New Jersey: United States Supreme Court permits states to legalize sports betting

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Last December, the United States Supreme Court heard oral arguments in two consolidated lawsuits, Murphy v. National Collegiate Athletic Association and New Jersey Thoroughbred Horsemen’s Association, Inc. v. National Collegiate Athletic Association, the details of which we explained at the time. The dispute focused on New Jersey’s repeal of its own state law that banned 1) wagering on sporting events by persons 21 years of age or older; and 2) wagering at a horse racing track or a casino or gambling house in Atlantic City. The repeal applied only to wagers on sporting events that did not involve a New Jersey college team, or a collegiate event taking place in New Jersey. 

The federal law at issue in the resultant litigation was the Professional and Amateur Sports Protection Act (PASPA).  The PASPA makes it unlawful for a state to authorize “’a lottery, sweepstakes, or other betting, gambling, or wagering scheme based . . . on’ competitive sporting events.”  As Justice Alito put it in the court's May 14, 2018 majority opinion that he authored: “[t]he State of New Jersey wants to legalize sports gambling at casinos and horseracing tracks, but a federal law, the Professional and Amateur Sports Protection Act [PASPA], generally makes it unlawful for a State to ‘authorize’ sports gambling schemes. We must decide whether this provision is compatible with the system of ‘dual sovereignty’ embodied in the Constitution.” 

Justice Alito acknowledged that “Americans have never been of one mind about gambling, and attitudes have swung back and forth…[and] New Jersey’s experience is illustrative.” Starting in 1897, when New Jersey adopted a constitutional amendment that barred all gambling within its borders, it enacted a number of measures through the years that permitted certain kinds of games, like horse betting, bingo, and a state lottery.  Even so, people worried about the addictive nature of sports gambling, and the reputational damage to professional and amateur sports.  Indeed, “professional sports leagues and the National Collegiate Athletic Association (NCAA) long opposed legalization.” Hence, PASPA’s enactment. 

The anticommandeering principle

The central question before the court was whether New Jersey’s repeal violated PASPA’s prohibition on state authorization of sports gambling schemes. 

After first deciding that the repeal at issue “authorizes” sports gambling, Justice Alito looked to the question of sovereignty, noting that the anticommandeering doctrine “is simply the expression of a fundamental structural decision incorporated into the Constitution.” That is, the states have powers inherent in their sovereignty, as distinct from those powers of the federal government. Such dual sovereignty necessarily limits both the states and the federal government in certain ways. One manifestation of these limits is the anticommandeering principle, which prohibits Congress from issuing direct orders to the states. Congress may only issue laws directing the conduct of individuals: “[w]here a federal interest is sufficiently strong to cause Congress to legislate, it must do so directly; it may not conscript state governments as its agents.” 

The opinion offers several reasons why this anticommandeering principle is so important: 

1. It serves as “one of the Constitution’s structural protections of liberty;”
2. It promotes political accountability; and
3. It prevents Congress from shifting the costs of regulation to the states.

On this rationale, the court concluded that PASPA’s provision that prohibits state authorization of sports gambling violates the anticommandeering rule, by “unequivocally dictat[ing] what a state legislature may and may not do…A more direct affront to state sovereignty is not easy to imagine.” 

Justice Alito dismissed the notion that, technically, PASPA does not actually compel a state to take any specific action. He described this point as “empty” on the “basic principle [that] Congress cannot issue direct orders to state legislatures.” 

Similarly, he disagreed with the premise that PASPA is valid as an exercise of federal preemption: “It is no such thing.” Underlying preemption is the notion, under the Supremacy Clause, that where federal and state laws conflict, the federal law is supreme. As noted above, Congress has authority only to direct individuals, which PASPA does not: “there is no way in which this provision can be understood as a regulation of private actors.”  

In the end, Justice Alito conceded the controversial nature of legalizing sports gambling, but he, and five other justices, opted to stay out of it. “Supporters argue that legalization will produce revenue for the States and critically weaken illegal sports betting operations, which are often run by organized crime. Opponents contend that legalizing sports gambling will hook the young on gambling, encourage people of modest means to squander their savings and earnings, and corrupt professional and college sports. The legalization of sports gambling requires an important policy choice, but the choice is not ours to make.”   


New Jersey’s Gov. Murphy was “thrilled” with the court’s decision. In a press release issued after the opinion came out, he declared that the Garden State “has long been the lead advocate in fighting this inherently unequal law, and today’s ruling will finally allow for authorized facilities in New Jersey to take the same bets that are legal in other states in our country.” He is happy to proceed with the authorization and regulation of sports betting.

The National Conference of State Legislatures (NCSL) also applauded the decision, stating that it “supports every state’s right to regulate gaming and sports betting, including both legalization and prohibition, without unwarranted federal preemption and interference. This landmark ruling provides states another tool with which they can continue to craft smart, tailored policies during a time of congressional gridlock in Washington.”  NCSL predicted that states would follow on New Jersey’s path by repealing their own bans on sports gambling, and/or passing laws that directly allow it.

An NPR story estimated that despite the existing entrenched black market on sports gambling, 32 states will eventually allow it, generating $6 billion annually. Of course New Jersey is working on something now and expects to finalize the tax rate within four weeks.  It will likely be between 8 percent and 15 percent of revenue after winnings are paid out.

Ohio, however, is not one of the states eager to take immediate advantage of the ruling. characterized Gov. Kasich as standing down for now. The paper quoted the Buckeye State’s director of the Ohio Lottery Commission, who said that “we will not have sports gambling in Ohio [immediately], but we could have it in six months or a year, we don't know.” According to the director, the governor “is not looking to expand gambling, and whether Ohio moves forward with sports wagering as part of the lottery may not be decided until the next administration.”

The NCAA issued its own statement, asserting glumly that it would “adjust sports wagering and championship policies to align with the direction from the court.” In another release published a few days later, it said it supports federal regulation of sports wagering, to “maintain[] the integrity of competition and student-athlete well-being.”

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