Occam’s Razor and Sports Wagering Law

T he Third Circuit’s recent decision upholding the ban on sports betting may be in violation of the Supreme Court’s decision on a similar case in 1999.

O n January 14, 2015, New Jersey Governor Chris Christie filed his most recent brief (hereinafter “Christie II”) to the Third Circuit Court of Appeals in the state’s continued attempt to offer sports wagering within their borders.[1] In New Jersey’s first attempt to offer sports gambling (hereinafter “Christie I”) at casinos and racetracks, the state argued that the Professional and Amateur Sports Protection Act (“PASPA”) violated the anti-commandeering protections of the Tenth Amendment, the equal sovereignty principles of the commerce clause, and that the plaintiff sports leagues lacked Article III standing.[2] The Third Circuit was unmoved by these arguments and ruled in favor of the quintet of sports leagues, and intervenors United States.[3] Contained within the Third Circuit’s decision was a footnote stating that “PASPA’s legislative history is clear as to the purpose behind its own exemptions…”[4] This otherwise innocuous statement may represent a material error in the Third Circuit’s reasoning, because the Supreme Court, in a unanimous decision authored by Justice Stevens, seemingly came to a different conclusion in 1999.[5]

PASPA has remained a largely obscure statute since its 1992 passage.[6] However, it has been litigated substantively three times over the past six years. The first instance featured the same sports leagues against the Governor of Delaware in 2009.[7] The suit challenged the state of Delaware’s proposed expansion of sports gambling options.[8] In the second case, Christie I, courts upheld PASPA’s constitutionality, thus preventing Governor Christie from allowing state-licensed casinos and racetracks to offer sports betting at their existing facilities.[9] The most recent case involves the sports league plaintiffs challenging New Jersey’s quasi-deregulation of sports gambling at casinos and racetracks. The pending case, Christie II, examines whether New Jersey’s effort complies with PASPA’s prohibition on state authorization of sports gambling.[10]

PASPA created several exemptions; the first allowed for states that had authorized some form of sports gambling between January 1, 1976 and August, 31, 1990 to continue operating their schemes.[11] PASPA further created a one year window that would have allowed the state of New Jersey to offer sports betting in Atlantic City, an opportunity that the state did not seize.[12] The Third Circuit highlighted New Jersey’s missed opportunity to license sports gambling in their Christie I decision.[13] The Third Circuit’s majority decision in Christie I was at least partially supported by its finding that PASPA’s exemptions had a clear legislative purpose.[14] Such finding potentially carries immense precedential value, as there are currently several states expressing interest in offering sports betting.[15]

The observation made by the Third Circuit is not uniformly shared. Justice Stevens found PASPA’s exemptions to be unclear.[16] In 1999, while authoring an opinion on the constitutionality of restrictions on gambling related advertisements, Justice Stevens wrote: “… [PASPA] also includes a variety of exemptions, some with obscured congressional purposes.”[17] Justice Stevens concluded that the exemptions make the scope of § 3702 of PASPA “somewhat unclear.”[18] But, neither the Third Circuit nor the parties addressed the only Supreme Court majority opinion that addresses PASPA. To date no party or court decision in Christie I or Christie II have made even passing reference to Justice Stevens’s comments in Greater New Orleans.

Legislative history provides further evidence that PASPA’s exemptions are problematic.[19] Senator Dennis DeConcini of Arizona, stated that he supported the exemptions for the states of Nevada, Oregon, Delaware, Montana and South Dakota.[20] Despite DeConcini’s inclusion of South Dakota in his remarks, South Dakota has not been included as one of the exempted states mentioned in any of the recent PASPA cases. Senator Charles Grassley of Iowa further expressed confusion at the exemptions, in particular asking “why the legislation exempts the billion-dollar private [Nevada] sports gambling industry.”[21] The congressional testimony surrounding PASPA detailed significant confusion regarding not only the states which were exempted, but considerable debate over multiple issues.[22] Congressman Romano Mazzoli of Kentucky may have highlighted PASPA’s bizarre attempt to reel-in state sponsored betting when he stated: “My reaction is that we’re trying to close the barn door here after it’s already been opened and a great many of the horses have escaped. I just don’t know whether we can corral those horses and put them back in the barn.”[23]

With the growth in the number of states introducing sports gambling bills in state legislatures, the likelihood of another PASPA challenge continues to grow. What remains unclear is whether any party will pick the low hanging fruit, which Justice Stevens graciously provided to the states. States looking to legalize sports gambling may be well served relying on lex parsimoniae to challenge PASPA, rather than the broad and potentially impactful constitutional principles, which New Jersey has heretofore unsuccessfully challenged. Justice Stevens’s simple explanation about PASPA’s flaw should suffice.

 

John T. Holden is a doctoral student at Florida State University. Anastasios Kaburakis is an assistant professor at Saint Louis University. Ryan M. Rodenberg is an assistant professor at Florida State University.

 

[1] See Brief for Appellants Christopher J. Christie, David L. Rebuck, & Frank Zanzuccki, Nat’l Collegiate Athletic Ass’n et al. v. Christie et al., 14-4546 (3rd Cir. Filed Jan. 14, 2015).

[2] See Brief for Appellants Christopher J. Christie, David L. Rebuck, & Frank Zanzuccki, Nat’l Collegiate Athletic Ass’n et al. v. Christie et al., 730 F.3d 208 (3rd Cir. 2013, Filed Apr. 29, 2013). The sports league Plaintiffs included: the National Collegiate Athletic Association (“NCAA”), Major League Baseball (“MLB”), the National Football League (“NFL”), the National Basketball Association (“NBA”), and the National Hockey League (“NHL”).

[3] See Nat’l Collegiate Athletic Ass’n v. Gov. of NJ, 730 F.3d 208 (3rd Cir. 2013).

[4] Id. at n.18.

[5] See Greater New Orleans Broadcasting Ass’n., Inc. v. United States, 527 U.S. 173, 179-180 (1999).

[6] 28 U.S.C. §§ 3701-3704 (2012).

[7] See Office of Comm’r of Baseball v. Markell, C.A. 09-538-(GMS) (D. Del. 2009); See also Office of Comm’r of Baseball v. Markell, 579 F.3d 293, 295 (3d Cir. 2009).

[8] Id. The Third Circuit determined that Delaware could not expand a sports wagering scheme beyond the confines within which sports wagering had been available at the point of PASPA’s adoption.

[9] See NCAA v. Governor of N.J., 730 F.3d 208 (3d Cir. 2013), cert. denied, 134 S. Ct. 2866 (U.S. June 23, 2014); NCAA v. Christie, 926 F. Supp. 2d 551 (D.N.J. 2013).

[10] See Nat’l Collegiate Athletic Ass’n v. Christie, Nos. 3:12-cv-04947 (MAS) (LHG), 3:14-cv-14-06450 (MAS)(LHG) (D.N.J. 2014). New Jersey’s latest attempt at offering sports gambling is based in part on arguments advanced during the first iteration of litigation. See also Anastasios Kaburakis, Ryan M. Rodenberg & John T. Holden, Inevitable: Sports Gambling, State Regulation, and the Pursuit of Revenue, 5 Harv. Bus. L. Rev. Online 27 (2015).

[11] See 28 U.S.C. §3704(a)(1) (2012). This exemption provided for the states of Nevada, Oregon, Delaware and Montana to continue operating respectively varying forms of sports gambling. See John T. Holden, Anastasios Kaburakis & Ryan M. Rodenberg, Sports Gambling Regulation and Your Grandfather (Clause), 26 Stan. L. & Pol’y Rev. Online 1 (2014).

[12] See 28 U.S.C. §3704(a)(3). This exception contained a provision, which would have allowed New Jersey to pass legislation within a year of PASPA’s effective date and thus regulate sports gambling. Such legislation was not adopted until 20 years elapsed, initiating Christie I. The rationale behind this exemption may shed light into Justice Stevens’s concern: Congressman Robert Torricelli of New Jersey expressed concern to his fellow congressmen that PASPA posed a grave threat to Atlantic City’s Casinos, which in his view needed the projected revenue by sports betting to survive. Torricelli proposed an exemption for the state from PASPA’s grasp, the result of which was the curious one-year exemption. See Professional and Amateur Sports Protection Act: Hearing on H.R. 74 Before the Subcomm. on Econ. and Commercial Law of the H. Comm. on the Judiciary, 102d Cong. 74 (1991). (Statement of Robert Torricelli.) During that one-year window, Atlantic City casinos and the state’s gambling industry actors were unsuccessful convincing the legislature to bring a proposed state constitutional amendment to New Jersey voters in a referendum that would have allowed casino betting on sports; such a referendum took place 18 years later, in November 2011, with 64% of the state’s voters siding with legislation allowing sport betting in the state. See Larry Josephson, Righting a Wrong: A History in New Jersey Sports Betting, http://www.covers.com/articles/columns/articles.aspx?theArt=251825.

[13] See Gov. of N.J. supra n.9 at 216.

[14] See Gov. of N.J. supra n.9 at n.18.

[15] Indiana introduced a sports betting bill on January 6, 2015. See In. House Bill No. 1073 (2015); The state of New York introduced a sports betting bill on January 7, 2015. See N.Y. Bill No. S00940 (2015); South Carolina introduced a joint resolution on sports betting on January 13, 2015. See S.C. Bill No. H-3127 (2015).

[16] See Greater New Orleans Broadcasting Ass’n., Inc. supra n.5.

[17] Id. at 179-180.

[18] Id. at 180.

[19] See Prohibiting State-Sanctioned Sports Gambling: Hearing on S. 473 and S. 474 Before the Subcomm. on Patents, Copyrights & Trademarks of the S. Comm. on the Judiciary, 102d Cong. 1 (1991); Professional and Amateur Sports Protection Act: Hearing on H.R. 74 Before the Subcomm. on Econ. and Commercial Law of the H. Comm. on the Judiciary, 102d Cong. 74 (1991).

[20] See Prohibiting State-Sanctioned Sports Gambling: Hearing on S. 473 and S. 474 Before the Subcomm. on Patents, Copyrights & Trademarks of the S. Comm. on the Judiciary, 102d Cong. 1 (1991) (opening statement of Dennis DeConcini, Chairman S. Comm. on Patents, Copyrights & Trademarks).

[21] See Prohibiting State-Sanctioned Sports Gambling: Hearing on S. 473 and S. 474 Before the Subcomm. on Patents, Copyrights & Trademarks of the S. Comm. on the Judiciary, 102d Cong. 1 (1991) (Statement of Senator Charles E. Grassley). Senator Grassley also posited in his statement that only 3 states were exempted: Nevada, Oregon and Delaware, in his comments he requested that Iowa also be exempt from PASPA’s scope, but made no mention of Montana.

[22] See generally supra n.19.

[23] See Professional and Amateur Sports Protection Act: Hearing on H.R. 74 Before the Subcomm. on Econ. and Commercial Law of the H. Comm. on the Judiciary, 102d Cong. 74 (1991). (Statement of Romano Mazzoli, Representative from Ky.)

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