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Tuesday, October 04, 2016
New Jersey Sports Betting, The Supreme Court, and a Nuclear Option (with a Twist)

For those of you who have been closely following New Jersey’s five-year quest to legalize sports gambling, it should come as no surprise that the Garden State is not quite ready to throw in the towel following its latest federal court setback. Earlier today, New Jersey State Senator Ray Lesniak told ESPN’s David Purdum that New Jersey would be filing a petition with the United States Supreme Court by the end of this week. While the news is not surprising—after all, New Jersey appealed its Third Circuit loss in 2013 to the Supreme Court, so why wouldn’t it do so again, following another divided Third Circuit opinion (with two dissenting opinions and an en banc rehearing). But the deadline for filing a petition for writ of certiorari is November 7th, which is more than one month away. Why the rush, especially with only eight justices? Wouldn’t it make more sense to file in November with the potential recess appointment of Justice Merrick Garland looming (if Hillary Clinton becomes the President-Elect), thereby enhancing the possibility of certiorari being granted with one more judge being able to vote. In all likelihood, Senator Lesniak was referring to his own chamber’s petition—the anticipated Supreme Court filing by the New Jersey State Senate and New Jersey State Assembly, who are represented in this case by Stephen Sweeney (the Senate President) and Vincent Prieto (the Assembly Speaker). There are, however, two other “New Jersey” parties: the New Jersey Thoroughbred Racing Association and New Jersey Governor Chris Christie. They are the principal New Jersey parties in this case, and their expected petitions will likely be filed much closer to the November 7th deadline.

Whenever these petitions are actually filed, we can expect the key arguments to again focus on the anti-commandeering doctrine, a principle of constitutional law that prevents the federal government from dictating how a state regulates its own citizens. New Jersey would presumably highlight the dissenting opinions in Christie II, particularly Judge Thomas Vanaskie’s criticism of the “shifting line approach” employed by the majority, which had opened the door to the possibility of a partial repeal in Christie I before essentially sealing it shut in Christie II. Judge Vanaskie observed that after Christie I, a state like New Jersey “at least [had] the choice of either: (1) repealing, in whole or in part, existing bans on gambling on sporting events,” or (2) “keep[ing] a complete ban on sports gambling.” Such a choice, he explained, was essential to upholding PASPA’s constitutionality in Christie I. By contrast, he wrote, the majority’s decision in Christie II “does not leave a state ‘much room’ at all. Following Christie II, states “must maintain an anti-sports wagering scheme” by “leav[ing] sports gambling prohibitions on the books to regulate their citizens.” Judge Vanaskie opined that this really “leaves the States with no choice,” adding that “[t]he anti-commandeering doctrine, essential to protect State sovereignty, prohibits Congress from compelling States to prohibit such private activity.” Judge Vanaskie was unpersuaded by the majority’s assertion that some partial repeal options “may pass muster” (such as the example involving small wagers between friends and family), noting that the majority “does not explain why all partial repeals are not created equal or explain what distinguishes the 2014 Law from those partial repeals that pass muster.” As Judge Vanaskie explained, “[t]he bedrock principle of federalism that Congress may not compel the States to require or prohibit certain activities cannot be evaded by the false assertion that PASPA affords the States some undefined options when it comes to sports wagering.” Contending that the majority opinion “excised” the distinction between a “repeal” and an “authorization,” Judge Vanaskie declared that it is “clear” that no repeal of any kind will evade PASPA’s command that no State “shall . . . authorize by law sports gambling.” Such commands, Judge Vanaskie concluded, “are fundamentally incompatible with our constitutional system of dual sovereignty.”

Judge Vanaskie’s commandeering analysis—and his thesis that PASPA requires states to maintain and enforce existing state-law gambling prohibitions—will likely be the centerpiece of New Jersey’s petition to the Supreme Court. In his Christie II dissent, Judge Vanaskie described PASPA as “seek[ing] to control and influence the manner in which States regulate private parties” by effectively commanding the states to maintain and enforce existing gambling prohibitions. By issuing this directive, Judge Vanaskie wrote, “Congress has set an impermissible ‘mandatory agenda to be considered in all events by state legislative or administrative decisionmakers.’” “The logical extension of the majority,” he continued, “is that PASPA prevents States from passing any laws to repeal existing gambling laws.” (italics in original). By “effectively command[ing] the States to maintain and enforce existing gambling prohibitions,” Vanaskie concluded, “PASPA . . . dictat[es] the manner in which States must enforce a federal law,” adding that the Supreme Court “has never considered Congress’ legislative power to be so expansive.”

Although New Jersey unsuccessfully sought certiorari review following the Christie I decision, its commandeering argument this time around is arguably more compelling. In its previous Supreme Court petition, New Jersey’s commandeering argument in Christie I was directed to PASPA’s “negative command” forbidding states from licensing or authorizing sports wagering. That was always an uphill battle given the Supreme Court precedent limiting the anti-commandeering doctrine to cases where the federal government requires states to engage in some type of “affirmative activity,” such as taking title to radioactive waste (as in the New York case) or performing background checks on prospective handgun purchasers (as in the Printz case). But this time around, New Jersey’s commandeering argument will address the flip-side of PASPA: its “affirmative requirement” compelling states to prohibit sports wagering. This view of PASPA fits more neatly into the Supreme Court’s commandeering jurisprudence, and, as such, New Jersey’s prospects for Supreme Court review are arguably enhanced. Nonetheless, this is still a long-shot proposition at best since the Supreme Court typically grants less than one percent of all petitions seeking certiorari review. New Jersey’s chances for Supreme Court review are also hampered by the absence of any “circuit split” on the issue of PASPA’s constitutionality. Most cases accepted for review by the Supreme Court involve conflicting decisions among the lower federal courts on a particular legal issue. Since the Christie line of cases are only the federal court decisions addressing the constitutionality of PASPA, the all-important “circuit split” is lacking here. (Note: New Jersey could potentially focus the “circuit split’ on the broader commandeering issue by pointing to the Ninth Circuit’s decision in Conant v. Walters, 309 F.3d 629 (9th Cir. 2002), where Judge Kozinski reasoned in a concurring opinion that “preventing [a] state from repealing an existing law is no different from forcing it to pass a new one,” and, therefore, “runs afoul of the commandeering doctrine.” That language is arguably at odds with Christie II).

Even if New Jersey’s pitch to the Supreme Court fails (and we will likely not know until the Spring of 2017), it still possesses other options—legislatively—to legalize sports betting. One option would be to enact another partial repeal law, though perhaps one not nearly as targeted or selective as the 2014 Law (which decriminalized sports gambling only for casinos, racetracks and former racetrack sites). While the Christie II decision did not provide specific examples of a partial repeal law that would “pass muster”—other than the commercially meaningless “friends and family” exception—it did allow that states had “sufficient room” under PASPA to “craft their own policies.” The precise contours of this policy-making room for state lawmakers were not spelled out in Christie II, but, clearly, New Jersey would be permitted to partially repeal its state-law prohibitions on sports gambling so long as it did not cross the line into an “authorization” of that activity (which would be prohibited by PASPA). So, what kind of partial repeal would “pass muster” with the Third Circuit? Perhaps a partial repeal based on geographic boundaries, such as a law repealing sports gambling prohibitions at any commercial establishment within Atlantic County (where all of New Jersey’s casinos are located) and Monmouth County (the home to Monmouth Park Racetrack). While such a law could likewise be viewed as benefitting casinos and racetracks, it would not be nearly as selective or targeted as the 2014 Law: it would decriminalize sports betting within the entirety of both counties (and not just at state-licensed casinos and racetracks). A repealer like this would stand a far better chance of passing legal muster, though it would likely lead to more litigation with the sports leagues, which would invariably point to language in the Christie II opinion stating that a state law which “channels wagering activity to particular locations . . . is in essence, an ‘authorization’ under PASPA.” Ironically, this could the tee up the next round of litigation—anyone ready for a “Christie III”?—over the meaning, breadth and scope of the word “locations,” such as whether it refers only to specific venues or encompasses any “geographic-based” repealer (such as a law decriminalizing the activity throughout an entire county or municipality).

A second option—and one completely within New Jersey’s control to pull off—is the so-called “nuclear option,” e.g., a complete decriminalization of sports betting statewide. Under a complete repeal, any and all state-law prohibitions against sports betting would be removed so that anybody (literally anybody) could offer, accept, or place sports wagers without criminal or civil repercussions (or any form of regulation). This “Wild West” scenario would decriminalize sports betting not only for casinos and racetracks, but also for the corner bookie, retail stores, and, most stunningly, for organized criminal enterprises. One New Jersey State Senator—Ray Lesniak (who has long championed sports betting in New Jersey)—announced that he intends to introduce such legislation in the near future. While such a measure would face long odds in the New Jersey Senate and New Jersey Assembly due to its controversial premise (e.g., having no laws on the books prohibiting sports betting), its true goal is more forward-thinking: to force the major sports leagues and Congress to address the issue of expanded legal sports betting sooner rather than later. The leagues’ worst fears—widespread unregulated and unmonitored sports gambling (with no oversight)—would be realized if New Jersey were to enact such a law. Thus, the thinking here is that a complete repeal, if enacted, would dramatically shorten the timeline for expanded legal sports betting by forcing the sports leagues and Congress to act more expeditiously in legalizing sports betting nationally. While this “nuclear” option may not be taken seriously by some observers—who see it as nothing more than a “bluff” or a publicity stunt—it is the only one of the three remaining options that would guarantee sports betting in New Jersey on day one.

Finally, New Jersey may wish to consider what I call the “nuclear option with a twist”: completely repealing its state-law prohibitions on sports betting and then, over time, adding restrictions to arrive at essentially the same place as the 2014 Law: legal sports betting at casinos and racetracks. Judge Fuentes alluded to this very possibility in his Christie II dissent when he reasoned that “no conceivable reading of PASPA” would preclude a state from “repeal[ing] completely its sports betting prohibitions” and then adding “later enacted limiting restrictions regarding age requirements and places where wagering could occur.” Such a multi-stage legislative approach—which could be spread out over a period of several years—could allow New Jersey to accomplish over time what it could not achieve in a single legislative act—legal sports betting confined to specific locations of the State’s choosing. Of course, such a maneuver would surely be challenged by the sports leagues, which would argue that New Jersey was trying to accomplish indirectly what it was prohibited by Christie II from doing directly. But this option offers certain advantages: at the outset, it would guarantee legal sports betting in New Jersey, while potentially providing the State with an opportunity to make appropriate down-the-road adjustments to the law free from the clutches of PASPA. This could be the pragmatic solution for those lawmakers hesitant to completely decriminalize sports gambling.


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