3rd Circuit Court of Appeals upholds ban against New Jersey’s sports betting law | Meadowlands Matters | NorthJersey.com

Posted on Tuesday, September 17, 2013 10:28 am

by John Brennan

[last UPDATED at 12:15 pm ET]

The U.S. Third Circuit Court of Appeals on Tuesday affirmed a lower court ruling that struck down New Jersey’s sports betting law because it conflicts with a 1992 federal law that bans such activity in all but four states. The ruling was only 2-1 in favor, not unanimous – in a case that already was expected by the principals on both sides to wind up in the U.S. Supreme Court regardless of the Third Circuit’s decision. The ruling begins, “Betting on sports is an activity that has unarguably increased in popularity over the last several decades. Seeking to address instances of illegal sports wagering within its borders and to improve its economy, the State of New Jersey has sought to license gambling on certain professional and amateur sporting events. A conglomerate of sports leagues, displeased at the prospect of State-licensed gambling on their athletic contests, has sued to halt these efforts. They contend, alongside the United States as intervening plaintiff, that New Jersey’s proposed law violates a federal law that prohibits most states from licensing sports gambling, the Professional and Amateur Sports Protection Act of 1992 (PASPA). In defense of its own sports wagering law, New Jersey counters that the leagues lack standing to bring this case because they suffer no injury from the State’s legalization of wagering on the outcomes of their games. In addition, alongside certain intervening defendants, New Jersey argues that PASPA is beyond Congress’ Commerce Clause powers to enact and that it violates two important principles that underlie our system of dual state and federal sovereignty: one known as the “anti-commandeering” doctrine, on the ground that PASPA impermissibly prohibits the states from enacting legislation to license sports gambling; the other known as the “equal sovereignty” principle, in that PASPA permits Nevada to license widespread sports gambling while banning other states from doing so. The District Court disagreed with each of these contentions, granted summary judgment to the leagues, and enjoined New Jersey from licensing sports betting. On appeal, we conclude that the leagues have Article III standing to enforce PASPA and that PASPA is constitutional. As will be made clear, accepting New Jersey’s arguments on the merits would require us to take several extraordinary steps, including: invalidating for the first time in our Circuit’s jurisprudence a law under the anti-commandeering principle, a move even the United States Supreme Court has only twice made; expanding that principle to suspend commonplace operations of the Supremacy Clause over state activity contrary to federal laws; and making it harder for Congress to enact laws pursuant to the Commerce Clause if such laws affect some states differently than others.” The Court stresses that it is not weighing in on the “wisdom” or PASPA or whether legalized sports betting is desirable. “We speak only to the legality of these measures as a matter of constitutional law. Although this “case is made difficult by [Appellants’] strong arguments” in support of New Jersey’s law as a policy matter,……our duty is to “say what the law is…. If two laws conflict with each other, the courts must decide on the operation of each.” New Jersey’s sports wagering law conflicts with PASPA and, under our Constitution, must yield. We will affirm the District Court’s judgment.” After a brief history of the legal background of the case, the court takes on the issue of whether the NFL, NCAA, and three other professional sports leagues have legal ‘standing’ even to make their case here. The lower court found that the leagues did, and the Third Circuit majority opinion quickly agreed in this ruling. Technical point: The leagues repeatedly have tried to bring the 2009 “Markell” case into the picture, where Delaware was denied by the same court a bid to expand its pro football betting beyond the parlay, or multi-tiered, bets that it offered prior to PASPA. But the court today notes, “we will not rely on Markell for our ‘standing’ analysis.” The court focuses instead on the “injury-in-fact” analysis, which from a 1973 case means the plaintiffs must merely show “an identifiable trifle of injury.” The court found that the leagues’ submissions of polls showing fans concerned about “game fixing” and an aversion to a pro sports franchise being based in Las Vegas was more than sufficient. “[M]ore legal gambling leads to more total gambling, which in turn leads to an increased incentive to fix or attempt to fix the Leagues’ matches.” Interesting that a footnote refers to a 2007 espn.com column stating that the revelation of NBA referee Tim Donaghy’s gambling on NBA games means that “the integrity of the games just took a major hit.” This point drives New Jersey sports betting backers to distraction, because the leagues’ ratings and revenues have increased since then, and franchise values – seen through sales of teams – have escalated. They claim that means that perception did not become reality. The court replies: “But these arguments, which sound more like an appeal to commonsense with which, no doubt, many will agree as a policy matter, do not legally deprive the Leagues of standing and are insufficient to raise a genuine issue of material fact. A plaintiff does not lose standing to challenge an otherwise injurious action simply because they may also derive some benefit from it. Our standing analysis is not an accounting exercise and it does not require a decision on the merits….. that the Leagues may have been successful at rehabilitating their images does not deprive them of standing.” As a last resort, Appellants question the Leagues’ commitment to their own argument that state-licensed sports wagering harms them, noting that the Leagues hold events in jurisdictions such as Canada and England where gambling on sports is licensed, and that they promote and profit from products that are akin to gambling on sports, such as pay-to-play fantasy leagues. But standing is not defeated by a plaintiff’s alleged unclean hands and does not require balancing the equities. That the Leagues may believe that holding events in Canada and England is not injurious to them does not negate that harm may arise from an expansion of sports wagering to the entire country. The same can be said of the Leagues’ promotion of fantasy sports, even if we accept that these activities are akin to head-to-head gambling. And, as even Appellants recognize, it is not the Leagues’ subjective beliefs that control. That the Leagues have standing to enforce a prohibition on state-licensed gambling on their athletic contests seems to us a straightforward conclusion, particularly given the proven stigmatizing effect of having sporting contests associated with gambling, a link that is confirmed by commonsense and Congress’ own conclusions. Footnote on this point: “We note, however, the legal difference between paying fees to participate in fantasy leagues and single-game wagering as contemplated by the Sports Wagering Law….. (holding that fantasy leagues that require an entry fee are not subject to anti-betting and wagering laws)…. (holding that a “hole-in-one” contest that required an entry fee was a prize contest, not a wager). MERITS “The centerpiece of Appellants and amici’s attack on PASPA is that it impermissibly commandeers the states. But at least one party raises the spectre that PASPA is also beyond Congress’ authority under the Commerce Clause of the U.S. Constitution. We thus examine first whether Congress may even regulate the activities that PASPA governs. Only after concluding that Congress may do so can we consider whether, in exercising its affirmative powers, Congress exceed a limitation imposed in the Constitution, such as by the anti-commandeering and equal sovereignty principles.” “It is self-evident that the activity PASPA targets, state-licensed wagering on sports, may be regulated consistent with the Commerce Clause. First, both wagering and national sports are economic activities. A wager is simply a contingent contract involving “two or more. . . parties, having mutual rights in respect to the money or other thing wagered.” Second, there can be no serious dispute that the professional and amateur sporting events at the heart of the Leagues’ operations “substantially affect” interstate commerce. The Leagues are associations comprised of thousands of clubs and members… which in turn govern the operations of thousands of sports teams organized across the United States, competing for fans and revenue across the country.” Third, it immediately follows that placing wagers on sporting events also substantially affects interstate commerce. As New Jersey indicates, Americans gamble up to $500 billion on sports each year.” Then an address of anti-commandeering: They note that New Jersey argues that “PASPA’s operation over the Sports Wagering Law violates the “anti-commandeering” principle, which bars Congress from conscripting the states into doing the work of federal officials. The import of this argument, then, is that impermissible anti-commandeering may occur even when all a federal law does is supersede state law via the Supremacy Clause. But the Supreme Court’s anti-commandeering jurisprudence has never entertained this position, let alone accepted it.” SUPREMACY CLAUSE Appellants’ arguments that PASPA violates anti-commandeering principles run into an immediate problem: not a single case that we have reviewed involved a federal law that, like PASPA, simply operated to invalidate contrary state laws. It has thus never been the case that applying the Supremacy Clause to invalidate a state law contrary to federal proscriptions is tantamount to direct regulation over the states, to an invasion of their sovereignty, or to commandeering.” “In light of the fact that the Supremacy Clause is the Constitution’s answer to the problem that had made life difficult under the Articles of Confederation — the lack of a mechanism to enforce uniform national policies — accepting Appellants’ position that a state’s sovereignty is violated when it is precluded from following a policy different than that set forth by federal law (as New Jersey seeks to do with its Sports Wagering Law), would be revolutionary.” Summing up why the state’s attempt to compare PASPA to the two precedents of anti-commandeering, the court sums up, “it is hard to see how Congress can “commandeer” a state, or how it can be found to regulate how a state regulates, if it does not require it to do anything at all.” EQUAL SOVEREIGNTY [I]t is noteworthy that Appellants do not ask us to invalidate …. the Nevada grandfathering provision that supposedly creates the equal sovereignty problem. Instead, we are asked to strike down …. PASPA’s general prohibition on state-licensed sports gambling. Appellants do not explain why, if PASPA’s preferential treatment of Nevada violates the equal-sovereignty doctrine, the solution is not to strike down only that exemption. The remedy New Jersey seeks — a complete invalidation of PASPA — does far more violence to the statute, and would be a particularly odd result given the law’s purpose of curtailing state-licensed gambling on sports. That New Jersey seeks Nevada’s preferential treatment, and not a complete ban on the preferences, undermines Appellants’ invocation of the equal sovereignty doctrine.” Hmm, I wonder what might have happened had New Jersey added that request – ban Nevada’s sports betting, too – as part of its alternatives. It wouldn’t do New Jersey any good, but it might have put pressure on Senate Majority Leader Harry Reid to find a way to avoid having that option on the table for the Court. If baseball is a game of inches, constitutional adjudication may be described as a matter of degrees. The questions we have addressed are in many ways sui generis. Neither the standing nor the merits issues we have tackled permit an easy solution by resorting to a controlling case that provides a definitive “Eureka!” moment. Our role thus is to distill an answer from precedent and the principles embodied therein. But we are confident that our adjudication of this dispute and our resolution of its merits leave us well within the strict bounds set forth by the Constitution and preserves intact the state – federal balance of power.” Finally, Just as PASPA once gave New Jersey preferential treatment in the context of gambling on sports, Congress may again choose to do so or, more broadly, may choose to undo PASPA altogether. It is not our place to usurp Congress’ role simply because PASPA may have become an unpopular law. The forty-nine states that do not enjoy PASPA’s solicitude may easily invoke Congress’ authority should they so desire.” – See more at: http://blog.northjersey.com/meadowlandsmatters/6623/breaking-third-circuit-court-of-appeals-upholds-ban-against-new-jerseys-sports-betting-law/#sthash.OIgnmnac.dpuf

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