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Going All-In at the Supreme Court

by Chico Payne | Fall 2018

Despite the international uproar caused by the gang rape of 23-year-old “Nirbhaya” and the promise following the 2014 election of Prime Minister Narendra Modi, India’s laws regarding rape are still drastically behind the times. India’s penal code still makes allowances for rape within marriage and does not address the rape of young boys or non-binary genders, but there may be hope further down the road.

4. Lucinda Shen, DraftKings and FanDuel Settle N.Y. Lawsuit for $12 Million, Fortune, Oct. 26, 2016.

5. Ibid.

7. Ibid.

8. 28 U.S.C. § 3702

9. Marc Edelman, Controversial U.S. Sports Gambling Law Turns 22 Years Old, Forbes, Oct. 28, 2014.

10. Mary Ann Spoto, Sports Betting backed by N.J. Voters, N.J. Advance Media, Nov. 9, 2011.

13. Nat'l Collegiate Athletic Ass'n v. Governor of N.J., 730 F.3d 208, 216 (3d Cir. 2013)

14. Ibid.

16. Id at 240.

17. Resp’t’s Br. at 7-11, Governor of N.J. v. Nat’l Collegiate Athletics Ass’n, N.J. Thoroughbred Horseman’s Ass’n, Inc. v. Nat’l Collegiate Athletics Ass’n, S. Ct. (2017) (Nos. 16-476, 16-477).

18. Br. for the Pet’r’s at 3, Governor of N.J. v. Nat’l Collegiate Athletics Ass’n, S. Ct. (2017) (No. 16-476).

20. Id at 9.

22. Id at 8-9.

23. Id at 3.

27. Id at 17.

For many football fans, the spectacles televised on Monday Nights are not only the opportunity to cheer for your favorite teams—they also serve as an opportunity to be the general manager and coach of your own side. You can choose quarterbacks, wide receivers, and defensive lines. You can draft them in September and following them into the playoffs. I’m talking of course, about fantasy football. Fantasy sports allow fans to compete with friends, family, and coworkers in hopes of earning pride and a small sum of pooled money. While gambling on fantasy sports is legally protected because it is considered a game of skill, another custom associated with American engagement in sports, betting on the games themselves, is not legally permissible in most states. It is on these grounds that the Supreme Court is preparing to hear two cases, both emanating out of the state of New Jersey, that seek to expand sport betting into new places.

In June 2017, the Fantasy Sports Trade Association estimated that there are more than 59.3 million active fantasy sports players in the United States and Canada. The industry brings-in more than $7.22 billion dollars annually.[1]  But Americans have a deeper interest in sports than just building fantasy leagues: they often test their knowledge of the game by making wagers. The American Gambling Association estimates that $15 billion was bet in the Super Bowl and NCAA Men’s Basketball Tournament alone.[2]  One might be surprised that only approximately 3% of these bets were made legally.[3]

Recently, sports gambling has had a series of high-profile brushes with the law. In October of 2016, FanDuel and DraftKings, two websites that allow users to make wagers on fantasy sports teams, resolved lawsuits with the State of New York for making false advertisements in a $12 million settlement.[4]  For example, FanDuel advertised that ordinary people could win millions, yet it failed to disclose that the person profiled worked in the sports analytics industry.[5] In addition, 89.3% of DraftKings users lost money in the 2012–2013 season.[6] Despite these setbacks, both companies managed to avoid the ban that New York Attorney General Eric Schneiderman had threatened to level against the companies the previous year.[7]

 

Sports gambling again appears in the headlines as it takes center stage in a pair of lawsuits, Christie v. National Collegiate Athletics Association and New Jersey Thoroughbred Horseman’s Association v. National Collegiate Athletics Association. Due to the similarity of the matters at hand, the Court has decided to consolidate the cases, meaning that they will both be heard in December and ruled on at the same time. Both petitioners take issue with the Professional and Amateur Sports Protection Act of 1992 (PASPA). The act makes it illegal for “a government entity to sponsor, operate, advertise, promote, authorize by law or compact […] a lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly […] on one or more competitive games in which amateur or professional athletes participate.”[8] The ban carved out an exception that allows gambling to continue in the four states that had already adopted the practice: Delaware, Montana, Oregon, and Nevada.[9]

 

New Jersey has been opposing this act for several years now. In an effort headed by one of the State’s Senators—Raymond Lesniak (D)—a 2011 referendum to legalize sports betting was overwhelmingly approved.[10] Governor Chris Christie, who had previously refused to support the effort, stated that he would support it if the referendum were to pass.[11] 

Just two months before the state was set to accept applications for betting licenses, the National College Athletics Association (NCAA), Major League Baseball (MLB), National Basketball Association (NBA), National Football League (NFL), and National Hockey League (NHL), filed a suit to stop the state from issuing these licenses.[12] The suit eventually advanced to the Third Circuit Court of Appeals. The Third Circuit took note of the reasons given for the creation of PASPA.[13]  It reported that the Senate Report showed “concern for ‘the integrity of, and public confidence in, amateur and professional sports’ and its concern that ‘[w]idespread legalization of sports gambling would inevitably promote suspicion about controversial plays and lead fans to think ‘the fix was in’ whenever their team failed to beat the point-spread.’”[14] Essentially, the senators worried that widespread gambling could create the perception that the outcomes of sporting events were being corrupted; this perception would be heightened whenever the result of the game failed to match spectators’ expectations. The notion that sports leagues would suffer harm from an increase in legalized sports gambling gave them standing to bring their claims to the Court.[15]

The Appellate Court ultimately determined that “nothing in PASPA violates the U.S. Constitution. The law neither exceeds Congress' enumerated powers nor violates any principle of federalism implicit in the Tenth Amendment or anywhere else in our Constitutional structure.”[16]  This decision did not deter New Jersey, which tried several more times to introduce gambling into the state, culminating in the attempt that ultimately landed them in the Supreme Court.[17]

Governor Christie cites several precedents, including New York v. United States, and Printz v. United States, to argue that the Federal Government has no right to instruct a State “to govern according to Congress’s instructions.”[18] Additionally, Christie contends that it creates a burden on the state to enforce a prohibition against sports gambling.[19] Thirdly, Christie asserts that the Federal Government’s interference shifts accountability for the unpopular prohibition on state officials, making them appear responsible for policies that they are forced to enact.[20] The Horseman’s Association argues much along the same lines—namely, that Congress should have simply prohibited sports betting under federal law instead of preventing states from authorizing sports betting.[21]  Because of the manner that they chose to enact the ban, Congress required states to enforce a prohibition against sports gambling.[22]

 

The respondent in both cases before the Supreme Court is the NCAA. In its brief, the NCAA notes that Congress has a long history of curtailing betting on sports and regulating gambling.[23] It cites the fact that in 1964, Congress enacted 18 U.S.C. § 224, which “made it a federal crime to fix or attempt to fix any sports contest.”[24] In 1992, this tradition of protecting the industry of the league would continue with the adoption of PAPSA, which was signed into law by the President on October 28th.[25] The brief notes that under this act, New Jersey was given one year to legalize sports betting in its already licensed casinos in Atlantic City but that it did not seize the opportunity to do this.[26] The NCAA also characterizes the claim in opposition to PAPSA on the grounds of a “commandeering” challenge to be “novel, splitless, and meritless.”[27] PAPSA does not compel the state to do anything, they contend, but instead is a “straightforward exercise of Congress’ power to preempt the operation of state laws that conflict with federal policy on matters within Congress’ purview.”[28] It further supports this view by citing the fact that New Jersey has been in full compliance with PAPSA for more than “two decades without enacting or implementing anything” as evidence that it has not been commandeered.[29]

 

The implications for this case could be huge. If the petitioners were to win in this issue, it would pave the way for other states to legalize sports betting, likely expanding the already large industry. The enlargement of sports betting could provide states another avenue to collect tax revenue. Additionally, widespread access to legal sports betting might reduce the number of bets made illegally. This potential to raise revenues and promote the creation of new industries needs to be weighed against the possible effects that widespread gambling could have on the integrity of the game. Would an increase in revenues be worth the possibility that sports could become corrupted? New Jersey seems to believe that it should have the right to decide this for itself, regardless of the federal act that prohibits it. Despite the extensive efforts made by New Jersey, no federal court has ever previously ruled against PASPA. No matter which way they decide, it is unlikely that the Supreme Court will make a ruling before next year.

REFERENCES

 

[1] Fantasy Sports Now a $7 billion Indus., Fantasy Sports Trade Ass’n, June 30, 2017.

[2] Br. for the Am. Gaming Ass’n as Amicus Curiae at 1, Governor of N.J. v. Nat’l Collegiate Athletics Ass’n, N.J. Thoroughbred Horseman’s Ass’n, Inc. v. Nat’l Collegiate Athletics Ass’n, S. Ct. (2017) (Nos. 16-476, 16-477).

[3] Id.

[4] Lucinda Shen, DraftKings and FanDuel Settle N.Y. Lawsuit for $12 Million, Fortune, Oct. 26, 2016.

[5] Id.

[6] Id.

[7] Id.

[8] 28 U.S.C. § 3702

[9] Marc Edelman, Controversial U.S. Sports Gambling Law Turns 22 Years Old, Forbes, Oct. 28, 2014.

[10] Mary Ann Spoto, Sports Betting backed by N.J. Voters, N.J. Advance Media, Nov. 9, 2011.

[11] ibid

[12] Darren Heitner, Constitutionality Of Sports Betting Prohibition At Issue In NCAA And Prof’l Leagues' Lawsuit Against N.J., Forbes, Aug. 7, 2012.

[13] Nat'l Collegiate Athletic Ass'n v. Governor of N.J., 730 F.3d 208, 216 (3d Cir. 2013)

[14] Id.

[15] Id at 223,224.

[16] Id at 240.

[17] Resp’t’s Br. at 7-11, Governor of N.J. v. Nat’l Collegiate Athletics Ass’n, N.J. Thoroughbred Horseman’s Ass’n, Inc. v. Nat’l Collegiate Athletics Ass’n, S. Ct. (2017) (Nos. 16-476, 16-477).

[18] Br. for the Pet’r’s at 3, Governor of N.J. v. Nat’l Collegiate Athletics Ass’n, S. Ct. (2017) (No. 16-476).

[19] Id at 6.

[20] Id at 9.

[21] Reply Br. by N.J. Thoroughbred Horseman’s Ass’n at 4-5, N.J. Thoroughbred Horseman’s Ass’n, Inc. v. Nat’l Collegiate Athletics Ass’n, S. Ct. (2017) (No. 16-477).

[22] Id at 8-9.

[23] Id at 3.

[24] Id.

[25] Id.

[26] Id at 6.

[27] Id at 17.

[28] Id at 22.

[29] Id at 35.

1. Fantasy Sports Now a $7 billion Indus., Fantasy Sports Trade Ass’n, June 30, 2017.

2. Br. for the Am. Gaming Ass’n as Amicus Curiae at 1, Governor of N.J. v. Nat’l Collegiate Athletics Ass’n, N.J. Thoroughbred Horseman’s Ass’n, Inc. v. Nat’l Collegiate Athletics Ass’n, S. Ct. (2017) (Nos. 16-476, 16-477).

3. Ibid.

6. Ibid.

11. Ibid.

12. Darren Heitner, Constitutionality Of Sports Betting Prohibition At Issue In NCAA And Prof’l Leagues' Lawsuit Against N.J., Forbes, Aug. 7, 2012.

15. Id at 223,224.

19. Id at 6.

21. Reply Br. by N.J. Thoroughbred Horseman’s Ass’n at 4-5, N.J. Thoroughbred Horseman’s Ass’n, Inc. v. Nat’l Collegiate Athletics Ass’n, S. Ct. (2017) (No. 16-477).

24. Ibid.

25. Ibid.

26. Id at 6.

28. Id at 22.

29. Id at 35.