U.S. Supreme Court Agrees to Hear Sports Betting Case

This morning, the United States Supreme Court announced it would hear New Jersey’s case on gambling and federalism. The decision seems to reflect concerns raised by CEI and others that federal encroachment on state decision making, if left to stand, presents a grave threat to some of our country’s founding principles.

Will the Supreme Court end the madness?

As I have detailed many times, the problem started in 1992 when Congress enacted a little-known law—that likely will be better known after today—called the Professional and Amateur Sports Protection Act (PASPA). It prohibited any state that didn’t already have sports betting from authorizing the activity within its borders.

Because only Nevada had single-game betting at the time (with Montana, Oregon and Delaware having others forms, like multi-game lotteries), the law in effect granted that one state a monopoly on legal sports betting.

The purpose of PASPA was supposedly to stop the spread of sports gambling and protect games from the corruption that some Members of Congress believed would increase alongside gambling on sports.

The law has been an abject failure. While sports betting in the U.S. was estimated to be a $40 billion per year industry in 1991, today it is somewhere between $140 billion and $400 billion, with around 98 percent of that happening on the black market.

By prohibiting states from “authorizing” sports betting, PASPA blocks states, like New Jersey, that wish to enact consumer protections and collect the millions in revenue this enormous illegal market could generate.

For years, New Jersey has sought to overturn the law, which it argues violates the Tenth Amendment of the Constitution by unlawfully allowing Congress to interfere in what should be a state matter. Most recently, the New Jersey legislature, acting on the results of a 2011 voter referendum, sought to bypass the law by decriminalizing sports betting at casinos and racetracks. By repealing its own laws that prohibited sports betting, the state hoped it could allow and profit from the activity without violating PASPA’s restriction against authorizing it. 

Sports leagues, led by the National Collegiate Athletics Association (NCAA) and the National Football League (NFL), sued the state. Disturbingly, two federal courts agreed that the federal law not only prohibited the state from enacting legislation legalizing sports gambling, but also prevented it from modifying its own laws in any way that seemed to conflict with PASPA’s spirit.

Preserving federalism

This is a very dangerous precedent. If left to stand, it would empower Congress to force states to enforce federal law. This is in direct opposition to the idea, enshrined in the Constitution, that states have sovereignty over state matters and should be free from unnecessary federal interference.

Back in 1842, the Supreme Court, in Prigg v. Pennsylvania, ruled that states were under no obligation to use their own resources to enforce federal law—in that case the Fugitive Slave Act—with which they might disagree. The Court has upheld this “anti-commandeering” principle ever since. This principle protects “states’ rights,” granted under the Constitution’s Tenth Amendment, allowing state legislatures and voters to decide on state-based matters without undue federal interference.

For example, if Congress were to enact legislation prohibiting online ammunition sales, states would not be obligated to use their own enforcement mechanisms to surveil or prosecute offenders.  

Preserving “equal sovereignty”

Also at issue is the equal sovereignty principle, also known as the equal footing principle, the notion that Congress may not enact legislation that treats certain states unfairly. Allowing only certain states like Nevada to profit from sports gambling while prohibiting others like New Jersey from the same benefit is a clear violation of this principle.

Though many expected the Court to listen to the U.S. Solicitor General’s (SG) office, which recommended against hearing New Jersey’s case, the SG’s rationale might be the very reason the Court ignored it.

As sports gambling expert Daniel Wallach pointed out, in a previous version of this case, the SG argued that PASPA did not violate the Tenth Amendment because the law “does not even obligate New Jersey to leave in place state-law prohibitions against sports gambling that it had chosen to adopt prior to PASPA’s enactment. To the contrary, New Jersey is free to repeal those prohibitions in whole or in part.” [Emphasis added]

Yet, when arguing against New Jersey in this most recent case, the SG flipped, opining that “in context,” what the federal government “meant” is that states are “free to repeal those prohibitions …  in part” only to the extent the state’s repeal “is not a de facto authorization.” Courts don’t look favorably on these sorts of flip-flops where litigants make one argument to win a case only to reverse it later to win another case.

For these and other reasons, Wallach and this author were among the few people to give New Jersey’s case a 50-50 chance of getting a hearing. The number of important principles at stake, combined with the SG’s flip-flop, and possibly the addition of Justice Neil Gorsuch to the Court seem to have made the difference. But there’s a long road ahead.

Most experts expect the Court will not hear oral arguments in the case until December, at the earliest, with a ruling following in spring or summer of 2018.

In the meantime, Congress has an opportunity to undo the error it made when it enacted the blatantly unconstitutional PASPA 25 years ago by repealing it, wholesale. While that might seem a herculean task in the currently bitter partisan environment, Americans of all political stripes should be able to get behind such an effort.

It is not the role of the government to defend sports leagues’ reputations. It is not the federal government’s right to tell states whether they can or cannot regulate sports gambling—or any other economic activity—within their borders (especially when allowing some other states to do so). And it is more important now than ever to protect the states from the heavy hand of federal lawmakers if we hope to preserve state autonomy and our laboratories of democracy.