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Monday, September 29, 2014
Sports Leagues Push Back on New Jersey's Latest Sports Betting Gambit

In a post two weeks ago, I analyzed Governor Christie's latest strategy for bringing single-game sports betting to the Garden State: by arguing in a federal court motion that the state-law prohibitions against sports wagering have already been repealed through the enactment of the New Jersey Sports Wagering Law, even though that particular legislation was found by two different federal courts to be preempted by the Professional and Amateur Sports Protection Act. ("PASPA"). Governor Christie had argued, I believe unconvincingly, that the portion of the legislation allowing casinos and racetracks to "operate sports pools" could be "severed" from the portion of the law authorizing the state to "license" sports betting (the part found to be in express conflict with PASPA).

Earlier today, the four major professional sports leagues and the NCAA filed their joint response in opposition to Governor Christie's motion. The Preliminary Statement wastes no time laying waste to the Governor's main legal arguments. Here are some of the highlights:
  • "This motion reflects defendants' latest unlawful attempt to authorize sports wagering in New Jersey's casinos and racetracks."
  • "Contrary to this Court's decision and defendants' prior position -- as well as to the very words of the Sports Wagering Law itself -- the Governor takes the astounding position that, in providing that casinos and racetracks 'may operate a sports pool," the Sports Wagering Law does not 'authorize' sports wagering, but simply repeals the State's existing prohibition on sports wagering. This despite the fact that throughout the litigation, defendants consistently asserted that the Sports Wagering Law authorized casinos and racetracks to operate sports wagering games."
  • "Moreover, even in their current motion, defendants expressly acknowledge that sports pools operated by racetracks and casinos pursuant to the Sports Wagering Law would be subject to all of the laws and regulations that apply to those venues, including the extensive legislation and licensing and regulatory scheme addressing gambling in New Jersey's Casino Control Act, N.J. Stat. Ann. s 5:12-1 et seqIn other words, this Court's injunction has no practical effect whatsoever on New Jersey's ability to accomplish precisely what PASPA prohibits."
In the main portion of their opposition brief, the Leagues characterize New Jersey's implied repeal argument as both "improper" and "disingenuous," pointing to the plain language of the Sports Wagering Law, the two prior court rulings, statements made in the defendants' prior court filings, and the recent unsuccessful legislative repeal efforts:
  • "The plain language of the Sports Wagering Law readily refutes defendants' new reading, as the phrase 'may operate' is as clear an authorization as one could imagine. In fact, both this Court and the Third Circuit have recognized that the Sports Wagering Law is an attempt to authorize sports gambling, not to 'repeal' existing prohibitions."
  • "So, too, have defendants, who repeatedly represented--including throughout this litigation--that the Sports Wagering Law does in fact seek to authorize sports gambling."
  • "Immediately after this litigation (seemingly) concluded, the State Legislature attempted to enact legislation that purported to repeal sports wagering prohibitions at casinos and racetracks--legislation that would have been wholly unnecessary had the Sports Wagering Law accomplished that end."
On the related issue of "severability," the Leagues argue that the defendants' attempt to sever only five words ("may operate a sports pool") from the Sports Wagering Law's authorization of sports wagering "utterly misconstrues" the doctrine of severability. As the Leagues explain in their joint response, "[t]he critical inquiry for severability is legislative intent, which 'must be determined on the basis of whether the objectionable feature of the statute can be excised without principal impairment of the principal object of the statute.'" 

The Leagues argue that the legislative intent behind the Sports Wagering Law was to enact a "licensing regime" that would shift illegal economic activity into legal channels where it could be monitored, regulated and appropriately taxed. They point to the 2010 public hearings during which legislators "expressed a desire to 'stanch the sports-wagering black market flourishing within New Jerseys borders.'" And, as icing on the cake, the leagues quote directly from a Third Circuit brief filed by two New Jersey legislators (Stephen M. Sweeney and Sheila Oliver) in which they stated that unregulated sports betting "would be contrary to the considered judgment of the Legislature and the expressed desire of their constituents." Based on the foregoing, the Leagues conclude that "Defendants--and this Court--cannot, consistent with legislative intent underlying the Sports Wagering Law, sever the law's provision authorizing casinos and racetracks to operate sports gambling from its requirements that any sports gambling in New Jersey (i) be authorized and approved by the [state regulators]; and (ii) conform to the licensing requirements of the Casino Control Act and the regulations promulgated thereunder."

The Leagues also take issue with the notion that there can ever be such a thing as "unregulated" sports betting at New Jersey's casinos and racetracks, since they would still remain subject to an extensive licensing and regulatory regime in New Jersey (whether there is sports betting or not). Indeed, the Leagues stress, "virtually every detail concerning the operation of casinos and racetracks is heavily regulated by both State law and by regulations promulgated by the DGE and Racing Commission." For example, State regulations upon casinos and racetracks include licensing and permitting requirements, specifications on equipment used for gambling, and payment to the State of a portion of revenue derived from casino and racetrack wagering. As the Leagues point out, even the defendants have stated that these requirements "will apply equally to sports wagering if the provision of the Sports Wagering Law providing that casinos and racetracks 'may operate a sports pool' is reinstated. Thus, the Leagues argue that this would leave New Jersey "free to accomplish precisely what the Sports Wagering Law was enacted to achieve: state-regulated sports wagering in casinos and racetracks," adding that "[n]ot only is [such a] result flatly inconsistent with this Court's injection, it is flatly inconsistent with PASPA." 

Finally, the Leagues argue that, under no circumstances, could sports wagering be conducted at Monmouth Park or at the Meadowlands because those two racetracks are owned and operated by the New Jersey Sports and Exposition Authority, a state governmental entity. Based on the state's ownership of those racetracks, the Leagues contend any sports wagering conducted at either the Monmouth Park or at the Meadowlands "would violate the provisions of PASPA that prohibit a State from directly sponsoring, operating, or advertising sports wagering, regardless of whether those facilities purport to offer gambling pursuant to a state authorization or a state repeal."

As of the this writing, the Department of Justice has not yet filed its response brief. But if past practice is any indication, I would expect the DOJ to file a response shortly (i..e, before midnight tonight).

New Jersey is now on the clock, with its Reply Brief due on October 10.

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