Goodwin Gaming
March 8, 2013

Sports Leagues Take Round One in NJ Sports Betting – Gov. Christie Vows to Keep Fighting


By Bob Crawford and Achal Oza

As promised, Judge Shipp released his decision last week on the lawsuit brought by the NCAA, NBA, NFL, NHL and MLB against New Jersey over its plans to legalize sports betting within the state, which the U.S. Department of Justice joined in January.  In a 45-page opinion, Judge Shipp ruled in favor of the sports leagues by upholding the Federal Professional and Amateur Sports Protection Act (PASPA) and permanently blocking (or enjoining) New Jersey from “sponsoring, operating, advertising, promoting, licensing” any sports gambling, whether amateur or professional.

Agreeing with the arguments set forth by the DoJ, the Court determined that PASPA is a valid exercise of Congress’s Commerce Clause powers and that it does not violate the 10th Amendment, the Due Process Clause, the Equal Protection Principles or the Equal Footing Doctrine. With respect to the Commerce Clause, the Court reasoned that Congress had a rational basis in determining that “sports gambling [was] a national problem” and PASPA is reasonable attempt at curbing this “problem.”  As for the grandfathering permitted under PASPA for sports gambling systems that were existing at the time PASPA was enacted, Congressional findings demonstrate that Congress had a “rational basis to exempt” them because “Congress desired to protect the reliance interest of the few states that had legalized gambling operations.”

Under the so-called “commandeering principles” of the 10th Amendment, which prohibits the Federal Government from “directly compelling the States to pass laws which do the Federal Government’s bidding,” the Court determined that PASPA “neither compels nor commandeers New Jersey to take any action” because no affirmative actions are required by the States under PASPA, instead they are merely prohibited from certain actions.

The Due Process Clause of the Fifth Amendment provides that “No person shall . . . be deprived of life, liberty, or property, without due process of law,” and includes an Equal Protection Principle in that the Federal government is “prohibited . . . from invidious discrimination between individuals or groups.”  The Court pointed out that the State of New Jersey “is not a ‘person’” but a “governmental entity”, and therefore the Due Process Clause is not implicated here.

Lastly, the Court quickly rejected New Jersey’s argument under  the Equal Footing Doctrine, which provides for “the admission of additional states [to the Union] on equal footing with the original States.”  Here, the Court noted that this case “does not involve a State that is . . . attempting to enter the Union.”  Should we forget, the Court reminded us that New Jersey was “one of the original colonies.”

New Jersey can immediately appeal to the Third Circuit, and it is expected that they will file an appeal together with a request that the Court exercise its discretion and expedite the case.  The deadline for it to do so is April 1st.  Governor Chris Christie has also said that he’s willing to take his case to the U.S. Supreme Court in order to allow lawful sports betting within his state.  We expect any such appeal to address the points discussed above, as well as the grant of standing to the sports league allowing the lawsuit in the first place and the appropriateness of granting a permanent injunction. And it is clear that Governor Christie remains optimistic about New Jersey’s odds to ultimately offer sports betting.  At a recent event in New Jersey, Governor Christie said “We are confident that the federal court of appeals will conclude that New Jersey should be treated equally with other states,” and “I think the Supreme Court will see the wisdom of this ultimately and I think we’ll ultimately prevail, but it will take about two years.”  The Supreme Court has never addressed PASPA.

In the meantime, two New Jersey congressmen have introduced bills in the House of Representatives that could allow New Jersey to offer sports betting without violating Federal law – which, if passed, could render this lawsuit moot.  Even the NCAA recognizes that the appeals process will take time and has already responded to this ruling by reversing the ban it had imposed against New Jersey hosting any college tournament or championship games.

While Judge Shipp’s ruling deals a significant blow to New Jersey’s immediate plans to offer sports betting in New Jersey, the future of sports betting in America will be played out in the Third Circuit and perhaps ultimately the U.S. Supreme Court.