Supreme Court Strikes Federal Law Prohibiting Sports Gambling

The Supreme Court today Walker v. NCAA (formerly Christie v. NCAA) in a 7-2 decision found unconstitutional a federal law that prohibits sports betting on football, basketball, baseball, and other sports. This gives states the green light to legalize betting on sports.

Legalized sports gambling in Maryland may not be far away.  We came close to passing a law in the last session in anticipation of this ruling. Delaware and New Jersey may have sports gambling within the next few weeks.

You can read about this on ESPN or Sports Illustrated, too.  But I’m unimpressed with how they have explained the law.  I’m writing here for lawyers who want to understand the details of the ruling without reading the case or the briefs.

What was the law that the Supreme Court struck down?

sports gambling supreme courtIt is illegal under the Professional and Amateur Sports Protection Act (PASPA) for a state to “sponsor, operate, advertise, promote, license, or authorize by law. . . a lottery, sweepstakes, or other betting, gambling, or wagering scheme” on amateur or professional competitive sports.

But wait. Nevada allows for sports betting, right? It does. Oregon and Delaware have state lotteries, which were instituted long before the PASPA (one more state does, too, but I forget what it is). That is a part of the problem. Congress is picking the winners and losers, giving some states a chance to profit and leaving the others out in the cold.

New Jersey Fights for Atlantic City

New Jersey objected to this scheme, passing a law in 2012 New Jersey to control and regulate sports betting that it knows is already happening in New Jersey. Many states have wanted to legalize sports gambling, but New Jersey correctly believes that Nevada has an unfair advantage over Atlantic City because sports betting is legal in Nevada.

The 3rd Circuit

The case went to the 3rd Circuit. New Jersey contended that PASPA impermissibly impedes a state’s exercise of its lawmaking power because it cannot regulate sports gambling. The sports leagues (MLB, NFL, NCAA, NHL, who somehow got past Article III standing arguments) and the U.S. government realized they had a problem defending the statute on 10th Amendment grounds. The Tenth Amendment provides that “powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The Supreme Court calls this the “anticommandeering” rule, which says the feds cannot make the states implement federal regulatory rules. Is it hard to argue an anti-sports gambling rule is anything other than anticommandeering that singles out states that can and states that cannot allow sports gambling?

But the league still maintained the New Jersey law was violative of PASPA. So they came up with the argument that PASPA was constitutional because it did not technically prohibit sports betting. Since it prescribed only “licensing,” it did not direct states in the exercise of their police powers. The argument was that PASPA does not violate the anti-commandeering doctrine because the law does not force the states to administer any federal regulatory program. Just do not make any laws allowing gambling on sports and you will not have to spend any money on the regulatory objective, the leagues argued.  They did not explain how this was not directly ordering New Jersey not to allow gambling. But it did not matter. A divided 3rd Circuit sided with the leagues.

Supreme Court Ruling

sports gambling law unconstitutionalThe Supreme Court sided with New Jersey, finding that while the “legalization of sports gambling requires an important policy choice, but the choice is not ours to make.” Moreover, Congress has the power to ban sports betting. (Justice Thomas pushes back on this point in a concurring opinion.) But Congress is not permitted to pick winners and losers and favor some states over others.  Whether the federal government forces a state to enact a new prohibition or to maintain and enforce an existing one, the federal government is still dictating state law in violation of the anti-commandeering rule in the 10th Amendment.

What Did the Dissent Say?

Justice Ginsburg’s dissent in Murphy v. NCAA agrees that the PASPA prohibition on modifying or repealing state law.  But the dissent argued that Congress permissibly exercised its right to regulate commerce by prohibiting sports betting.  Accordingly, the court should have kept the law and kicked out that particular provision instead of throwing out the baby with the bathwater.  She has a point.  The cardinal principle of statutory construction is to save the statute and not to destroy it.  But the majority did not buy this argument.

Is Sports Betting Now Legal in Maryland?

Sports betting is not legal in Maryland.  The Supreme Court’s opinion gives states like Maryland the chance to decide for themselves.  The House of Delegates approved a bill in the last session that would put a referendum on the ballot in November’s asking voters to approve sports wagering at the state’s casinos and racetracks. Why would they even consider this issue?  The correct bet is that the Supreme Court would rule as it did.  Ultimately, the bill did not pass the Maryland Senate.

But we all know where this is going, right?  Gambling is an arms race.  Delaware will approve sports betting because they have to compete with Atlantic City.  Maryland will need to compete with Delaware.

What is my hot take on sports gambling in Maryland?  I really don’t know.  I am receptive to the idea that the gambling black market is so rampant that there is wisdom in channeling sports wagering activity into a regulatory scheme that can take profits away from illegal bookmakers and funnel it into education via taxation.  An incredible $500 billion is waged on sports every year in this country.  Then again, this was the plan with casino gambling and I do not see our schools flush with cash.  You also worry about gambling addicts having an easier path to sports betting.  DraftKings has already issued a statement saying they want to get involved in online betting.

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