The Supreme Court is going to do something related to PASPA, but what?

Hartley takes an in-depth look at what may happen at a December 4th hearing by the Supreme Court that could affect sports gambling in the U.S.

The Supreme Court will hear New Jersey's appeal of PASPA on Dec. 4

In one week, the Supreme Court of the United States (SCOTUS) will hear New Jersey's appeal of PASPA and determine if the 1992 law is constitutional or whether it should be repealed. For the longest time New Jersey's argument was that the Professional and Amateur SPorts Protections Act (PASPA) was unconstitutional because it permitted sports betting in four states, while prohibiting it in 46 others, and thus violates the commerce clause. But, that argument was struck down by the appeals court, which stated that there is no requirement for states to be treated equally. Now, however, it is clear that New Jersey instead will argue that the law as it is written handcuffs states from passing gambling rules on sports betting that are best for themselves because the decision by the appeals court demands either a full repeal of penalties or full enforcement.

New Jersey residents voted by a 2/3 margin in favor of allowing sports betting at casinos and race tracks to help bolster revenues, but the circuit court prohibited the state's plan to legalize sports betting only at racetracks and casinos saying that PASPA did not give the state authorization to do so. Two judges in that appeal dissented and one of those judges, Thomas Vanaskie stated "PASPA cannot survive constitutional scrutiny because it was intended to compel states to prohibit wagering on sporting events." In better words, the states have authority under the Tenth Amendment to pass their own laws, but the language of PASPA makes it impossible for New Jersey to do so, because as a federal law New Jersey cannot regulate sports betting in the state and act in their own self-interest.

There's no question that SCOTUS is going to do something related to PASPA in 2018 but the question is what?

Supreme Court sports betting PASPAWhen SCOTUS agreed to hear New Jersey's appeal it stunned almost everyone in the gambling industry, since analysts almost unanimously believed the court would simply affirm the decision of lower courts stating that New Jersey's arguments for the repeal of PASPA were without merit. But the court instead asked for this case, despite the acting Solicitor General before Jeff Sessions urging them not to hear the case. So, the Supreme Court clearly has some issues with the law and the only question is whether they think it's unconstitutional and want to strike it down or whether they have issues with sports betting as a whole and want to get rid of the provision that grandfathered in Nevada, Delaware, Montana and Oregon and instead make sports betting illegal throughout the U.S. And the last option seems a real possibility since the Republicans are generally viewed as bible thumping, evangelical sympathizing party that has held up the advancement of gambling in the United States for at least three decades and the Republicans have the majority of judges of the Supreme Court.

It was the likes of Republicans John Kyl, Bill Frist and George W. Bush that were responsible for the passage of the UIGEA and pretty much all anti-gambling legislation. In addition, Sheldon Adelson's RAWA has been introduced and sponsored by Republicans. And really the only thing that has changed in the last year was the announcement of a new Republican Supreme Court justice. So, the announcement of Neil Gorsuch as the replacement of Antonio Scalia on the Supreme Court bench should have only strengthened the Supreme Court's resolve to prevent gambling expansion. Or did it?

I spoke to many analysts who have told me that comparing Gorsuch to Scalia is like comparing Bush to Trump. While both are technically Republican they couldn't be more different in their viewpoints when it comes to religious tolerance and personal choice. While Scalia was a cheerleader for the Christian right and believed everyone should aspire to the rules of the church, Gorsuch has a much broader view on freedom of religion and has promoted religious tolerance. They also said that Gorsuch is far more Libertarian than Scalia was. In fact, many believe Scalia was a major reason SCOTUS never even considered hearing the first argument by New Jersey on sports betting because they knew that it couldn't pass, as Scalia had great influence and both he and Clarence Thomas would pressure the other Republican judges to vote with the party line in support of evangelical doctrines. Gorsuch, however, will not be intimidated.

"There is no reason that four states should have more power to get themselves exempt . . ."

Along with the change in judges, the whole new administration is less fundamental thanks to a leader who is a conservative but not a neo-conservative. Don't forget Trump told off the Pope, has had run ins with many religious leaders and it is abundantly clear that his mandate is America first, looking for a legacy of creating new jobs, instituting tax cuts and building the economy. And he has stated in the past that he believes the anti-gambling stance in the country has been holding America back. When it comes to concerns about morality and preventing addicts from harming themselves it's very likely that Trump, as well as his closest advisors, could care less. What is truly important to them is whether changing the law could help build the economy.

I spoke to one industry insider who was convinced that the main reason the Supreme Court asked to hear this case is that they simply believe it should never have passed in the first place, as it was done so without a hearing and without any real justification. The bill was introduced by Senator Bill Bradley, a Democrat, in 1992 to appease the NCAA and NBA and many analysts suggest it was Bill Bradley's celebrity that helped pass the bill. During the debate on the bill Bradley stated:

"Where sports gambling occurs, I think fans cannot help but wonder if a missed free throw or a dropped fly ball or a missed extra point was part of a player's scheme to fix the game."

Every Senator except one voted for PASPA. Charles Grassley argued that the bill was a complete affront to federalism and the reasoning for the passing of PASPA was disingenuous.

"I cannot recall where we have legislated pre-emption on a piecemeal or patchwork basis, and that is what we are about to do here," Grassley said. "There is no reason that four states should have more power to get themselves exempt from this bill's provisions."

Grassley also suggested that if the Senate was really that concerned about game fixing then they should have removed the exemption for Nevada as well. It should be noted that the Department of Justice (DoJ) at the time also said they were concerned about the bill because they believed it was unconstitutional, as it gave favoritism to Nevada.

For that exact reason there is some concern that the courts may be asking to hear the case to strike down the grandfathering clause that permits sports betting in Nevada, but doing so would be met stringently by Nevada and Delaware, who rely on sports betting for much of their revenue and like New Jersey they could also consider opening it up with any regulation, i.e. the nuclear clause, that would benefit no one.

Repeal of PASPASo, it's far more likely that the courts are looking at PASPA because they think it is an affront to the 10th Amendment and want gambling laws gone from federal laws, instead passing them on to the states. Daniel Wallach wrote an article at outlining several excellent legal reasons why the Supreme Court will likely choose to repeal the law, including the Supreme Court's prior skepticism over PASPA and the ongoing argument that PASPA does not treat all states equally.

However, there are two other non-legal reasons why there's a good chance the courts may repeal PASPA. First, there is a belief that the courts are prepared to consider RAWA in the near future which would repeal the DoJ's 2011 decision and ban online gambling everywhere, and allowing sports betting could be a way to give something back to the states before taking something else away from them. And second, the main complainants for the passage of PASPA (the sports leagues) have vacillated on the issue as well. The leagues all have issued their reasons to the court why they want the law to be kept as is, although the NBA and Major League Baseball have indicated that they are prepared to back away from their opposition to sports betting, provided it is regulated federally. And it appears the NHL, and possibly the NFL, would agree to such an arrangement as well. It must be noted that sports betting is legal in almost all democratic countries around the world and in many of those countries it is regulated by their form of federal government.

Likely the NCAA would be the only league which would oppose any form of legal sports betting, although they could perhaps be enticed to support a repeal if the federal regulation of a new sports betting law includes a ban on betting on amateur sports and it is applied nationally, meaning that Nevada would lose the right to continue offering betting on college sports. The issue there of course is a concern that doing so would simply expand the amount of betting offshore or with illegal bookmakers, since Americans will continue to bet on NCAA bowl games and March Madness, whether they do so in Nevada or elsewhere. Other rules that would likely be included in federal regulation would involve rules to prevent money laundering and terrorist financing, rules relating to age restrictions and verification, rules that would ensure operators have no criminal background and rules that would help spot and report on suspicious wagering. Most of these rules already apply at the state level anyway, but the leagues simply don't want to have to deal with 30 or 40 states operating sports betting with each one having their own sets of rules. One last thing the leagues will likely demand to support sports betting is some form of compensation, although how that would work is uncertain. It's likely the courts would prefer to simply have gambling of any sort off the federal laws, but as has been seen with the Indian Gaming Regulation Act, the courts are willing to be involved at the regulation level provided the states do most of the grunt work.

New Jersey isn't alone in this fight either as 20 other states have filed an amicus brief in support of the repeal of PASPA and the American Gaming Association filed their own brief and gave concrete reasons why the law needs to go:

"Regulation of sports betting needs to be accomplished in a sensible manner that promotes, rather than thwarts, the strictures and principles of federalism. PASPA has thus had the perverse effect of pushing an enormous market underground by way of federal decree while stamping out state and local efforts to adapt their own laws pursuant to their own citizens' wishes."

The Supreme Court will hear all arguments on December 4th and will likely rule on PASPA sometime in early 2018. The fact they are hearing this case is a good sign and if they do decide to strike down the law it will be welcomed by gamblers throughout the United States. One thing is certain, however. If the Supreme Court chooses not to repeal PASPA, Americans will still wager on their favorite sports because offshore and illegal bookmakers aren't going anywhere, and, in the end, they could benefit the most by a decision to keep things status quo.

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

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