The U.S. Supreme Court may be poised to reverse PASPA

When the Republicans won the last election, many industry analysts, as well as myself, surmised that Congress could pass a sports betting bill in exchange for making online gambling illegal. Doing so would appease Sheldon Adelson who has launched a staunch campaign to get online gambling declared illegal, but also appease pro-gambling factions and states that have been pushing for legal sports betting. I received two separate emails following articles telling me that I'm crazy and the government has no intentions of legalizing sports betting, but recent events may prove that what has been suggested is indeed what is happening.

Chris Christie has indicated the state is ready to introduce sports betting in an effort to help casinos and race tracks and California put forth a constitutional amendment in its state which would legalize sports betting pending a federal law legalizing it. ACA 18 introduced by Assemblyman Adam C. Gray would put the vote for legal sports betting on the ballot, provided it receives a 2/3 approval by the State legislature. Upon introducing the amendment, Gray suggested it was time:

"Whether we like it or not, Californians are already betting on sports through illegal and often unscrupulous websites in foreign countries," Gray said. "It is time to bring this multibillion dollar industry out of the shadows."

Last week Connecticut passed a bill, H-6948 that would legalize sports betting if it is allowed federally and earlier this year Mississippi passed legislation that would allow for the introduction of sports betting in the state if it is legalized federally. That piece of legislation was part of a daily fantasy sports bill that was signed by Governor Bryant last year that would legalize daily fantasy sports in the state. Apparently, the amendment to the Mississippi Gaming Control Act allows regulators there to set rules for regulating both sports betting and DFS, provided sports betting is legalized federally.

And a couple of analysts who keep close tabs on state gambling have told me that they believe as many as 20 other states have some sort of provision ready to announce which would legalize and regulate sports betting if the federal law is overturned.

The reason for this anxiousness by states to enact measures for sports betting, which was always seen as a taboo subject, stems from an announcement last month by the Supreme Court of the United States that it was willing to hear New Jersey's arguments as to why PASPA should be repealed or amended and why the state should be allowed to introduce sports betting. That announcement ran contrary to several other decisions made earlier by courts which rejected New Jersey's appeal to hear arguments why they should not be bound by a law which they believe is unconstitutional. And most legal experts I spoke to suggested that SCOTUS wouldn't be interested in hearing the case unless they are prepared to override PASPA or at least amend it (likely to make only amateur sports betting illegal). Larry Walters, a first amendment attorney specializing in online gambling, explained why he believes New Jersey will win at the Supreme Court:

"SCOTUS hears only about one or two percent of the cases that are brought to it each year. It is very rare that the Supreme Court asks the opinion of the Solicitor General on whether it should consider a case. In this case, SCOTUS asked the U.S. Solicitor General to weigh in, but the SG's office ultimately recommended that the Supreme Court not hear the appeal. Usually the Supreme Court follows the recommendation of the SG, but in this case the Justices decided to hear the appeal despite the recommendation. So, the Court is definitely interested in clearing up the confusion caused by the underlying decisions. If it wanted to let things stand as they are now, it could have rejected the case from the beginning. Based on all circumstances leading up to this Supreme Court case, and modern interpretations of the Tenth Amendment and federalism, I believe that New Jersey is going to win the appeal. Anything less would result in a chaotic mess regarding the scope of states' rights and the division of power in our system of dual sovereignty."

While SCOTUS has given no reason as to why they are willing to hear the case now, there are suggestions that the court has been split on the issue of PASPA ever since Antonin Scalia's death early last year but Neal Gorsuch is a strict constitutionalist and was likely concerned about the fact that PASPA could violate the 10th amendment. Moreover, the reason PASPA was introduced in the first place was due to requests from the sports leagues to ban gambling on their respective sports because it could lead to game fixing, but in recent years the leagues have softened their stances. Adam Silver has indicated his support for betting on the NBA as he feels gambling is inevitable and MLB, the NHL and to a lesser degree the NFL have taken a less aggressive stance against gambling than they have previously. The leagues will indeed submit a brief as to why sports betting should remain illegal, but it appears they no longer feel this is a hill worth dying for. No doubt the league's strong support and partnerships with DFS sites have convinced them that opposing sports betting could cost them in the long run.

It's almost certain that New Jersey lawyers will argue that PASPA should never have been passed and even the DoJ at the time expressed a concern the law is unconstitutional. Their main focus will be on the fact it violates the 10th amendment and as the defunct trade group iMEGA pointed out when they first represented New Jersey when suing to make PASPA unconstitutional:

""PASPA, as it's written, is a violation of federalism and infringes on a state's rights to raise revenue. It created a special class for a small number of states and deprived other states from being able to be a part of it."

While iMEGA was shot down because they were deemed not to have standing, that concern no longer is an issue since the Supreme Court has agreed to hear the case and consequently the justices will have to wrestle with justifying a law that gives exclusive rights to 4 states to offer a product, while excluding 46 others.

Larry Walters outlined the timeline for how the case will now proceed:

"In late June, the Supreme Court agreed to hear New Jersey's appeal in the state's long-running effort to offer legalized sports gambling. The case will essentially start over, as it advances from 'cert stage' to 'merits stage.' Once the Supreme Court grants certiorari in a case, the parties are required to file a new set of briefs. Unlike the "cert stage" briefs, which focused on whether the court should review the case, the briefs on the merits address why that party should win its case. Once certiorari is granted, the petitioner generally has 45 days to file its opening brief. New Jersey's merits brief would thus be due on August 10, although the parties can always request an extension of the deadline. Such extensions do occur, but the requests are "disfavored" under the court rules. The parties would also be required to file a joint appendix by August 10. Amici curiae briefs are due one week after the New Jersey merits brief is filed. This would make August 17 the tentative deadline for amici briefs. The leagues' response brief would then be due 35 days after New Jersey files its opening merits brief. This would make it due on September 14. New Jersey would then be permitted to file a reply brief no later than 30 days after the leagues' response brief is filed (but at least seven days before the oral argument). Under this tentative schedule, the reply brief would be due on October 14.

Oral argument would likely be scheduled for the fall. The Supreme Court normally hears oral arguments between October and April, scheduling them into monthly two-week sittings during which the court hears two (although sometimes one or three) arguments per day on Monday, Tuesday and Wednesday. Generally, the Court allots one hour of argument time for each case, with each party speaking for 30 minutes. If New Jersey ends up winning the decision, sports betting could open at state racetracks and casinos by June 2018."

I also asked Walters if it's possible the Supreme Court could deem part of the law still applies (such as a ban on amateur sports) but legalize the rest, but he said that was outside the court's mandate:

"SCOTUS does not have the power to rewrite New Jersey's law, or make it applicable to only certain types of sports betting. It can only decide whether NJ's actions in repealing the sports betting prohibitions violated PASPA, and if so, whether that violation offends the constitution. Depending on the actual decision rendered by the Court, NJ could re-write its own sports betting laws. For example, if PASPA was declared facially unconstitutional and struck down, NJ (and any other state) could then attempt to implement a more nuanced licensing and regulatory regime. There are some circumstances where the Court can judicially narrow a statute, or strike portions of it. While that's theoretically possible here, I believe this will be an all or nothing decision."

So, New Jersey will finally get the only thing it asked for all along, a chance to refute the constitutionality of PASPA, and it's evident many other states want the law struck down too so that they can use sports betting as a way to bolster state coffers. Sports betting is legal and encouraged by almost every other first world country including the UK, most of Europe, Australia, New Zealand and Canada. And contrary to old concerns legal sports betting has not led to more game fixing. Let's hope this is the start to a whole gambling reform throughout the U.S.

Read insights from Hartley Henderson every week here at OSGA and check out Hartley's RUMOR MILL!