Appeals Court Hears Argument on N.J. Sports Betting Law, With Uncertain Outcome

Very lively oral arguments were held today, June 26, in the U.S. Court of Appeals for the Third Circuit on the New Jersey sports betting law, in a case that will have an enormous impact on the future of sports betting in the United States.

At issue in the case is the federal Professional and Amateur Sports Protection Act of 1992 (PASPA), which prohibits any state from offering sports betting unless that state had a sports betting scheme in place between 1976 and 1990. Last year, New Jersey Governor Chris Christie signed into law a bill authorizing single-game sports betting in the state. In August, the four major professional sports leagues and the National Collegiate Athletic Association (NCAA) filed suit arguing that the state’s sports gambling law was in violation of federal law.

In December 2012, Judge Michael Shipp of the U.S. District Court for the District of New Jersey held oral arguments to determine whether the sports leagues had standing to bring the lawsuit and determined that they did have standing. The U.S. Department of Justice (DOJ) later intervened in the case to defend the constitutionality of the statute. Oral arguments were held in February, and Judge Shipp held that the New Jersey law was invalid as conflicting with PASPA, which he found to be a valid exercise of congressional power. In March, New Jersey filed an appeal with the Third Circuit, appealing both the standing and constitutionality rulings.

Today in the Third Circuit, the judges dictated the path that the oral arguments took for both sides. Ted Olson, a former United States Solicitor General arguing on behalf of New Jersey, began the arguments by stating that PASPA is “plainly unconstitutional.” Olson also argued that the sports leagues did not have standing to bring the lawsuit because they did not meet the Article III requirement that they actually suffered harm from the New Jersey wagering law.

On the issue of anti-commandeering, which could be crucial to the court’s decision on the constitutionality of PASPA, the judges peppered Olson with questions regarding precedent on the issue and whether “commandeering” is limited to instances in which the federal government forces a state to take affirmative steps. There seemed to be some skepticism from the judges that PASPA should be considered an instance of commandeering because New Jersey did not have to do anything to comply with the statute. Olson argued that PASPA is a federal initiative and the responsibility for enforcing it is on the states, thus making this an instance of commandeering.

The issue of state sovereignty was not an issue that New Jersey focused on in the district court or in their briefs in the Third Circuit, but today Olson focused more on the issue by citing Supreme Court decisions that were issued yesterday and today, arguing that those cases support the position that PASPA is a violation of state sovereignty. Olson took contention with the argument made by their opponents in the briefs that the issue of state sovereignty only applies to states that are newly admitted to the Union.

Paul Clement, also a former United States Solicitor General, argued for the sports leagues. He pointed to the Third Circuit’s previous decision in Office of the Commissioner of Baseball v. Markell, a case that he conceded did not directly address standing, to support his position that the leagues have standing in the case. Clement also pointed to other cases, such as copyright cases, that show that the leagues are entitled to protect their product, and in sports wagering, it is their product, the games, that is at issue.

Clement was questioned about the recent Supreme Court decisions and was asked why PASPA was not a violation of state sovereignty. Clement attempted to distinguish the cases by arguing that they did not apply to PASPA because it was passed under the Commerce Clause, which affords the federal government broad powers to regulate interstate commerce. The U.S. Attorney for the District of New Jersey, Paul Fishman, argued on behalf of the federal government and agreed with Clement’s stance that PASPA is distinguishable from those cases.

There is no definitive timetable for a decision in the case, but it may take several months before an opinion is issued. Regardless of the decision reached by the Third Circuit, the losing party will have the option of seeking a rehearing en banc in that court or filing for a writ of certiorari to the United States Supreme Court. However, both these steps are subject to court discretion.

The ruling from the Third Circuit in this case will have far-reaching implications. A decision in New Jersey’s favor would remove the primary hurdle preventing states from offering sports betting within their borders. The panel today left no clear impression about which way they are leaning in their decision. and ultimately it may take a Supreme Court ruling before there is a definitive answer on PASPA.