Showing posts with label MLB. Show all posts
Showing posts with label MLB. Show all posts

Wednesday, September 18, 2013

Appeals Court Ruling Against New Jersey Shows Path To Sports Betting

The United States Court of Appeals for the Third Circuit yesterday ruled against New Jersey in its attempt to implement sports betting by a 2-1 decision.  The case is now clear for New Jersey to appeal to the US Supreme Court.  Although a defeat at this stage, New Jersey can actually see very good news.  For the first time, a judge did side with New Jersey and against the US and the sports leagues.  The dissenting judge put forward a very well reasoned dissent that picked apart the majority opinion and showed in detail how PASPA was unconstitutional.

New Jersey does have the option of asking for the full Third Circuit to hear the case.  The information I received is that it doesn't do much for New Jersey to do that.  The first thing is that the full court could side with the majority, which doesn't help.  The second thing is that the loser is going to go to the US Supreme Court anyway, so why not go there now and save time and money?  That appears to be the path New Jersey will take.

The opponents of sports betting will take this as a great victory - not so fast.  From the majority opinion, this sentiment I found interesting:
We are cognizant that certain questions related to this case—whether gambling on sporting events is harmful to the games’ integrity and whether states should be permitted to license and profit from the activity—engender strong views. But we are not asked to judge the wisdom of PASPA or of New Jersey’s law, or of the desirability of the activities they seek to regulate. We speak only to the legality of these measures as a matter of constitutional law. Although this “case is made difficult by [Appellants’] strong arguments” in support of New Jersey’s law as a policy matter, see Gonzales v. Raich, 545 U.S. 1, 9 (2005), our duty is to “say what the law is,” Marbury v. Madison, 1 Cranch 137, 177 (1803). “If two laws conflict with each other, the courts must decide on the operation of each.” Id. New Jersey’s sports wagering law conflicts with PASPA and, under our Constitution, must yield. We will affirm the District Court’s judgment.
So they pretty much put blinders on and crafted an affirming opinion based on a subset of the issues.  The court also just used the "rational basis" test and took only a cursory look at PASPA to find anything to say that PASPA was a regulation of interstate commerce, as opposed to Congress using a state as a puppet, which isn't allowed.  In other words, if Congress wanted to outlaw the sale of beef jerky, Congress can do that directly, but they cannot tell the states to pass laws to prohibit beef jerky or keep them from passing laws allowing beef jerky, while declining to do so themselves.  In the case of PASPA, they allow some states to have sports betting, but not others, which is even more strange.  They later in the opinion stated a very odd way of how a state could comply with PASPA:
Thus, under PASPA, on the one hand, a state may repeal its sports wagering ban, a move that will result in the expenditure of no resources or effort by any official. On the other hand, a state may choose to keep a complete ban on sports gambling, but it is left up to each state to decide how much of a law enforcement priority it wants to make of sports gambling, or what the exact contours of the prohibition will be.
We agree that these are not easy choices. And it is perhaps true (although there is no textual or other support for the idea) that Congress may have suspected that most states would choose to keep an actual prohibition on sports gambling on the books, rather than permit that activity to go on unregulated. But the fact that Congress gave the states a hard or tempting choice does not mean that they were given no choice at all, or that the choices are otherwise unconstitutional. See United States v. Martinez-Salazar, 528 U.S. 304, 315 (2000) (“A hard choice is not the same as no choice.”); see also F.E.R.C., 456 U.S. at 766 (upholding a choice between expending state resources to consider federal standards or abandoning field to federal regulation).
What does this mean?  The court is saying that New Jersey does not run afoul of PASPA if they ban sports betting or they totally deregulate sports betting.  So, in theory, New Jersey could simply allow sports betting with no regulation or oversight whatsoever and the US Government, sports leagues and NCAA couldn't do a thing about it.  That logic is insane and was properly called out in the dissenting opinion.

The opening of the dissent is well written and sums up what I believe the essence of New Jersey's appeal to the US Supreme Court will be:
I agree with my colleagues that the Leagues have standing to challenge New Jersey’s Sports Wagering Law, N.J. Stat. Ann. § 5:12A-2, and that the Professional and Amateur Sports Protection Act (“PASPA”), 28 U.S.C. § 3702, does not violate the principle of “equal sovereignty.” I therefore join parts III and IV.C of the majority’s decision in full. I also agree that, ordinarily, Congress has the authority to regulate gambling pursuant to the Commerce Clause, and thus I join part IV.A of the majority opinion as well. Yet, PASPA is no ordinary federal statute that directly regulates interstate commerce or activities substantially affecting such commerce. Instead, PASPA prohibits states from authorizing sports gambling and thereby directs how states must treat such activity. Indeed, according to my colleagues, PASPA essentially gives the states the choice of allowing totally unregulated betting on sporting events or prohibiting all such gambling. Because this congressional directive violates the principles of federalism as articulated by the Supreme Court in United States v. New York, 505 U.S. 142 (1992), and Printz v. United States, 521 U.S. 898 (1997), I respectfully dissent from that part of the majority’s opinion that upholds PASPA as a constitutional exercise of congressional authority.
This case isn't over and it is my view that the Supreme Court will take it up.  How it turns out is a matter of debate, but my view is that New Jersey should prevail.  It should be noted that a recent statistic indicated that 60% of the rulings from the Third Circuit Court of Appeals are reversed by the Supreme Court.  I think yesterday's ruling overall wasn't too bad at all for New Jersey and those wanting expanded legal sports betting in the USA.

Sunday, March 10, 2013

New Jersey Sports Betting Loses in District Court

Although not totally unexpected, a Federal judge ruled against the State of New Jersey with regard to its challenge to the constitutionality of the Professional and Amateur Sports Protection Act (PASPA).  So, with this ruling, New Jersey can not proceed with implementing sports betting.  As it stands, sports betting is still allowed in just four states:  Nevada, Delaware, Oregon and Montana.

Don't expect New Jersey to quit - an appeal to the US Court of Appeals for the Third Circuit is almost a given.  Whoever loses there will almost certainly appeal to the US Supreme Court.  This is a multi-round fight, but the first round goes to the NCAA and sports leagues.

Read more about this issue here.

Saturday, July 25, 2009

MLB, NFL, NBA, NHL and NCAA Sue Delaware to Stop Sports Betting

Yesterday, the major sports leagues (MLB, NFL, NBA, NHL) and the NCAA sued Delaware in an attempt to block the state from offering single-game sports wagers, and keep Delaware limited to offering only parlay sports wagers. The USA Today article has more information on the history and quotes from the various parties as well as a link to the actual pleading.

This blog has previous posts which discuss issues with the Delaware effort, particularly the problems with the government tax structure and the parlay-only offering. Those posts can be found here and here.

The leagues can't stop Delaware from offering parlays, as even the federal law, the Professional and Amateur Sports Protection Act (PASPA), allowed Delaware as one of the four states grandfathered (the others being Nevada, Oregon and Montana) to offer sports betting. Delaware, having offered parlays before, can resume that game whenever they wish. Offering single-game betting is being viewed as an expansion of previously offerings.

From the lawsuit, the leagues claim single-game sports betting in Delaware "would irreparably harm professional and amateur sports by fostering suspicion and skepticism that individual plays and final scores of games may have been influenced by factors other than honest athletic competition." OK...but Nevada's been doing this since like...the 1940s. If any harm would have occurred, wouldn't it have occurred by now?

Besides, the leagues know gambling is an important component to their games' popularity. Why are point spreads published in just about every newspaper in the country, even though sports betting only happens (legally) in Nevada? Why does the NFL publish their injury reports publicly and not just send them confidentially to the various teams? Because they want information in the hands of sports bettors, both legal and illegal.

According to the federal law, the sports leagues have the authority to seek an injunction against operators of sports betting operations - those that aren't grandfathered in. Since Delaware is looking to expand, this might appear to fall outside the grandfathered area. Until now, the leagues have never tried to exercise the law. This is where the situation could get very interesting, and very dangerous for the leagues.

PASPA had some very strong arguments during its deliberation that it is unconstitutional. In essence, the argument was that you can't say 4 states can do something the other 46 can't. Also, since when does the goverment say a private entity has the authority to enforce federal law? States generally have sovereign immunity, so by and large they are immune from being sued unless they allow it. That immunity could be an easy defense. New Jersey has recently challenged the constitutionality of PASPA. A post discussing that case is here, which I recommend reading to learn more of the flaws in this law.

It is in Delaware's interest to keep PASPA in place so that Delaware would have a competitive advantage over neighboring states. It could have sports betting where the others could not. With the New Jersey suit challenging PASPA, Delaware was not likely going to join in as it would not be in its best interest. With the leagues going after Delaware, Delaware will have to fight back. If successful, it will be able to allow single-game sports betting. If unsuccessful, it will only be able to allow parlays.

Here's something very interesting. What if Delaware was too successful in its defense? What if it succeeded in throwing out PASPA? If that happened, every state could offer sports betting if it wanted and Delaware's current advantage would disappear. How Delaware responds to the lawsuit will be telling. They may use the sovereign immunity defense as well as use their constitution saying that a single-game sports bet is basically a one-game parlay. They may not challenge PASPA, or if they do, limit the challenge to the ability of private entities to enforce federal law...not challenge the law in its entirety. Delaware wants the competitive advantage. For that to be maintained, PASPA needs to stay in force.

It will be very interesting to see how this case turns out.


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