A Good Bet? Legalized Sports Gambling May Be Coming Soon

Brendan Mochoruk | March 12, 2018
Sports-booking in Vegas. Image by Prayitno, CC-BY 2.0 License.

On December 4, 2017, the Supreme Court heard oral argument in Christie v. National Collegiate Athletic Association, a case in which the State of New Jersey is challenging the constitutionality of the Professional and Amateur Sports Protection Act (PASPA). Passed by Congress in 1992, PASPA banned all state-sanctioned sports gambling, but provided exemptions for four states—Nevada, Oregon, Delaware, and Montana—where laws allowing certain types of sports gambling were already on the books. PASPA also contained a provision that would have allowed New Jersey to permit sports gambling in casinos if the state were to enact a sports gambling scheme within one year of PASPA’s passing, which New Jersey did not do.

In 2012, New Jersey had a change of heart and passed a bill that would actively allow certain sports betting activities in casinos and horseracing tracks, but a district court struck down the law as a violation of PASPA. New Jersey responded by passing another law in 2014 which repealed existing bans on sports betting in the state, effectively authorizing sports gambling in New Jersey without explicitly doing so. The National Collegiate Athletic Association (NCAA), along with the National Basketball Association (NBA), National Football League (NFL), Major League Baseball (MLB), and the National Hockey League (NHL), sued to enjoin New Jersey from implementing the law on the grounds that it is a violation of PASPA. The district court granted summary judgment to the sports leagues, and a divided panel of the Third Circuit upheld the decision. In an en banc rehearing, the Third Circuit again upheld the decision.

New Jersey argues that PASPA is an unconstitutional violation of the Tenth Amendment’s anti-commandeering doctrine, which prohibits the federal government from requiring states to adopt a specific regulatory scheme if the federal government itself has not done so. New Jersey argues that by requiring states to adopt regulatory schemes banning sports betting, PASPA violates this principle. The sports leagues, on the other hand, argue that PASPA does not require states to adopt any particular regulatory framework, but instead only prohibits states from legalizing or sanctioning sports betting. As such, the leagues claim that PASPA does not require states to take any affirmative action, and that the law therefore does not commandeer the states’ legislatures.

According to some commentators, if the oral arguments are any indication of how the Court will eventually rule, the Court may be prepared to find in favor of New Jersey. But overturning PASPA could have wide-ranging implications. Estimates suggest that illegal sports betting is a $80 to $400 billion industry—overturning PASPA and allowing state governments to legalize the industry could produce significant revenues for states. However, gambling revenues often come disproportionately from low-income individuals, so these tax revenues would likely be regressive in nature. Furthermore, some worry that legalized sports betting would increase the incidence of match-fixing. More importantly, however, a broad ruling in favor of New Jersey could have important ramifications for a host of other issues related to state and federal sovereignty, including marijuana legalization, immigration, and gun control, signaling more deference to state sovereignty. The Supreme Court is expected to rule on the case by summer 2018.