Sports Law Blog
All things legal relating
to the sports world...
Friday, July 17, 2015
 
Chicago Sports Law Event Featuring ESPN's Lester Munson


If you're going to be in the Chicago area on July 30th, I encourage you attend a sports law networking event at the offices of Foley & Lardner. A 90-minute panel, moderated by ESPN's Lester Munson, will offer an in-depth discussion of the leading sports law controversies of the day. Topics covered will include the regulation of on-and-off-field conduct, player discipline, the Washington Redskins trademark controversy, the changing legal environment of college athletics, the emergence of daily fantasy sports, and the legalization of sports gambling. There will be a 30-minute networking reception prior to and at the conclusion of the event, followed by an offsite gathering at a local area restaurant.

Title:     

Hot Topics in Sports Law

Event Details:

Date:   Thursday, July 30, 2015
When:  5:00 pm-7:00 pm
Where: Foley & Lardner, LLP,  3321 N. Clark Street,  Suite 2800, Chicago, IL 60654-5313
Cost:    FREE (Refreshments will be served at the event; however, the post-event gathering at a local
             area restaurant will be “dutch treat”)
RSVP:  Daniel Wallach at Wallachlegal@gmail.com or 305-725-9688
             Robert Bressler at RBressler@foley.com or 312-832-5701

There will be a post-event gathering at BlackFinn Ameripub, 65 West Kinzie Street (located across the street from Foley & Lardner), beginning at approximately 7:15 pm (roughly 15 minutes after the conclusion of the panel). All are invited.

Moderator:

Lester Munson, Senior Writer and Legal Analyst, ESPN

Panelists: 

Mike Feldman, Counsel, Chicago Cubs
Scott Rochelle, VP and General Counsel, National Basketball Retired Players Association
Eldon Ham, Sports Law Professor, Chicago-Kent College of Law
Chris Griffin, Partner, Foley & Lardner, LLP
Cari Grieb, Partner, Chapman & Cutler LLP
Scott Andresen, Partner, Andresen & Associates, P.C.
Daniel Wallach, Partner, Becker & Poliakoff, P.A.

Opening Remarks:

Robert Bressler, Foley & Lardner

Sponsors:

Foley & Lardner, LLP
Chicago Bar Association, Sports Law Committee
American Bar Association, Tort Trial and Insurance Practice Section

Presented in conjunction with the Sports Lawyers Association (the "SLA"). The SLA is a non-profit, international, professional organization whose common goal is the understanding, advancement and ethical practice of sports law.

For additional information, click here.

Hope to see you there!

            

Tuesday, July 07, 2015
 
Founding Fathers: NBA Free Agency & Independence Day

As we celebrate July 4th and our nation's independence, it's appropriate to also connect that celebration to the utter mayhem of this past week's NBA free agency. Individual rights, and the pursuit of happiness and freedom are defining hallmarks of our country. And, unquestionably, they are also the driving principles of professional sports unions.
This year's crop of NBA free agents signed for nearly $1.5 billion in the frantic 48 hours after midnight on July 1st. To many, the salaries paid to basketball players appears obscene, creating the impression that they are an overpaid workforce. Surprisingly, however, player salaries are artificially depressed due to the NBA's salary cap which restricts team payrolls, and therefore player salaries. 

Friday, July 03, 2015
 
Slava Voynov's Immigration Problem


Last November, Los Angeles Kings’ Defenseman Slava Voynov was arrested for domestic violence charges, which I wrote about in detail here. After the slow grind of the criminal justice system, yesterday we finally learned the outcome of Mr. Voynov’s criminal case.

In a deal to avoid trial on felony charges, Mr. Voynov has pled no contest to misdemeanor Corporal Injury to Spouse with Great Bodily Injury in violation of California Penal Code 273.5. While this plea does avoid the chance of being found guilty of a felony, Mr. Voynov’s plea nonetheless renders him deportable as a crime of domestic violence.

The issue of his deportability under this plea was firmly settled earlier this year by a decision in the 9th Circuit Court of Appeals: Marquez Carrillo v. Holder. In that case, the court held that no matter how a plea to a violation of Cal. P.C. 273.5 is structured, it is always considered a crime involving domestic violence, making the perpetrator subject to removal from the United States.

This is a fact Mr. Voynov’s lawyers surely knew, so the question remains of why he would agree to such a plea, especially when it appeared that his wife was a less-than-cooperative witness. The answer may lie in Mr. Voynov’s wife’s immigration status.

Although much like with Mr. Voynov, we do not know the specifics of her immigration status, we can presume that she is also not a United States citizen. When she began refusing to cooperate or be a witness for the state, the judge threatened her with contempt, which if charged as a felony, would make her deportable. Thus, she may have been forced to testify regardless of her personal desires in the matter.

There also appeared to be a number of other witnesses to the aftermath of the domestic violence committed by Mr. Voynov, both to the injuries of his wife and to statements both Mr. Voynov and his wife made. Therefore, even if she was not a good witness for the state, it appears likely that the prosecution would have been able to prove the felony charges.  With all of that information, it appears that Mr. Voynov’s best course of action truly was to take a plea deal to avoid felony charges, even though this conviction will render him deportable.

At this point, the Department of Homeland Security now has the right to begin removal proceedings against Mr. Voynov. It is always up to their discretion whether to do so or not, but they typically do not exercise their discretion in favor of perpetrators of domestic violence.   If proceedings are brought against Mr. Voynov, he may be eligible for relief against a deportation, but without knowing more about his status and history in the United States, it is too hard to speculate at what that relief might be.

In addition, even if the Department of Homeland Security does not initiate removal proceedings against Mr. Voynov, if his immigration status was based on a non-immigrant visa through his employment with the Los Angeles Kings, he may find that status suddenly revoked if the Kings cancel his contract and no other team is willing to sign him.  Either way, it appears as if we may have seen Mr. Voynov’s last NHL game.

Correction: An earlier version of this post incorrectly stated that Slava Voynov pled guilty. It has been corrected to reflect his plea of no contest.

Friday, June 26, 2015
 
Preview of New Jersey Sports Betting Decision and Likely Aftershocks

As we await the impending decision in the New Jersey sports betting case, no clear consensus has emerged as to which side will win. Those of us who were in attendance for the Third Circuit oral argument on March 17th are divided. While some seasoned observers, such as noted sports litigator Alan Milsteinbelieve that New Jersey will prevail (and he may be right), others (such as myself) have a hard time wrapping their arms around the prospect of a federal appeals court actually blessing New Jersey's plan to legalize sports betting through a "partial repeal" that primarily benefits state-licensed casinos and racetracks. But my skepticism is not based on the law, but, rather, my sense that the Third Circuit may be reluctant to open the floodgates for nationwide deregulated legal sports betting (the "inevitable" consequence of any New Jersey victory) at casinos and racetracks. Putting my cynicism aside, I believe that New Jersey may hold the upper hand based on what unfolded at the oral argument. In contrast to the district court, which was concerned with the far-reaching implications of other states following New Jersey's blueprint (and thereby potentially weakening PASPA), the Third Circuit signaled strongly that principles of statutory interpretation would dictate the outcome. And this bodes well for New Jersey.

Natural Meaning of the Word "Authorize"

The question asked repeatedly at oral argument was "what does 'authorize' mean"? It was asked no fewer than six times. Why is this one word so critically important? The answer lies in the plain language of the statute. Pursuant to PASPA, states may not "authorize" sports wagering schemes (and also may not sponsor, operate, advertise, promote, or license such activities). The sports leagues take the position that New Jersey's partial repeal law is tantamount to an "authorization" of sports gambling because it allows such activity to take place only at state-licensed and state-regulated casinos and racetracks (and at former racetrack sites). New Jersey, on the other hand, maintains that its new law (which relies upon the Third Circuit's "exact contours" language in Christie I and the U.S. Solicitor General's prior statement that New Jersey is free to repeal its state-law prohibitions "in whole or in part" without violating PASPA) is not an "authorization" of sports gambling because there would be no state involvement in that activity. New Jersey argues that the word "authorize" connotes some type of "affirmative" state sanctioning of the activity, i.e., placing the state's "imprimatur" on sports betting. The Third Circuit zeroed in on this difference, with one panelist pointedly asking whether "authorize" means "to permit" or "to allow" (as the leagues maintain) or whether it must rise to the level of a state sanctioning or approval of the activity (as New Jersey argues).

Principles of statutory interpretation would appear to support New Jersey's interpretation. The statutory term "authorize" is not defined by PASPA. When a statute itself does not define a term, courts will often construe the term in accordance with its ordinary or natural meaning. This exercise is highly favorable to New Jersey. According to Black's Law Dictionary, the word "authorize" means "to give legal authority; to empower; or to formally approve; to sanction." Similarly, according to the American Heritage Dictionary, to "authorize" means "to grant authority or power to. To give permission for; sanction." The American Heritage Dictionary supplements the above definition of "authorize" with the following example of its usage: "city agency that authorizes construction projects." Likewise, Webster's Third New International Dictionary defines "authorize" as meaning "to endorse, empower, or permit by or as if by some recognized or proper authority; to endow with effective legal power."

These definitions suggest that the term "authorize" does not merely mean "to permit" or "to allow," as the leagues contend. Rather, according to the natural meaning of the word "authorize," there must be an affirmative granting of approval to engage in the conduct in question. One of the Third Circuit judges, Marjorie Rendell, appeared to embrace this construction when she remarked that "to authorize" means "to give power of official meaning, that the state is involved in the process." And Judge Julio M. Fuentes (who authored the majority opinion in Christie I) pointedly stated during an exchange with Paul Clement (the sports leagues' attorney) that "[a] repealer is a removal of the restrictions and of all criminal laws, but it doesn't mean that the government is saying go ahead and engage in that activity."

But the panel was also concerned about the "selective" nature of the partial repeal, suggesting that by restricting sports gambling to specific locations (e.g., casinos and racetracks) which are licensed and heavily regulated by the state, New Jersey may be "authorizing" that activity. One panelist found it "curious" that sports betting "is now being allowed only in places that have gambling licenses." And another panelist remarked that New Jersey's partial repeal law does more than just simply remove existing prohibitions: it "affirmatively permits" sports gambling at racetracks, casinos and former racetrack sites.

The "Associated Words Canon"

But other interpretative tools may strengthen New Jersey's hand. The most pivotal moment of the oral argument occurred when Judge Marjorie Rendell invoked the "associated words canon" during her questioning of Paul Clement, the leagues' counsel:
THE COURT: . . . here we have the words "sponsor, operate, advertise, promote, license, authorize," you know there is a canon, associated words canon, and all of these words anticipate something more, something, something affirmative. 
Should we not read "authorize" to mean something more than merely "permit"? Should we read it to say authorized by, you know, empowering, giving the state imprimatur, if you will. I get back to the issue of how do we read "authorize"? And doesn't the context in PASPA make it seem like the state has to do something by law that is a scheme as compared to just saying okay, you can do it at these places?
The "associated words canon" (also known as noscitur a sociis) is a tool of statutory construction which provides that when a string of words are grouped together in a statute, they should bear on one another's meaning. Or, as the Supreme Court has put it, "'[a] word is known by the company it keeps-' a rule that is often wisely applied when a word is capable of many meanings in order to avoid the giving of unintended breadth to the Acts of Congress." Thus, an otherwise ambiguous statutory term may be given a more precise meaning by reference to the neighboring words with which it is associated.

Under this canon, the term "authorize" would be construed in light of the other verbs which accompany it in PASPA--"sponsor," "operate," "advertise," "promote" and "license." Each of these associated words connotes some type of official involvement by the state in sports gambling. Judge Rendell hinted at this during the following exchange with Paul Clement, the former U.S Solicitor General and outside counsel for the sports leagues:
MR. CLEMENT:  . . . I mean I think that in terms of context you obviously can look at the surrounding words. I think you can also look at the legislative history. I think that's still allowed in this country. . . . 
THE COURT: But I don't think we can go beyond the language of the law and really look at that. I mean it's fair to know about it, but unless there's ambiguity in the law, you know there really isn't a need. And again I look at the other words and they require something more than - - - I mean they really require involvement of the state, "promoting, licensing, advertising," you know, putting its seal of approval, if you will. . . .
Echoing this point, renowned appellate lawyer Ted Olson (representing Governor Christie) referred to the earlier Third Circuit opinion which equated the PASPA verbiage (sponsor, operate, advertise, promote, license, and authorize) with a state "scheme":
MR. OLSON:  Well, I think that -- I read your opinion. And I read your opinion to mean that the words, and one of you referred to the fact that it's a stream of words, it has to do with the state providing the approval, a mechanism. It's almost as if you have a license to put in the window saying this is permitted here. You said -- 
THE COURT: We talk about a scheme also, a scheme.
MR. OLSON: You talked about a scheme and a regime, you talked about permit issuing, licensing, state issues license, affirmative authorization, authorization by law, state scheme, state sponsored, state sanctioned.
A look back at Christie I provides some context and insight into the Court's thinking. In Christie I, the Third Circuit stated that "[a]ll that is prohibited [under PASPA] is the issuance of gambling 'license[s]' or the affirmative 'authoriz[ation] by law' of gambling schemes." Within the same paragraph, the Court reiterated that "PASPA speaks only of 'authorizing by law' a sports gambling scheme." The use of the words "only" and "scheme" is notable here. It suggests that a partial repeal of state-law prohibitions against sports gambling would not violate PASPA so long as there is no state scheme or involvement. The interplay of this key language with the interpretative tools discussed above would appear to leave New Jersey holding a strong hand following oral argument.

But Legislative History May Cut the Other Way

Although Judge Rendell downplayed the importance of PASPA's legislative history--saying it only came into play if there was an "ambiguity" in the statutory language--the Third Circuit will likely consult PASPA's background and motivating policies as part of its analysis. If the Court believes that there is a latent ambiguity in the meaning of the term "authorize" (which seemed to be the case at oral argument), then it will undoubtedly avail itself of all pertinent tools of statutory construction, including reviewing the legislative history of PASPA in addition to employing the "associated words canon" and other interpretive aids.

The legislative history of PASPA cuts both ways. While the express legislative purpose behind PASPA was to "stop the spread of state-sponsored sports betting," Congress was also concerned with maintaining the integrity of, and public confidence, in professional and amateur sporting events, which federal officials believed would be threatened by the widespread legalization of sports gambling. But the leagues' attorney, Paul Clement, wisely refrained from playing that card during oral argument, in all likelihood because one of his clients (the National Basketball Association) has evolved in its thinking and now believes that the legalization of sports betting (through the adoption of a federal framework) would actually serve to promote the integrity of sporting events.

Instead, Mr. Clement pointed to language in Senate Report 102-48 expressing concern about the prospect of sports gambling "spreading" to racetracks and casinos, and specifically mentioning Florida as one of the states that was contemplating approving some form of sports gambling for its racetracks as part of legislation "reauthorizing" Florida's pari-mutuel wagering statute (when it was originally set to expire in the early 1990's):
MR. CLEMENT: [I]f you look at the Senate report, there are three things that it's crystal clear Congress is concerned about. They're concerned about states having state lotteries that involve sports gambling. They are concerned with racetracks that already have venues for state authorized gambling having sports gambling. If you look at the Senate Report it's very specific. 
At the time Florida is going through the process of renewing the licenses of its racetracks. And Congress is worried that they're going to get involved in sports gambling as a way -- this is 20 years ago, or 20 plus years ago, but the horse tracks were already in a little bit of financial trouble, and there was concern that they're going to try to add sports gambling as the next solution. And Congress was very concerned about that.
[Congress was also] concerned about . . . what they called in the Senate report "casino style" sports gambling, and they were specifically focused on the New Jersey situation. . . . Now, I think what that shows you is that Congress was particularly concerned with the idea that sports gambling would take place in the venues that states had selected as the being the venues for state authorized gambling.
But there are several flaws with Mr. Clement's decision to highlight only select portions of the Senate Report. For one, it makes no mention of the primary legislative intent behind PASPA: to stop the spread of state-sponsored sports betting and to maintain the integrity of sporting events. If the Third Circuit is going to consider PASPA's legislative history, then it must consider the entire Senate Report, and not just select portions thereof. Second, whatever concern that Congress may have had about casinos and racetracks offering sports gambling was solely in the context of state-sponsored gambling "schemes." Along those lines, the Senate Report noted that "[i]n the broader sports gambling area, States are considering a wide variety of State-sponsored gambling schemes," specifically mentioning both the Florida racetrack situation and "casino-style" sports gambling. But New Jersey's partial repeal law (which would entail no state oversight of sports gambling) would not seem to fit the rubric of a state-sponsored "scheme." Thus, the legislative history would not appear to be as one-sided as Mr. Clement suggests.

The "Rule of Lenity"

Although not raised during oral argument or in the parties' written submissions, there is yet another canon of statutory interpretation that could tip the scales in favor of New Jersey--the "rule of lenity." The rule of lenity holds that "where there is ambiguity in a criminal statute, doubts are resolved in favor of the defendant." This is the judicial equivalent of the baseball maxim "the tie goes to the runner." Courts will apply the rule of lenity when, after all the tools of interpretation have been applied, a reasonable doubt as to statutory interpretation persists. The rule of lenity is premised on two ideas. First, a fair warning should be given to the world in language that the common world will understand, of what the law intends to do if a certain line is crossed. A second goal of the rule of lenity is to minimize the risk of selective or arbitrary enforcement, and to maintain the proper balance between Congress, prosecutors, and the courts. Or, as the Supreme Court put it, "legislatures and not courts should define criminal activity."

But the rule of lenity is not automatically applied merely because there is some ambiguity in the statute under review. In order for the rule to apply, there must be a “grievous ambiguity or uncertainty in the language and structure of the statute." Lenity is reserved for those situations in which reasonable doubt persists about a statute's intended scope "even after resort to the language, structure, legislative history, and motivating policies of the statute in question." It will be invoked only if, after seizing everything from which aid can be derived, the court can make no more than a "guess" as to what Congress intended. In other words, the rule of lenity is an interpretive tool of "last resort."

The "rule of lenity" could come into play here as the Third Circuit wrestles with the critical question of just how far a repeal must go in order to not violate PASPA. There are no clear answers. And oral argument only added to the confusion, with the leagues retreating from their earlier position and conceding that something less than a "complete repeal" might be allowed under PASPA. But both the leagues and the DOJ struggled to pinpoint the line of demarcation. When asked by Judge Fuentes how far a repeal must go, Mr. Clement vaguely answered "pretty far," suggesting that "the dividing line is maybe around 50 percent." Determining whether a partial repeal of a criminal law constitutes an "authorization" of the activity and then pinpointing the dividing line is no easy task, even after employing canons of statutory construction and reviewing the legislative history of the statute. The Third Circuit may well conclude that this is an area of "grievous ambiguity or uncertainty," and invoke the rule of lenity in favor of New Jersey. I do not expect this to happen, particularly since it was not raised by the parties or by the Court. But it remains a possibility.

Absence of Word "Regulate" from PASPA May Help New Jersey's Chances

During last month's oral argument, Judge Fuentes (the author of the Third Circuit's majority opinion in Christie I) expressed concern that New Jersey's partial repeal law would have the effect of allowing completely unregulated sports betting to take place at state gambling venues. He suggested that this would be anathema to PASPA's goal of preserving the integrity of sporting events. Judge Fuentes' concerns go to the very heart of why I believe New Jersey may be on the losing side (yet again) despite having what I consider to be the better of the legal arguments under a pure statutory interpretation analysis. The following exchange between Judge Fuentes and Mr. Olson demonstrates this tension:
THE COURT: I'm really impressed in how this whole thing is going to unfold, because I was very impressed, in reading your brief, with the number of regulations that the state is repealing, including oversight by the state and Casino Control Commission, the Division of Gaming Enforcement. They will all, according to the state, have no role whatsoever in sports betting.
MR. OLSON:  Correct. And that's -- 
THE COURT:  Well, I'm a little concerned about that, because the function of those [regulatory bodies] is to preserve integrity in the process and now the state is saying they're out of this. So this is essentially a laissez-faire. Sports betting is going to take place in the casino with no oversight whatsoever.
MR. OLSON: That's right. As I said, like a ping-pong table game or a debate tournament.
THE COURT: I guess it's not for us to say that's good or bad. . . If it were, I would have a response to that.
But then Judge Rendell (who was not part of the Christie I panel) weighed in and suggested that it might still be possible to read PASPA as not prohibiting the states from "regulating" sports betting. She noted that PASPA is "so specific" and that there are six verbs contained within PASPA identifying the activities states may not engage in (e.g., sponsor, operate, advertise, promote, license, or authorize), and noting that "regulate" is not one of them. She then posited that "some modicum" of state regulation could be "appropriate." Consider the following exchange:
THE COURT: Do you read PASPA as saying that, assuming the law were repealed in toto and operations came up all across the state, of sports gambling, do you read PASPA to prohibit the state from regulating, imposing any kind of regulations on the sports gaming?
MR. OLSON: Well, that's what our opponents are essentially saying now.
THE COURT: But I'm asking you, is that how you read it? . . .
MR. OLSON: . . . If the state is engaged, to address your exact question, in regulating the activity, that might involve the imprimatur of . . . regulation and control.
THE COURT: But which verb under PASPA would regulation fall under? It's not sponsoring, it's not operating, its not advertising; promoting; licensing; or authorizing. It's regulating. Would that be permissible? . . . 
MR. OLSON: Well, I think it is a different question . . . 
THE COURT: PASPA is so specific. There are six specific activities that you cannot engage in, but regulating is not part of that.
MR. OLSON: That's right.
THE COURT: So I'm just wondering, maybe thinking out loud, that maybe some modicum of regulation is appropriate if you were right in the first instance.
This could be a real "game-changer" for New Jersey. If, as Judge Rendell suggested, states could repeal sports betting prohibitions but still be allowed to "regulate" the activity (so long as they do not sponsor, operate, advertise, promote, license, or authorize it), this might be the type of compromise that avoids the "wild-west" scenario feared by Judge Fuentes. It would allow the Third Circuit to interpret PASPA in a manner that is favorable to New Jersey (and in accordance with the above-described canons of statutory construction) without having to worry about the negative consequences associated with unregulated sports betting. At the very least, this reveals Judge Rendell to be an "outside the box" thinker. As noted earlier, Judge Rendell was also the panelist who invoked the "associated words canon" during oral argument. Her comments from the bench strongly suggest that she might be inclined to rule in favor of New Jersey (or is at least looking for a reason to do so). But she will need at least one more judge to join her (there are three judges on the panel), and her statement concerning the ability of states to "regulate" sports gambling without violating PASPA may be just the vehicle to accomplish that.

The Long-Range Implications of the Third Circuit's Decision

The Third Circuit's decision--regardless of the result--will have far-reaching consequences for the U.S. sports industry (and New Jersey's gaming industry). If New Jersey prevails, sports betting could become a reality at the state's licensed casinos and racetracks in time for the beginning of the 2015 NFL season. But as the decision date stretches into July, that may prove to be a long shot (even with a New Jersey victory) because the leagues and the U.S. Department of Justice would have 45 days to file a petition for rehearing en banc. (Rehearing en banc is a mechanism available to the losing side to seek review of the decision by the entire court, rather than just the three-judge panel that decided the appeal). Normally, the deadline for seeking rehearing is 14 days from the date of the decision. But since the federal government is a party, the leagues would have 45 days to file a petition for rehearing. That means we are looking at a late August deadline, assuming that there is a panel decision by mid-July. Thus, for Monmouth Park Racetrack to be able to offer sports betting by Week 1 of the 2015 NFL season (September 10), an appellate decision plus a denial of rehearing would have to occur no later than September 3, 2015 since the injunction entered by the lower court would not be lifted until 7 days has passed from the denial of rehearing. With each passing "non-decision" day, the prospect of Monmouth Park Racetrack launching sports betting in time for Week 1 of the 2015 NFL season is in jeopardy, but I'm sure that the track operators will settle for any date in 2015 (or even 2016).

The impact of a New Jersey victory would extend far beyond the state's borders. One immediate aftershock of such an upset (I now give New Jersey a 40% of chance of prevailing, increased slightly after oral argument) is that neighboring states (such as Pennsylvania and Delaware, which are part of the Third Circuit territory) would likely follow New Jersey's "court-blessed" blueprint and enact their own version of a partial repeal law in reliance on the Third Circuit's decision. Looking beyond the Third Circuit's jurisdictional territory, we could see as many as 10 other states passing similar partial repeal laws within a matter of months following a New Jersey victory. Several states--most notably, Minnesota, Indiana and South Carolina, to name just a few--are not even waiting. The legislatures of those states have already proposed bills legalizing single-game sports wagering (but not the partial repeal version favored by New Jersey). While these bills are only in a preliminary stage at this juncture, expect them to be fast-tracked if New Jersey wins.

Further, a victory by New Jersey will undoubtedly—and perhaps quickly—lead to new federal legislation that would expand legalized sports betting beyond Nevada. This is because New Jersey’s version of legal sports betting would be “unregulated" (meaning no governmental oversight). While NBA Commissioner Adam Silver has come out in favor of legal sports betting, he maintains that it needs to be “regulated” in order to preserve the integrity of the league’s games. A New Jersey victory would open the door to “unregulated” sports betting, a prospect that the NBA, the other sports leagues, and Congress are desperate to avoid. But the leagues and Congress have offered no definitive timetable for federal legislative reform, or any guarantees. Most observers believe that there is little chance of any Congressional action before 2017 (especially with a Presidential election next year). A New Jersey victory would likely change all that, and accelerate the timetable for federal legalization to 2016 (or perhaps even this year). Thus, regardless of the result, the Third Circuit’s decision will likely go a long way toward determining the “timing” of when sports wagering becomes legal in the United States.

But even if New Jersey were to lose the appeal, the eventual Third Circuit opinion will likely include language that provides New Jersey officials with some guidance for future legislative efforts. One possibility that was suggested at oral argument is the idea of a partial repeal based on geographic boundaries rather than favoring specific industries. The Court hinted that such a regime might not violate PASPA, and I would not surprised if that were the eventual solution reached by the panel (although courts are not typically in the business of issuing "advisory opinions"). New Jersey would then be poised to follow such a “roadmap” and introduce new legislation right away. Thus, regardless of the result, New Jersey may be inching closer towards achieving its goal of legal sports betting.

 
Justice Clarence Thomas's reprehensible use of NBA players' race for argument on fair housing


Justice Clarence Thomas has taken Sports Law to a new low.

In his dissent in the Fair Housing case issued Thursday (Texas Dept. of Housing v. Inclusive Communities Project), Thomas argued that African Americans don't need the protection of the law. As proof, he said, just look at the NBA where this minority dominates the court. (Equally insane, he cited how Jews in Poland owned quite a few businesses before the Holocaust.)

If you think this is hyperbole, read on from this excerpt of the dissent:
Racial imbalances do not always disfavor minorities. At various times in history, “racial or ethnic minorities . . . have owned or directed more than half of whole industries in particular nations.” These minorities “have included the Chinese in Malaysia, the Lebanese in West Africa, Greeks in the Ottoman Empire, Britons in Argentina, Belgians in Russia, Jews in Poland, and Spaniards in Chile—among many others.” “In the seventeenth century Ottoman Empire,” this phenomenon was seen in the palace itself, where the “medical staff consisted of 41 Jews and 21 Muslims.” And in our own country, for roughly a quarter-century now, over 70 percent of National Basketball Association players have been black.

Tuesday, June 23, 2015
 
The future of Pete Rose

ESPN's Outside the Lines reports on new evidence showing that Pete Rose bet on baseball, including games involving the Reds, while still an active player. Rose has admitted to betting on baseball, including on the Reds, while a manager from 1987-89, but he has never admitted (and in fact, expressly denied as recently as April) betting on baseball while a player. This all happens at an interesting time. In March, he submitted his latest petition for reinstatement, the first to be heard by new commissioner Rob Manfred, who some thought might be more receptive to the petition than his predecessors. In addition, the All-Star Game is in Cincinnati, and Rose was expected to play some role in the events, including acting as a commentator for Fox, suggesting at least a foot back in the game.

So how does/should this affect Rose's status?

On one hand, it should not make a difference. Baseball's Rule 21(d) does not distinguish between players and managers in declaring that anyone who bets on MLB games in which they have a duty to perform shall be placed on the permanently ineligible list. The lifetime ban was fully justified by his gambling (later admitted) while a manager; this new evidence of the same misconduct at a different time is not necessary to further justify the punishment. It long has been suspected that he did bet while a player, both because witnesses testified to that fact during the Dowd investigation (Dowd and company could not find documentary evidence to support the testimony) and because, as a matter of common sense, it seemed unreasonable to believe that Rose suddenly began betting on baseball games involving his team once he became a manager, but never before.

On the other hand, perhaps it might give Manfred basis to deny reinstatement on the ground that Rose has not been forthcoming and has not fully bared his soul and admitted the totality of his misdeeds. In other words, the old "it's not the crime, it's the cover-up"--Rose should remain on the ineligible list not because of his gambling (which was well-established before this report), but because he has lied to us, both by omission in 2004 and by commission, as recently as two months ago.

I admit to being a hard-liner when it comes to Rose--a lifetime ban is a lifetime ban and I never saw any justification for his reinstatement or for his inclusion in the Hall of Fame while still banned, especially simply because he confessed to doing the very thing that got him banned. The OTL piece might be beneficial in illustrating why MLB takes gambling so seriously. According to the newly discovered records, Rose was several hundred thousand dollars in debt (Dowd in the OTL piece calls it a "mortgage") to mob-connected bookies, perhaps placing himself in a position where he could be coerced into doing something to the detriment of the game.

 
The Complete Legal Primer to Tom Brady's Deflategate Appeal and his roadmap to taking the NFL to court

I have a new article for Sports Illustrated that breaks down the key issues in the appeal and Tom Brady's legal strategy going forward.

 
Florida's Uncertain Legal Landscape for Fantasy Sports: A Closer Look


The emerging popularity of daily fantasy sports has focused increased attention on whether such activity--which some equate to sports betting--is legal. While much of the debate has focused on federal law, and, in particular, the Unlawful Internet Gaming Enforcement Act, state law may represent the greater sphere of uncertainty (and vulnerability) for the fantasy sports industry. Four states—Iowa, Louisiana, Montana, and Washington—already expressly prohibit fantasy sports (either through an explicit statutory prohibition, as in the case of Montana, or through an advisory opinion from the state's attorney general, as in the case of Iowa and Louisiana, or because of an adverse interpretation by a state gaming regulator, as with the State of Washington). Additionally, the legality of fantasy sports (of all types) is especially murky in those states (such as Arizona, Illinois and Arkansas) in which even a modicum of “chance” would transform the contest into an illegal lottery, and, thus, run afoul of that state's gambling prohibitions.

But is Florida being overlooked? While there are there no Florida statutory provisions that directly address the legality of fantasy sports, the Florida Attorney General has weighed in on this issue, albeit, more than 20 years ago. On January 8, 1991, then-Attorney General Robert A. Butterworth issued an advisory opinion concluding that Section 849.14,Florida Statutes “prohibits the operation and participation in a fantasy sports league whereby contestants pay an entry fee for the opportunity to select actual professional sports players to make up a fantasy team whose actual performance statistics result in cash payments from the contestants’ entry fees to the contestant with the best fantasy team.” Fla. AGO 91-03, 1991 WL 528146, at *1 (Fla. A.G. Jan. 8, 1991).

As underscored by AGO 91-03, the question of legality in Florida does not turn on the “skill” vs. “chance” dichotomy, as it does in many other jurisdictions (which apply varying tests, but almost all of which embrace some form of the “skill” vs. “chance” analysis). While Florida’s gambling laws are primarily concerned with games of chance, there are specific provisions within Chapter 849 that also make it illegal to bet or wager on “contests of skill.” Along those lines, Section 849.14 provides as follows:
Whoever stakes, bets, or wagers any money or other thing of value upon the result of any trial or contest of skill, speed or power or endurance of human or beast, or whoever receives in any manner whatsoever any money or other thing of value staked, bet or wagered, by or for any other person upon any such result, or whoever knowingly becomes the custodian or depositary of any money other thing of value so staked, bet, or wagered upon any such result, or whoever aids, or assists, or abets in any manner in any of such acts all of which are hereby forbidden, shall be guilty of a misdemeanor of the second degree, punishable as provided on s 775.082 or s. 775.083.
Fla. Stat. § 849.14 (emphasis added)

There are four categories of potential violators that Section 849.14 was designed to reach: (1) the player, for betting or wagering on the contest of skill; (2) the sponsor, for accepting the bet or wager from the player; (3) banks and payment processors, for becoming the custodian or depositary of the money wagered, and (4) those who "aid, assist or abet in any manner" any of such acts. This last category should not be underestimated because it could subject “non-operators” to criminal liability merely for encouraging or assisting the primary violation of Section 849.14. Potentially at risk here are the investment banks, venture capital funds, professional sports leagues and teams, media broadcast companies, and entertainment companies that partner with the fantasy sports industry. These entities need ensure that the fantasy sports contests with which they are affiliated are legal in Florida, and, further, that their actions do not cross the line into “aiding and abetting” (as that concept is defined under Florida law).

While AGO 91-3 may seem antiquated to many, it remains the current (and only) law in Florida addressing the legality of fantasy sports. If you think that AGO 91-3 is no longer a concern, consider this: last year, one out-of-state gaming regulatory body cited AGO 91-3 in opining that “if a fantasy sports league has a buy-in (no matter what it is called) for its managers and gives a prize, then all three elements of an illegal lottery [e.g., chance, prize and consideration] are present." In concluding that a real-money fantasy sports league constituted illegal gambling, this Kansas regulatory body observed that “[t]he Florida Attorney General’s office reached the same conclusion in AGO 91-3.” While I have previously maintained that this Kansas regulatory opinion (since superseded) mischaracterized AGO 91-3 (which did not turn on the skill vs. chance dichotomy), the existence of that opinion underscores the very real risk that other regulators (and courts) could conclude that certain (or even many common) types of fantasy sports contests are illegal in Florida.

Deciphering “Stake, Bet or Wager” Under Florida Law

As stated earlier, the touchstone for a primary violation of Section 849.14 is whether the activity at issue constitutes a “stake, bet or wager.” Strangely, for a state with such an active gambling industry, Florida has very little case-law defining what constitutes a "stake, bet or wager." The most frequently cited decision is Creash v. State, 179 So. 149 (Fla. 1938), which distinguishes between a "stake, bet or wager" and a "purse, prize or premium" as follows:
In gamblers' lingo, 'stake, bet or wager' are synonymous and refer to the money or other thing of value put up by the parties thereto with the understanding that one or the other gets the whole thing for nothing but on the turn of a card, the result of a race, or some trick of magic. A 'purse, prize or premium' has broader significance. If offered by one (who in no way competes for it) to the successful contestant in a fete of mental or physical skill, it is not generally condemned as gambling, while if contested for in a game of cards or other game of chance, it is so considered. . . . 
Id. at 152 (emphasis added). The key difference, according to the Florida Supreme Court, is that in a "stake, bet or wager," all participants compete for thing offered, whereas, in the "purse, prize or premium" scenario, the sponsor does not compete for the thing offered.

But, at the same time, the Supreme Court cautioned against relying too heavily on labels in determining whether gambling has taken place. Rather, as Creash counseled, courts should look to the substance of the game under consideration (not its form), explaining:
Chance actuated by the hope of getting something for nothing is the controlling element in gambling. Any agreement or inducement by which one risks his money or other thing of value with no prospect of return except to get for nothing the money or goods of another is gambling. If the contest for a "purse, prize, or premium" or a "stake, bet or wager" has this element in it, it is gambling, regardless of the name by which it is called, the implements employed to accomplish the act, or the manner in which it is conducted.
Id. 

As an illustration of this approach, the Creash court characterized as illegal "gambling" a contest where participants "contribute[d] to a fund from which the 'purse, prize, premium' is paid, and wherein the winner gains, and the other contestants lose all." Id. Thus, regardless of whether the thing played for was a "purse, prize, or premium," or a "stake, bet, or wager," the Florida Supreme Court held that a conviction for illegal gambling would be warranted if the evidence showed that: (1) the amount paid by each player to enter the game went into the common fund from which prizes were paid; (2) the primary purpose for entering the game was to play for money or something of value; (3) the prize or prizes played for were won and paid to the winner; and (4) the other players lost all they paid in. Id. at 153.

Attorney General Opinions 91-03, 90-58 and 94-72

It is against this backdrop that the Florida Attorney General considered the legality of fantasy sports nearly one-quarter of a century ago. In AGO 91-03, the fantasy sports league at issue was operated "by a group of football fans" in which contestants paid an entry fee of $100 for the right to "manage" one of eight fantasy football teams. Each contestant would "draft" players from current National Football League (NFL) rosters, and compete against other contestants on a weekly basis. The winner of each week's head-to-head match-up was determined by combining the individual performance statistics of the "drafted" players from actual NFL games played that week. At the end of the season, the entire $800 in proceeds (representing the aggregate amount of entry fees) was paid based on the performance of the fantasy team.

In analyzing whether participants in this fantasy sports league were "betting or wagering" on a contest of skill in violation of Section 849.14, the Attorney General looked to the correlation between the entry fees paid and the prizes awarded and whether all participants had a chance of gain and risk of loss (echoing language in Creash). Pointing to the fact that the "the $800 in proceeds from the entry fees [were] used to make up the prizes," the Attorney General concluded that this characteristic transformed the payment of the entry fees into a "'stake, bet or wager' as defined by the courts." Id. at 2.

The Attorney General then contrasted this situation with an earlier advisory opinion (AGO 90-58), in which he concluded that "a contest of skill where the contestant pays an entry fee, which does not make up the prize, for the opportunity to win a valuable prize by the exercise of skill, does not violate the gambling laws of this state." Id. at n.8.

So does this mean that the legality of fantasy football turns solely on whether the "entry fees make up the prize"? Not necessarily. There are three important distinctions between the fact patterns in AGO 91-3 and AGO 90-58 (which involved a hole-in-one golf contest sponsored by a third party). First, in AGO 91-3, there was a direct correlation between the entry fees received and the prize awarded (e.g., the prize consisted of the aggregate entry fees received), whereas, in AGO 90-58, the prize was not contingent on the amount of funds earned from contest entry fees. Rather, it was paid out of the general assets of the sponsor of the contest. Second, in AGO 91-3, all participants paid an entry fee and competed for the same prize (with each person having a chance of gain and a risk of loss), whereas, in AGO 90-58, the sponsor of the contest was not competing for the thing offered. Id. Third, in AGO 91-3, while there was certainly skill involved in drafting NFL players for each fantasy team, the prizes were paid to contestants based upon the performance of those third party players, whereas in AGO 90-58, prizes were awarded based upon the individual contestants' own performance in the hole-in-one golf contest.

The Attorney General alluded to this last factor in AGO 90-58 when, quoting directly from Faircloth v. Central Florida, Inc., 202 So.2d 608 (Fla. 4th DCA 1967), he explained that the legislative intent behind Section 849.14 was to "proscribe 'wagering' on the results of ballgames, races, prize fights and the like, as opposed to 'playing' games of skill for prizes." Fla. AGO 90-58, 1990 WL 509068, *2 (Fla. A.G. July 27, 1990) (quoting Faircloth, 202 So.2d at 609). "To hold otherwise," the Attorney General wrote (again quoting from Faircloth), "we would have to find all contests of skill or ability in which there is an entry fee and prizes to be gambling. The list could be endless: golf tournaments, dog shows, beauty contests, automobile racing, musical competition, and essay contests, to name a few. No one seriously considers such activities to be gambling." Id.

The fact-patterns in AGO 91-03 and 90-58 represent opposite ends of the spectrum: in the former, the entry fees made up the prize, whereas, in the latter, none of the entry fees were used to make up the prize. This begs the question: would the opinion in AGO 91-3 have been different if only a portion of the entry fees had made up the prize? A later Attorney General Opinion, AGO 94-72 suggests that the answer to that question is no. In AGO 94-72, the Attorney General concluded that the purchase of a ticket containing the names of sports teams selected at random violates Section 849.14 when the winning ticket is determined by the sports teams that have scored the most points and part of the proceeds from ticket sales is used to make up the prize. The Attorney General explained:
According to your letter, the contestants would purchase a ticket to participate in the contest. Part of the proceeds from the ticket purchases would be used to make up the prize. Such monies, therefore, would appear to qualify as a "stake, bet or wager" as interpreted by the courts.  
Fla. AGO 94-72, 1994 WL 508760, at *2 (Fla. A.G. Aug. 23, 1994)

This trio of advisory opinions provides several insights into the factors that the Florida Attorney General (and a Florida court) would likely consider when assessing the legality of a fantasy sports league in the present environment. As gleaned from these opinions, the pertinent considerations include: (1) the correlation between the entry fees and prizes awarded; (2) whether the prize amount was contingent on the amount of entry fees received; (3) the source of the prize money (e.g., whether the amount paid by each contestant went into a "common fund" from which prizes were paid or, alternatively, was paid out of the general assets of the sponsor); (4) whether all contestants had a chance of gain and a risk of loss; (5) whether the sponsor of the event was a participant for the prize; and (6) the dependency on the performance of third parties in ascertaining the winner of the contest.

Might the conclusion reached in AGO 91-3 have been different if some of the facts were changed? For example, let's assume that the prize awarded to the winner(s) of the fantasy sports league in AGO 91-3 was paid by a third-party sponsor (such as a Yahoo or CBS Sports) which did not compete for it. Let's also assume that the prize money was not contingent upon, or directly proportionate to, the amount of entry fees received, and was paid out of the general assets of the sponsor. Under these assumed facts, a strong case could be made that the opinion reached in AGO 91-3 would have been different. And since many of today's popular fantasy sports leagues share some of these characteristics, an attorney representing a fantasy sports league operator or participant in a criminal prosecution or an enforcement proceeding would be well-served to point out those differences.

Since issuing this trilogy of opinions in the early 1990's, the Florida Attorney General has not revisited the issue of whether operating or participating in a fantasy sports league contravenes Section 849.14. This is surprising considering the explosive growth of fantasy football over the last two decades and the specific exemption that fantasy sports was recently accorded under the Unlawful Internet Gaming Enforcement Act (UIGEA). But it also underscores the risk that fantasy sports operators and their business partners face in Florida, absent clarification from the Attorney General.

How much weight should be given to the Attorney General's opinion? Is it controlling? Although not binding on a court, an attorney general's opinion "is entitled to careful consideration and generally should be regarded as highly persuasive." State v. Family Bank of Hallandale, 523 So.2d 474, 478 (Fla. 1993). Nonetheless, there have been instances where Florida courts have found attorney general opinions to be unpersuasive. See In re Advisory Opinion to the Governor, 600 So.2d 460, 463 n. 3 (Fla 1992) (disapproving opinion of attorney general); Willens v. Garcia, 53 So.3d 1113, 1117 (Fla. 3d DCA 2011) (finding an attorney general's opinion to "based upon questionable reasoning."); De La Mora v. Andonie, 51 So.3d 517, 522-23 (Fla. 3d DCA 2010) (same). Since the legality of fantasy sports has not yet been tested in a Florida court, it is difficult to predict what, if any weight, a judge will accord these two-decade-old advisory opinions.

Need for Legislative Clarity

Although there have been no criminal prosecutions of fantasy sports operators or participants (or alleged aiders and abetters) since the issuance of AGO 91-3, it is not beyond the realm of possibility that an aggressive state prosecutor could seek to target the industry, which has changed dramatically since 1991. As more money flows into fantasy sports and the character of the games begin to more closely resemble gambling (rather than an informal social game), the risk of a criminal prosecution heightens. As unlikely as that may seem to many, all it takes is one aggressive prosecutor or attorney general to jeopardize Florida's lucrative and established fantasy sports market.

While the industry has devoted substantial lobbying efforts towards changing the law in Iowa, Kansas, and Louisiana to explicitly legalize fantasy sports, Florida is a much more vital and strategic market, as it is the home to nearly 20 million residents (more than the aforementioned states combined), two major fantasy sports operators (CBSSports in Fort Lauderdale and FanDuel's new Orlando office), and seven major professional sports teams (nearly all of which have entered into sponsorship deals with the fantasy sports industry). The stakes for the industry are simply too high to ignore the risk posed by Florida's arguably antiquated (but still-on-the-books) Attorney General's opinion.

One option might be to seek a legislative amendment to Section 849.14 to specifically carve out fantasy sports from the ambit of the statute. With the Florida Legislature poised to consider significant gambling expansion during next year's legislative session, the time may be right to explicitly legalize fantasy sports in Florida. One model that could be pursued is the Pennsylvania and Indiana approach, which seeks to legalize fantasy sports for casinos and racetracks. Florida is one of the largest gambling markets in the United States, with 31 licensed pari-mutuel operators. However, many of these operators have been reluctant to embrace fantasy sports because of concern about the lack of legal clarity in Florida, and, for those operators with multi-state properties, the risk of attracting the ire of gaming regulators in other states and potentially jeopardizing their valuable gaming licenses. A one-line fix to Section 849.14 could stabilize the industry in Florida and potentially open up a brand new revenue stream. It's worth a look.