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The Billion Dollar Issue in the NJ Sports Betting Case is Commandeering

February 10th, 2013 3 comments

The last time I wrote about sports betting and New Jersey was last May, and I said the following:

Late last week, New Jersey Governor Chris Christie announced his State will proceed to take the steps necessary to offer sports betting at Atlantic City casinos and the State’s four horse tracks.

New Jersey is far ahead of New York in the process, as Governor Christie signed a bill into law in January 2012 that authorizes professional sports wagering in NJ. New Jersey will likely encounter in the near future efforts by federal authorities challenging such legislation on the basis of the Supremacy Clause. NJ will argue PASPA is unconstitutional.

My prediction held true, sort of.

Last August, the NCAA and the four major professional sports leagues filed suit against NJ Governor Christie, et al., in an effort to prevent the expansion of legalized sports betting in the United States.

Then in December, U.S. District Court Judge Michael Shipp held that the leagues have legal standing to sue NJ over the State’s sports betting law.

About a month later, the U.S. Department of Justice filed papers to intervene as a co-plaintiff in the case and defend the constitutionality of the Professional and Amateur Sports Protection Act of 1992.

Since then, the parties exchanged and filed legal briefs outlining their positions, ahead of this Thursday’s oral argument on the merits before Judge Shipp in federal court in Trenton, NJ.

What will the parties focus on during oral argument?

The leagues and the DOJ will argue that PASPA is constitutional and thus NJ’s sports betting law violates PASPA. NJ, in turn will argue that PASPA is unconstitutional under any of three theories, as articulated in New Jersey’s brief filed on Friday:

  1. PASPA Impermissibly Commandeers The Legislative Authority Of The States
  2. PASPA’s Lack of Uniformity Exceeds Congress’s Commerce Clause Power by Depriving States of Equal Sovereignty
  3. PASPA Violates Due Process and Equal Protection Rights

I find theory #1 the most compelling argument of the three. It’s clear NJ feels the same, as the substantial majority of its brief focuses on the commandeering issue.

What is commandeering? The 10th Amendment to the U.S. Constitution:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

The U.S. Supreme Court has struck down federal laws as unconstitutional for violating the 10th Amendment only a handful of times. The basis for the findings was that the federal statutes in question commandeered the states to enforce them.

The issue narrows to, again: What is commandeering?

Unsurprisingly, the parties fiercely disagree on the answer to this question.

Does the 10th Amendment merely prohibit federal statutes that compel the states to take some affirmative action, as the DOJ argues? Or, as NJ argues, does it also extend to federal statutes that do not necessarily compel the states to do anything, but instead prevent them from taking some action?

In this case, that’s the billion dollar question.

NJ may have a tougher time prevailing on the issue merely because there is no Supreme Court case on point factually to support its interpretation of the 10th Amendment’s reach. But, the 10th Amendment cases decided by the Supreme Court are not even roughly analogous to this case, so that is the opening NJ is seeking to exploit.

In its brief, NJ comes out firing in the opening two paragraphs. Citing New York v. United States, the State emphasizes that under the Constitution, Congress lacks the power directly to compel the States to require or prohibit certain acts pursuant to a federal statute. And of course, argues the State, PASPA prohibits States from offering sports betting.

The entire brief is a worthy read, as the State picks apart the 10th Amendment characterizations presented by the leagues and the DOJ. In short, the State takes the position that the anti-commandeering doctrine has been applied to federal statutes that command the States to maintain a certain state of affairs.

There’s some great additional commentary on the commandeering issue in this Pokerati post and its comments.

No matter how Judge Shipp rules in this case, an eventual appeal to the U.S. Supreme Court seems inevitable. There’s simply too many dollars at stake for either the leagues or New Jersey to back down until the Supreme Court says to do so.

Feds Seek Forfeiture in Billion Dollar Gambling Ring Case

July 2nd, 2012 No comments

According to a story from NBC 5 Dallas-Fort Worth, federal authorities have uncovered an illegal sports gambling ring located in North Texas that took in over $1 billion in revenue from September 2009 to September 2010.

No indictments have been unsealed. Expect that to change, however. In forfeiture papers filed in court, approximately 22 individuals were involved in the operation, which used offshore sites and a toll-free phone line. The line apparently received 20,000 calls per month.

The IRS seized cash, automobiles, jewelry, and sports memorabilia, among other things. Claims have been filed by those seeking return of the items.

Stories such as these add substance to those seeking an expansion of legalized sports betting in the United States. Earlier today, for example, New Jersey released its draft of sports betting regulations.

A showdown in court over the federal ban on sports betting seems imminent.

Sports Betting Bill Introduced in New York

May 29th, 2012 No comments

Last week, the New York Post reported Sen. Tony Avella introduced a bill that would authorize wagering on professional sporting events in New York. Proceeds would be applied to education in the State.

This news isn’t surprising, considering last March Governor Cuomo reached an agreement with lawmakers to allow seven new casinos in the state.

For either new casinos or sports betting to have a chance to come to New York, a constitutional amendment is required.

To amend the New York Constitution, the proposed amendment must be adopted by two successive legislatures, and then approved by a public referendum. The current legislative session in New York has until June 21 to approve the measures.

The sports betting bill introduced by Avella, S.7401, would authorize

wagering on professional sporting events at betting facilities located at thoroughbred and harness racetracks operating in this state, in simulcast theaters operated by off-track betting corporations and in any constitutionally authorized casino facility, as may be prescribed by the legislature….

Under the current language of the bill, you could place bets on professional sporting events at any of New York’s five tribal casinos or nine racinos, as well as at any other NY racetracks or OTBs. And, if commercial casinos are approved in New York, then you could place bets there as well.

Wait, but isn’t sports betting illegal under federal law? In general, that is correct.

The Professional and Amateur Sports Protection Act (“PASPA”) is a federal statute enacted in 1992 that expressly prohibits states from operating a gambling system based on professional or college sports. Four states were exempted: Delaware, Montana, Oregon, and Nevada.

So how does S.7401 get around PASPA? Well, one day NYers might thank NJ for taking care of it.

Late last week, New Jersey Governor Chris Christie announced his State will proceed to take the steps necessary to offer sports betting at Atlantic City casinos and the State’s four horse tracks.

New Jersey is far ahead of New York in the process, as Governor Christie signed a bill into law in January 2012 that authorizes professional sports wagering in NJ. New Jersey will likely encounter in the near future efforts by federal authorities challenging such legislation on the basis of the Supremacy Clause. NJ will argue PASPA is unconstitutional.

Christie’s comments all but ensure an imminent showdown:

“We intend to go forward,” the Republican governor said. “If someone wants to stop us, then let them try to stop us. We want to work with the casinos and horse racing industry to get it implemented.

“Am I expecting there may be legal action taken against us to try to prevent it? Yes,” the governor said. “But I have every confidence we’re going to be successful.”

Christie has a reputation of actually doing what he says he’ll do. This is already a great story, and the best is likely yet to come. I’ll address the merits of the legal arguments in a future post.

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