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Thursday, October 23, 2014
NJ Sports Betting Chances Boosted by Strong Response to TRO Motion; Oral Argument Likely
With an hourly rate of $1,800, Ted Olson may be the most expensive lawyer in the country. But, as his pedigree and track record prove (e.g., Bush v. Gore, Proposition 8, etc.), he is worth every penny. He demonstrated it again last evening with a masterful brief filed in opposition to the leagues' motion for a temporary restraining order and preliminary injunction. His persuasive and well-written brief (filed on behalf of Governor Christie) sets the stage for Judge Shipp to schedule oral argument tomorrow on whether a temporary restraining order should immediately issue against Monmouth Park Racetrack, which has announced plans to offer sports wagering to its patrons beginning this Sunday. Based on the strength of the response briefs (including those filed by the other New Jersey defendants), it also appears likely that Judge Shipp will also schedule a hearing for mid-November on the motion for preliminary injunction, which seeks an injunction of much longer duration than the temporary restraining order.
Here are the highlights of the New Jersey response (drawing mostly from Olson's brief) [to be updated periodically]:
In response to the leagues' argument that New Jersey's new legislation (a partial repeal of the sports betting ban, but limited to casinos and racetracks) is a "de facto authorization" of sports betting because casinos and racetracks remain subject to state licensing and regulation, Olson argues that New Jersey is doing precisely what the Third Circuit opinion allows. He writes that "[t]he 2014 Act's partial repeal of the State's prohibition on sports wagering tracks precisely what the Third Circuit held is permitted by PASPA. As the United States [Solicitor General] explained, under the Their Circuit's decision, PASPA permits States to repeal their prohibitions on sports wagering 'in whole or in part.' That is exactly what New Jersey has done." Olson adds that the Third Circuit opinion makes plain that the New Jersey defendants "were permitted to specify what the exact contours of the prohibition [on sports wagering] will be."
Olson also highlights prior statements made by United States Attorney Paul Fishman and league counsel Jeffrey Mishkin (at the Third Circuit oral argument) that a "repeal" would be permissible under ASPA. "In response to New Jersey's argument that PASPA violated the United States Constitution because it commandeered New Jersey's authority by effectively requiring it to maintain unwanted state-law prohibitions on sports wagering," Olson's recounts that "to save PASPA from that constitutional attack," the leagues and the U.S. Department of Justice "repeatedly conceded that PASPA does not require New Jersey to maintain its prohibitions on sports wagering." He notes that at oral argument before the Third Circuit, Mr. Fishman acknowledged that New Jersey "could" as a matter of law repeal its ban on sports wagering. Likewise, as Olson pointed out, league attorney Mishkin conceded at the same hearing that "nothing in PASPA requires states to enact, maintain, or enforce any prohibitions on sports gambling." Olson then adds this zinger (perhaps channeling judicial estoppel): "Having repeatedly urged this Court, and the Third Circuit, to adopt the view that PASPA does not prevent a State from repealing prohibitions against sports wagering, Plaintiffs cannot now be heard to complain when the New Jersey Legislature did exactly that."
Addressing the leagues' argument that the partial repeal of the state-law ban on sports betting is a "de facto authorization," Olson points to language in the Third Circuit opinion stating that "there is no 'equivalence' between 'repeal and authorization' and that a repeal of prohibitions on sports wagering would not 'authorize by law' that activity." He then adds that "Plaintiffs cannot have it both ways; either PASPA permits States to repeal their prohibitions against sports wagering in whole or in part, as does the 2014 Act, or PASPA unconstitutionally commandeers states authority by forcing States to maintain unwanted prohibitions."
In response to the leagues' argument that the partial repeal is a "half-measure" (see, even Paul Clement quotes Breaking Bad!) directed only at "state-authorized gambling venues," Olson writes that the league position is "flatly contradicted" by the Third Circuit's ruling, which explained that "States remain free to define the 'contours of the[ir] prohibition -- a holding that Plaintiffs tellingly fail to acknowledge." Olson maintains that "Plaintiffs' contrary contention that PASPA permits States only the choice of an absolute prohibition on all sports wagering or no prohibitions whatsoever on sports wagering is irreconcilable with the Third Circuit's ruling, the stated position of the United States, and common sense."
Olson also takes aim at the leagues' argument that the partial repeal is a "de facto authorization"of sports betting because only state-licensed casinos and state-licensed racetracks are benefitted and they would remain subject to extensive state regulation, thereby enabling New Jersey to "regulate"sports betting, even if indirectly. Olson makes two great points to counter that. First, he observes that this would still be true even under a "complete repeal" of the ban against sports wagering. Olson writes that "[i]f background regulation of other activities at casinos and racetracks constitutes an authorization of sports wagering, then even if a state were to take Plaintiffs' suggestion and repeal all laws against sports wagering, that background regulation, licensure and taxation of businesses still would violate PASPA (under Plaintiffs' interpretation). The choice between prohibiting sports betting and foregoing all regulation and taxation of businesses is not merely a 'hard' choice but is indeed 'no choice at all,' and therefore unconstitutional." Olson also challenges the leagues' assertion that only "state-licensed" venues are involved, pointing to language in the new law that also repeals prohibitions at 'former racetracks' which have been converted to other uses and are not regulated by the State Defendants at all." Those in the know speculate that one of the "former racetracks" that would house unregulated sports betting is Garden State Park, in Cherry Hill, NJ, right outside of Philadelphia).
The leagues had also argued that even if the New Jersey law is the "repeal" that it purports to be, then it would still violate Article IV, Section 7 of the New Jersey Constitution, which states that no gambling may be conducted in the State "unless it has been authorized by law by the Legislature." Olson counters by arguing that the Eleventh Amendment bars the bringing of state law claims against state officials in federal court "when--as here--the relief sought and ordered has impact directly on the State itself," and stating that "if the [leagues] want to advance such a claim, they will have to do so in state court." Alternatively, Olson adds, "nothing in the New Jersey Constitution prohibits the Legislature from repealing prohibitions on sports wagering."
In their TRO motion, the leagues relied heavily on the prior finding of "irreparable harm" in Judge Shipp's 2013 order imposing a permanent injunction. But Olson argues that the prior finding of irreparable harm "does not resolve the irreparable harm question here" because that finding occurred in the context of a "violation of federal law" (PASPA) and the current New Jersey law, by contrast, "does not violate PASPA." (But what if Judge Shipp finds that the new law does violate PASPA? Did New Jersey just concede the irreparable harm issue?). Olson adds that "with no violation of federal law, Plaintiffs are left only with the argument that limited wagering at a single racetrack during the pendency of this litigation is going to cause 'immediate' irreparable harm. This argument fails the straight-face test, particularly given the volume of sports wagering that occurs daily under the auspices of Nevada law." Indeed, as Olson points out, "a judge in this Circuit previously denied a request by the NFL for a TRO on the basis that "extensive gambling in NFL games has existed for many years and  this fact of common knowledge has not injured plaintiffs or their reputation." Nat'l Football League v. Gov. of Delaware, 435 F. Supp. 1372, 1378 (D. Del. 1977). But I would think that the 1977 decision is superseded by the more recent PASPA case-law, particularly last year's decision by Judge Shipp (as well as the Third Circuit opinion), in which New Jersey advanced the identical argument that legal sports betting in Nevada precluded a finding of irreparable harm, and lost on that issue.