped short of legalization but repealed the prohibition against running a sports books at tracks and casinos. That also was rejected at the trial and appellate levels, but the Supreme Court agreed last June to hear the case.
    During oral argument in December, several conservative justices said the law impermissibly "commandeered" states to keep their bans on the books. But several liberal justices said Congress merely pre-empted state laws, a commonplace action.
    What has made the law anachronistic is the advent and rapid growth of Internet gambling. Rather than stopping sports betting, it helped push more of it underground, creating a $150 billion annual industry. That dwarfs the $5 billion bet in Nevada, the lone state with a legal sports book that preceded the federal law.
    Raymond Lesniak, a former Democratic state senator who sponsored the bill, said states should be free to wrest sports gambling back from organized crime and offshore operations. ESPN lists Delaware, Connecticut, Iowa, Mississippi, New York, Pennsylvania and West Virginia as states that are closest to legalizing sports betting.

    "There’s plenty of action to go around," Lesniak said. "We originally took on the challenge to help our ailing casinos and racetrack industry, and this is going to be a big help.”
    In the decades since the legislation was passed, opposition among the sports leagues has waned. The National Hockey League has located a team in Las Vegas, and the NFL's Oakland Raiders are due to follow. National Basketball Association commissioner Adam Silver has endorsed sports betting, and Major League Baseball has invested in fantasy leagues.
    “Today’s decision is a victory for the millions of Americans who seek to bet on sports in a safe and regulated manner," said Geoff Freeman, president of the American Gaming Association. "Today’s ruling makes it possible for states and sovereign tribal nations to give Americans what they want: an open, transparent, and responsible market for sports betting."

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  • #2
    Why New Jersey Won Its Supreme Court Battle to Legalize Sports Betting

    By Michael McCann May 14, 2018

    If you bet on the U.S. Supreme Court ruling to make sports betting legal, it is time to collect.
    The Supreme Court on Monday issued a historic decision in Murphy v. NCAA that will reshape professional sports in America. The critical takeaway: Each of the 50 states is now empowered to decide whether it will allow sports betting. The nine justices were hardly in agreement, as two of them dissented in full and another in part. But like in betting, there can only be one winner—and that winner is that states can legalize sports betting.
    The buildup to a historic decision

    Writing for the majority, Justice Samuel Alito concluded that the provision of the federal Professional and Amateur Sports Protection Act of 1992 (PASPA) prohibiting states from authorizing sports betting is unconstitutional. PASPA is commonly regarded as a federal ban on sports betting.

    Since President George H.W. Bush signed it into law, PASPA has incited debate. Until Monday’s decision, the law had prohibited 46 states from licensing, sponsoring or authorizing sports betting. Advocates of PASPA have long insisted that it diminished opportunities for criminal and unethical figures to influence sports. In the absence of a ban on sports betting, players, coaches and referees are theoretically more susceptible to being “bought off” to throw games or engage in less-obvious attempts to alter scores. In either situation, the integrity of competition is damaged.
    There has been no shortage of integrity-damaging payoffs in American sports. For instance, there was the Black Sox scandal of 1919, Boston College basketball players point-shaving in 1979 and BC football players betting against their own team in 1996, Cincinnati Reds manager Pete Rose betting on baseball in the late 1980s, and NBA referee Tim Donaghy collaborating with the mafia to influence scores. While some of those schemes occurred after the federal sports betting ban went into effect, PASPA supporters insist that the law made sports corruption less likely to occur. Along those lines, betting on sports is structurally different from less controversial forms of wagering. The odds of someone being “bought off” to influence the outcome of lotteries, slot machines or poker games are much lower.

    PASPA contains an important—and contentious—grandfathering clause: Nevada, Delaware, Oregon and Montana are exempt because they had already adopted sports betting practices by 1992. In other words, PASPA was not designed to halt existing sports betting practices but rather to prevent new ones. Nevada, of course, gained the most from this exemption: Las Vegas is the country’s undisputed leader in sports betting.
    The legal controversy that gave the Supreme Court an opportunity to review PASPA was brought about by former New Jersey governor Chris Christie. In January 2012, Christie signed the Sports Wagering Act into New Jersey law. New Jersey Senators Raymond Lesniak and Jeff Van Drew had co-sponsored the act, which authorized New Jersey racetracks, casinos and gambling houses to offer sports wagering and received 64% of the vote in a statewide referendum. In its current form, the act contains a number of restrictions designed to minimize controversy, such as an age requirement of 21 and a prohibition on bets related to certain types of games, including college games played in New Jersey and games played by New Jersey colleges and universities. Advocates of the act have argued that it is carefully designed to minimize social concerns and would bring millions of dollars to the state.

    Until Monday, there had been a major problem with New Jersey’s Sports Wagering Act: It violated PASPA, which prevented it from taking effect. The core legal question, therefore, was whether federal law trumped state law in the context of sports betting. Stated differently, should the federal government or states’ governments decide whether sports betting ought to be lawful?
    The major professional sports leagues, along with the NCAA, all argued that federal law is supreme. They took this contention to court in 2012 and sued New Jersey. The leagues and NCAA maintained that New Jersey’s act is unlawful since it violates federal law. A year later, the U.S. Department of Justice under President Barack Obama joined the leagues in the lawsuit. The DOJ has remained part of the case under President Donald Trump.

    The leagues and the Justice Department had beaten New Jersey at every round. They won before the U.S. District Court for the District of New Jersey and then won again before the U.S. Court of Appeals for the Third Circuit. But the Supreme Court is the proverbial “ace in the hole”—it trumps everything before it.
    Why New Jersey won

    The takeaway from Monday’s ruling is that each of the 50 states can now license sports betting. However, the legal question considered by the Supreme Court was not so straightforward. New Jersey first highlighted that PASPA compels New Jersey to do what it doesn’t want to do: deny sports betting under New Jersey law. From this lens, New Jersey has insisted PASPA makes the state act against its own self-interest.

    To link such a contention to legal doctrine, New Jersey maintained that PASPA was incompatible with the so-called “anticommandeering” doctrine. This doctrine derives constitutional support from the Tenth Amendment to the U.S. Constitution and, in a general sense, precludes Congress from ordering states to adopt a specific regulatory scheme when the federal government itself has not adopted a relevant scheme. PASPA fits within at least part of that argument: It doesn’t create a federal standard for sports betting, but it blocks 46 states from doing so under their own laws.
    The more divisive question is whether PASPA goes further to “commandeer” New Jersey to adopt a particular scheme. The leagues and the Justice Department argued PASPA doesn’t commandeer New Jersey to adopt any scheme. From their vantage point, it merely stops New Jersey from legalizing sports betting. New Jersey disagreed, stressing that when the federal government prevents a state from pursuing a policy it wishes to pursue, the federal government has engaged in a form of commandeering. Much of the debate therefore centered on the appropriate meaning of “commandeering” in the context of constitutional law, and whether it requires forcing a state to take action or whether it also includes preventing a state from taking action.

    New Jersey’s commandeering argument clearly resonated with Justice Alito, who noted “PASPA’s provision prohibiting state ‘licens[ing]’ of sports gambling schemes violates the anticommandeering rule. It issues a direct order to the state legislature . . . [and] unequivocally dictates what a state legislature may and may not do.”
    To bolster this conclusion, Alito observes that “conspicuously absent from the list of powers given to Congress” in the U.S. Constitution “is the power to issue direct orders to the governments of the States.” To that end, Alito reasons that the leagues and Justice Department seem to have forgotten a common-sense understanding of the lay of the land when PASPA became law in the early ’90s. “At that time,” Alito writes, “sports gambling was generally prohibited by state law, and therefore a state’s political subdivisions were powerless to legalize the activity.” Alito then asks, “What if a state enacted a law enabling, but not requiring, one or more of its subdivisions to decide whether to authorize sports gambling? Such a state law would not itself authorize sports gambling.” A federal mandate like PASPA, then, would supersede the state’s sovereignty on the issue of sports gambling.

    As a secondary argument, New Jersey underlined the apparent unfairness of the federal government treating Nevada more favorably than 46 states. In that regard, PASPA is an unusual federal law. Federal laws normally treat the 50 states equally. Not so with PASPA, which grandfathered out the four states that had already adopted sports betting systems.
    This secondary legal argument connects to an American legal principle. Although not expressly stated in the Constitution, judges over the years have endorsed the so-called “equal sovereignty doctrine.” This doctrine simply instructs that the federal government can’t provide preferential treatment to certain states when states are owed equal treatment from the federal government. Of benefit to New Jersey, one of the judges who has long advocated for the equal sovereignty doctrine is Supreme Court Chief Justice John Roberts.

    For their part, the leagues, NCAA and Justice Department insisted the anticommandeering principle was inapplicable to New Jersey’s case. No state, they argued, was treated differently under PASPA. The only difference stemmed from the fact that PASPA exempts states that had already licensed sports betting practices prior to PASPA becoming law. While only four states fit that definition, the other 46 states had every opportunity to join them before PASPA became law. They choose not to.
    The leagues, NCAA and the Justice Department also stressed that the Constitution clearly gives the federal government the power to relate economic activities that impact multiple states. The Constitution’s “Commerce Clause” is often interpreted to prevent states from regulating a particular economic practice—in this case the licensing of sports betting—when the impact of that practice crosses state lines. Although a person placing a sport bet in a casino does so in one state, other states are likely implicated by that activity: the bettor may have travelled across state lines to place the bet; the bettor may have paid for the bet using a bank account located in a different state; they bettor might take any winnings and use them to travel to another state; the teams involved in the bet may play in other states or travel to other states—the list of “interstate” possibilities could go on and on.

    Justice Alito seemed both persuaded by the equal sovereignty argument and unconvinced by the interstate commerce reasoning. He bluntly compares to PASPA to scenario where “federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals.” In Alito’s view, “A more direct affront to state sovereignty is not easy to imagine.”
    Michael McCann, is SI’s legal analyst. He is also the Associate Dean for Academic Affairs at the University of New Hampshire School of Law and co-author with Ed O'Bannon of the new book Court Justice: The Inside Story of My Battle Against the NCAA.

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