Place Your Bets: Will the Trump Administration Support New Jersey’s Push to Expand Sports Gambling?

Fantasy Sports  •  Sports Betting

New Jersey’s years-long battle to allow sports gambling received a significant boost from the U.S. Supreme Court last week, which issued an order inviting the Solicitor General to file a brief in the case (known to Court Watchers as a “CVSG”).  The Court’s action keeps alive New Jersey’s push to bring sports gambling to the State, and it signals that the Court might ultimately grant review.  The Court’s order also provides an early opportunity for the new Trump Administration to weigh in on the significant federalism issues presented by the case.

Background

This is the second time that New Jersey has gone before the Supreme Court seeking to revive its effort to bring sports gambling to the State.  New Jersey first passed a law in 2012 to authorize sports wagering in casinos and racetracks.  The NCAA, NFL, NBA, and MLB filed suit to prevent the law from going into effect under the Professional and Amateur Sports Protection Act of 1992 (“PASPA”)—a federal statute that prevents government entities (subject to certain exceptions, such as a provision grandfathering-in states like Nevada) from, among other things, licensing or authorizing sports gambling.  28 U.S.C. § 3702.  The Third Circuit rejected New Jersey’s constitutional challenges to PASPA, which New Jersey claimed infringed upon state sovereignty, and the Supreme Court turned away New Jersey’s petition for certiorari.

Seizing on an apparent opening in the Third Circuit’s decision—which had suggested that PASPA’s restriction on laws authorizing sports gambling did not prevent States from repealing preexisting gambling bans—New Jersey enacted a new law in 2014.  This time, the New Jersey legislature withdrew legislation licensing and regulating sports wagering, but also repealed its prohibitions on sports wagers at casinos and race tracks.  The NCAA and the Leagues once again filed suit in federal court, arguing that the revised law continued to violate PASPA.  A panel of the Third Circuit agreed (in a 2-1 decision), and the full Circuit then voted to hear the case en banc before ultimately reaffirming the panel’s holding (in a 9-3 vote).  New Jersey, led by former U.S. Solicitor General Ted Olson, once again petitioned the Supreme Court to review the case.  The NCAA and the Leagues, who are led by another former U.S. Solicitor General Paul Clement, opposed review.

The Supreme Court’s Order and Next Steps

On January 17, the Supreme Court issued an order inviting the Acting U.S. Solicitor General to file a brief in the case expressing the views of the United States.  This “CVSG” order, which requires a minimum of four votes to grant, is a significant step for the Court to take, and it signals serious interest by at least several Justices in New Jersey’s case.  The Supreme Court typically invites the Solicitor General to file a brief in cases where the United States is not itself a party, but where important federal interests are at stake.

The Court’s order comes at an interesting time, as the new Administration raises the possibility that the Federal Government will change its position on PASPA’s application to New Jersey’s law.  The Federal Government participated as an amicus curiae in the Third Circuit in support of the NCAA and the Leagues, where it argued that New Jersey’s law authorized and licensed sports gambling in the guise of a repeal.  New Jersey and Governor Chris Christie are now hoping that the new Administration will take a different view.

There is no deadline for the Solicitor General ‘s Office to submit its invitation brief, but, by tradition, the Office will likely file by late May in order to give the Supreme Court time to consider the petition before its Summer Recess—at which point a Ninth Justice will likely be in place to vote on the petition.  The Court, of course, is not bound by the Solicitor General’s advice.  In practice, however, a recommendation by the Solicitor General to grant review would make it highly likely that the Court will take the case.  In either event, a decision on the petition is likely by the end of June 2017.

Potential Implications of Supreme Court Review

A decision by the Supreme Court in this case would have major implications for the gaming industry.  Most obviously, a decision could have a significant impact on the commercial casino industry, as it would determine whether New Jersey, and other states who were not grandfathered-in by PASPA, have a path to legalize traditional sports gambling.

A decision could also have broader ripple effects.  Depending on how PASPA is interpreted, the statute may significantly constrain States’ discretion to repeal or reform state gambling restrictions potentially applicable to the daily fantasy sports (DFS) industry, as well as to other activities whose legal status is uncertain under decades-old gambling laws.  Since DFS has emerged as a multi-billion dollar industry in recent years, several States have adopted or considered proposals to exempt DFS from gambling restrictions while also imposing regulations and licensing requirements on the industry.  While PASPA’s application to the DFS industry is contested, at least some State proposals could invite potential PASPA challenges.

In other words, Governor Christie isn’t the only one with skin in the game as the Trump Justice Department decides whether to support New Jersey’s push to legalize sports gambling.

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