The fight over legalization of sports betting in New Jersey, seemingly over months ago when the U.S. Supreme Court declined to hear the issue, is going another round.
In a rare formal opinion, issued Sept. 8, the state Attorney General’s office directed law enforcement to refrain from prosecuting casinos and racetracks for running sports-wagering pools.
Though a 2012 state law legalizing sports betting in the state was voided in federal court—preempted by the federal Professional and Amateur Sports Protection Act (PASPA), which regulates such wagering, the U.S. Court of Appeals for the Third Circuit held—the office claims sections of the law that lifted New Jersey’s imposition of criminal and civil penalties for taking sports wagers remain good law.
In light of the attorney general’s directive, Gov. Chris Christie filed a motion in the closed federal case, asking the judge who heard it to amend his injunction that halted enforcement of the legalization measure.
“In recognizing that the surviving portions of the Sports Wagering Act effect a repeal of New Jersey’s prohibition of sports wagering in casinos and racetracks, the directive has done only what the plaintiffs and the Third Circuit agreed states are free to do under PASPA: exempt certain sports wagering activities from liability,” Christie said in a brief.
The Sports Wagering Act, enacted in January 2012 after voters approved a state constitutional amendment, permitted betting on professional and collegiate events—though in-state events involving a New Jersey-based professional team, or events in any location involving a New Jersey-based college team, were declared off-limits.
The law removed statutory bans on sports betting and provided for a regulatory framework.
But the four major sports leagues and the National Collegiate Athletic Association sued, seeking a declaration that the law violated PASPA, which in 1992 barred authorization of sports betting in places where it wasn’t already legal.
The state countered by challenging PASPA’s constitutionality and the U.S. Solicitor General’s office entered the case to defend PASPA.
In February 2013, U.S. District Judge Michael Shipp of the District of New Jersey ruled on summary judgment that PASPA preempted the Sports Wagering Act.
The state appealed, arguing that PASPA violates the Tenth Amendment’s anticommandeering doctrine, which bars Congress from making states carry out the will of federal officials. It also alleged that PASPA’s grandfather clause—allowing sports betting to continue where it already was legal—is unfair. New Jersey had its chance to legalize sports betting before PASPA’s enactment and didn’t.
Last September, a divided panel of the Third Circuit affirmed Shipp, finding PASPA a valid exercise of Congress’s authority.
Judges Julio Fuentes and D. Michael Fisher said the anticommandeering doctrine only invalidates federal laws requiring states to take affirmative action.
Judge Thomas Vanaskie dissented in part, saying PASPA violates federalism principles because it restricts regulation of a practice over which the state historically has had authority.
New Jersey petitioned the Supreme Court for certiorari but the petition was denied in June.
In response, state Sen. Raymond Lesniak, D-Union, introduced legislation that would repeal state laws banning sports wagering at New Jersey casinos and horse-racing tracks.
The bill seized on the U.S. Solicitor General’s office’s statement, in its brief to the high court, that PASPA “does not even obligate New Jersey to leave in place the state-law prohibitions against sports gambling that it had chosen to adopt prior to PASPA’s enactment. To the contrary, New Jersey is free to repeal those prohibitions in whole or in part.”
At the time, Lesniak said, if New Jersey repealed its ban, “I expect that the U.S. Justice Department will refrain from intervening, as they have with Colorado and Washington when those states legalized marijuana.”
The measure passed, but Christie vetoed it last month, deferring to the federal courts’ rulings and calling the rule of law “sacrosanct.”
Christie has apparently reconsidered, however, and has now asked Shipp to clarify or modify his injunction barring enactment of the Sports Wagering Act.
He relied, at least in part, on Law Enforcement Directive 2014-1 by acting Attorney General John Hoffman, who held that casinos and racetracks aren’t prohibited by state criminal law from operating sports-betting pools, as long as the restrictions on wagering on in-state teams are followed.
Hoffman noted that the Third Circuit “made clear” that nothing in PASPA prevents a state from repealing its sports-betting ban—and said the leagues and the solicitor general conceded as much.
The law included a severability clause, whereby parts of the law may remain intact even if others are invalidated, Hoffman said.
“That federal courts have found the licensing regime of the Sports Wagering Act to be preempted by PASPA does not invalidate [its] repeal of prohibitions against the operation of sports pools by casinos and racetracks,” Hoffman said.
He also prohibited civil penalties.
In the brief, Christie argued that Shipp’s injunction, which enjoined the state from “‘authorizing’” sports betting, must be clarified based on the Third Circuit’s holding that PASPA can’t keep a state from repealing or modifying its own statutory sports-betting ban.
“Because this court did not have the Third Circuit’s now-controlling interpretation…at the time it issued the injunction, it is not clear whether this court’s injunction incorporates the Third Circuit’s limiting construction of ‘authorize,’” Christie said, arguing that the lack of prohibition doesn’t amount to an affirmative authorization.
“For a state to declare that casinos and racetracks ‘may operate a sports pool’…imparts no ‘label of legitimacy’ on sports wagering that would ‘make the activity appealing,’” he added. “Rather, it simply states that the activity no longer is prohibited in those settings.”
Neither the attorney general’s opinion nor Christie’s brief addressed whether sports betting, even if decriminalized by the state, still could be regulated or restricted by federal officials.
Lesniak said in a Sept. 8 statement, “It’s good that the governor reversed course. After vetoing my legislation that would have achieved the same goal, the administration’s actions today will allow the state to take advantage of an important economic opportunity.”
Matthew McGill of Gibson, Dunn & Crutcher’s Washington, D.C., office, who represents the state along with partner Theodore Olson, deferred to attorney general spokesman Lee Moore, who declined comment.
A Justice Department spokesman also declined comment. Peter Phipps, who defended PASPA in the federal lawsuit on behalf of the Federal Programs Branch, in the department’s Civil Division, didn’t respond to an email seeking comment.
An NCAA spokeswoman also didn’t respond to an email. Neither did Christie spokesman Michael Drewniak.
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