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June 11, 2013

DOJ Files Briefs in Key 3rd Circuit Case on N.J. Sports Betting Law

By: Ifrah Law

On June 7, 2013, the U.S. Department of Justice (DOJ) as well as the four major professional sports leagues and the National Collegiate Athletic Association (NCAA) filed their briefs in the U.S. Court of Appeals for the Third Circuit in a case with major implications for the future of sports betting in the United States.

Last February, U.S. District Judge Michael Shipp struck down New Jersey’s new sports betting law, finding it invalid as conflicting with federal law. The federal law at issue is the Professional and Amateur Sports Protection Act of 1992 (PASPA), which prohibits any state from offering sports betting unless the state had a sports betting scheme in place between 1976 and 1990.

In December, the court held oral arguments on just the standing issue and later held that the leagues did have standing to bring the suit. The Department of Justice later intervened in the lawsuit to defend the constitutionality of PASPA.

New Jersey filed its opening brief in April and will have the opportunity to file a reply brief by June 14 to the briefs submitted by DOJ and the sports leagues. Oral arguments are scheduled for June 26. New Jersey is challenging both the constitutionality of PASPA and the leagues’ standing to bring the case.

Also in April, the attorneys general from Georgia, Kansas, Virginia and West Virginia filed an amicus brief with the Third Circuit in support of reversal of the district court’s ruling, on the basis that the ruling threatens the system of dual sovereignty.

A key to this case will likely be how the Third Circuit interprets the anti-commandeering principle recognized by the U.S. Supreme Court in a number of cases. DOJ argues in its brief that PASPA does not offend the anti-commandeering principle and focuses on the fact that the Supreme Court has only applied the principle twice in invalidating a federal law.

DOJ argues that from those two decisions the Supreme Court has established “the basic touchstone of the anti-commandeering doctrine: it applies when a federal law requires a State to enact or implement a federal regulatory program.” In this case, PASPA is not demanding affirmative regulatory action; instead it prohibits New Jersey from sponsoring sports betting. The brief from the leagues points out that the Third Circuit has never held that a statute violates the Tenth Amendment.

The other key constitutional question that the Third Circuit is being asked to address is whether PASPA violates the equal sovereignty principle. New Jersey has argued that because PASPA discriminates among the states by allowing only a few states to offer sports betting, it violates the state’s right to equal sovereignty, which requires any discrimination among the states to be justified by “a showing that a statute’s geographic coverage is sufficiently related to the problem that it targets.” DOJ argues that PASPA does not offend the equal sovereignty doctrine and has traditionally been applied only in the context of States’ admission to the Union, and “has never been understood to invalidate, or even subject to heightened scrutiny, all federal legislation that draws distinctions among particular States.”

Regardless of the decision reached by the Third Circuit, the losing party will have the option of seeking a rehearing en banc in the Third Circuit, or filing for a writ of certiorari to the United States Supreme Court. However, both options are discretionary, leaving the possibility that the ruling from the Third Circuit will be final.

There have been prior challenges to PASPA in federal court, but none of those cases required the court to directly address the constitutionality of the statute, which the Third Circuit is being asked to do here.

The ruling from the Third Circuit in this case will have far-reaching implications. A decision in New Jersey’s favor removes the primary hurdle preventing states from offering sports betting within their borders. A decision that opines on the constitutional issues in the case could have a significant impact in the future on the federal government’s ability to regulate the states.