New Jersey Rolls the Dice, Plans to Sweeten the Pot

By Sean Foley

Las Vegas, Nevada, has been the titan of sports gambling in the United States, seemingly holding a monopoly on the industry. Throughout each year, eager sports fans, covetous speculators, and mere spectators alike anticipate the word from Las Vegas on sporting events, both big and small. This industry control is not simply naturally occurring—law, in fact, protects it. In 1992, Congress passed the Professional and Amateur Sports Protection Act (PASPA), which banned sports gambling in all states except the four that had already allowed it, including Nevada.

Recently, however, New Jersey decided to challenge the act of Congress by planning to legalize sports gambling, following the 2011 passage of a state referendum on the issue. According to Reuters, New Jersey initially had the option of opting in to the law in 1992 within a year, but neglected to do so.

Not surprisingly, New Jersey found itself in court soon after introducing its plan to proceed with the legalization. In a multi-party suit, the National Collegiate Athletic Association, the leagues of the four major professional sports (baseball, basketball, hockey, and football), and the United States Government, challenged New Jersey’s law on the grounds that it violated PASPA. 

Initially, New Jersey argued that the plaintiffs lacked standing to file the suit, asserting that the complainants could not prove that the law would cause the leagues tangible harm. In December of 2012, a United States District Court judge, Michael Shipp, rejected New Jersey’s claim, allowing the trial to proceed. In the spring of 2013, Shipp again ruled in favor of the sports organizations, this time upholding the PAPSA-imposed restrictions on sports betting.

New Jersey promptly appealed Judge Shipp’s decision, taking its case to the United States Court of Appeals for the Third Circuit in Philadelphia. New Jersey argued that PAPSA is unconstitutional because it violates the Constitution’s anti-commandeering clause, which reads that Congress does not have the power to “require the States in their sovereign capacity to regulate their own citizens.”

In its appeal, New Jersey also contested that the law contradicts the principle of equal sovereignty, which prohibits discrimination among the states lest there be a justification specific to the geographic differences. New Jersey stated that sports betting is not a local issue that warrants unequal treatment. The fact that some states had already permitted sports gambling did not earn them a special exemption and did not meet the geographic requirement the equal sovereignty doctrine mandates, the state insisted.

On June 26, 2013, the two sides made their arguments before the Third Circuit. Nearly two months later, on September 17, 2013, a three-judge panel released its decision. In a 2-1 decision, the Court ruled in favor of the sports organizations, marking yet another defeat for New Jersey. The Court upheld the constitutionality of PAPSA, and, therefore, declared that New Jersey’s law violated the federal statute.

Judge Thomas Vanaskie provided the dissenting vote. Siding with New Jersey, he posited that PAPSA was an illegitimate exercise of power. According to Judge Vanaskie, the law violated the principles of federalism by placing an undue burden on the states in contravention of the Constitution.

Despite the continued rulings in favor of the sports organizations, the matter is far from settled. The dissenting opinion of Judge Vanaskie has provided the state of New Jersey with hope. State Senator Raymond Lesniak, a Democrat, insists that the state will carry on its fight, either directly to the Supreme Court or first to the full Third Circuit court in the form of an en banc hearing, a proceeding which occurs before all the circuit judges who are on active duty.

Given the implications this suit has for the doctrine of federalism, this case ought to become very interesting should the entire Court of Appeals for the Third Circuit, or the Supreme Court for that matter, choose to hear it. While the courts sort out this issue, gamblers will continue to look to Las Vegas. 

Photo Credit: Flickr user Barbara Walsh