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The Importance of an Under-the-Radar Supreme Court Case on Sports Betting

New Jersey tried to repeal its own law against sports gambling, but a federal law banning sports gambling was used to stop New Jersey’s voters from deciding on their own state laws. Now the Supreme Court is set to weigh in. As I note in a new CEI paper out today, there is much at stake in this case, from the right of state voters to decide their own laws, to consumer protection from fraud, to states’ ability to meet the needs of their citizens.

On the surface, New Jersey merely wants the ability to repeal its own state laws prohibiting sports gambling, which would make the activity legal at casinos and racetracks in the state. At its heart, however, the Court’s decision on the matter could impact every other state’s ability to set their own policies—regardless of the federal government’s wishes—on a wide range of issues from gun and education policy, to marijuana and immigration regulation. More importantly, the case before the court involves a threat to our fundamental system of government that gives state voters the right to determine how they are regulated.

Apart from Nevada, betting on sporting events is mostly banned throughout the U.S. due to a 1992 law, the Professional and Amateur Sports Protection Act (PASPA), that prohibited states from legalizing any form of sports gambling they didn’t have prior to the law. Its purpose was to stop the spread of sports betting, but by all accounts, it failed. According to the American Gaming Association, Americans spent $47 million during the 2017 Super Bowl alone—with upwards of 97 percent of that occurring on the black market. Recognizing both an opportunity to profit off of taxing the activity and an obligation to protect the thousands of consumers engaged in such wagering, the New Jersey legislature took steps to regulate sports betting in their state.

The citizens of New Jersey were overwhelmingly in favor of the move, voting in 2011 for a constitutional amendment to legalize sports betting by a margin of nearly two to one. However, the legislature was blocked from implementing the law by the National Collegiate Athletics Association, National Football League, National Basketball Association, National Hockey League, and Major League Baseball, which sued the state. The leagues alleged that PASPA not only prohibits states from legalizing sports betting, but even prevents them from repealing their own laws. That means a de facto decriminalization of the activity.

While the Third Circuit Court of Appeals agreed with the leagues’ logic, New Jersey and outside observers like CEI, the Pacific Legal Foundation, and the Cato Institute argued that a federal law that blocks state legislatures from modifying their own laws as they and their voters see fit is a violation of the Constitution’s 10th Amendment, which reserves the power to regulate wholly in-state matters for the states.

In June, apparently recognizing merit in this argument, the Supreme Court agreed to hear the case. Of particular interest to the Court is the question of whether or not PASPA unjustly commandeers state authority. That is, does it compel the state to implement federal laws in violation of the Constitution?

This anti-commandeering doctrine stems from the era of slavery, from a state’s unwillingness to implement the federal Fugitive Slave Act, which required northern states to return escaped slaves to their “masters.” States that did not want to comply with the law successfully argued before the Supreme Court in 1842 that the federal government could not force states to enforce its laws (see Prigg v. Pennsylvania). The doctrine stands against the federal government using states and their resources as its puppets. It also lets states try different approaches to policy and, in that way, serve as laboratories of democracy. And it lets states set policies based on the values of its citizens and keeps lawmakers more accountable to their voters.

Consider that if federal lawmakers can force the states to do its bidding, members of Congress can escape accountability for laws and regulations that are costly, unpopular, or problematic, but implemented through the states’ authority. Voters may unwittingly blame local lawmakers for failing to do state voters’ bidding, unaware that state lawmakers were powerless to modify these laws. Thus, state lawmakers would bear the costs and take the blame for decisions made by federal politicians.

Should the Supreme Court rule against New Jersey, it would not only impact that state’s ability to legalize sports betting, it could have ramifications for countless other policies in which state voters wish to diverge from federal policies. For example, states that decriminalized medical or recreational marijuana may find themselves compelled to enforce and prosecute federal drug laws. States that wish to enhance gun control policies could find themselves in a tricky situation under the current administration—just like states who want to maintain free access to guns under subsequent, more liberal administrations. Similarly, Congress or the president might force states with sanctuary cities to deny them funding if they fail to comply with federal immigration law.

Most efforts to change unpopular policies begin at the state level, where lawmakers are more aware of voters’ changing attitudes and have a greater willingness to experiment with new approaches to regulatory problems. The successes or failures of these experiments help everyone see what works and what doesn’t.

On the flipside, granting the federal government the power to command state legislation could result in regulatory stagnation that is ultimately out of step with the values of voters. If PASPA is allowed to stand and the federal government allowed to force states to freeze—in perpetuity—their laws, regardless of what state voters want, this sort of regulatory evolution would grind to a halt.

No matter how one feels about sports betting or any other issue in particular, the importance of preserving the states’ right to make their own decisions on these matters should be painfully clear.