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Media Alerts - National Collegiate Athletic Association v. Governor of the State of New Jersey - Third Circuit
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September 2, 2016
  National Collegiate Athletic Association v. Governor of the State of New Jersey - Third Circuit
Headline: New Jersey Law Repealing Sports Gambling Prohibitions in Casinos and Racetracks Violates the Professional and Amateur Sports Protection Act of 1992

Area of Law: Constitutional Law, Gaming

Issue(s) Presented: Whether SB 2460, enacted by the New Jersey Legislature to partially repeal certain prohibitions on sports gambling, violates PASPA? Whether PASPA unconstitutionally commandeers the states?

Brief Summary: In 1992 Congress passed the Professional and Amateur Sports Protection Act of 1992 ("PASPA") to prohibit state authorized sports gambling. Congress included in the law an exception for New Jersey, but only if the State enacted a sports gambling scheme within one year of PASPA's enactment. New Jersey failed to do so. In 2014, the New Jersey Legislature passed SB 2460, repealing any existing prohibitions on sports gambling in casinos and racetracks. The NCAA and various professional sports leagues filed suit to enjoin New Jersey from enacting the law. New Jersey argued that SB 2460 did not violate PASPA because it was a repeal of existing prohibitions of sports gambling, not an authorization of such. The State further argued that PASPA was unconstitutionally commandeering the states by forcing states into a binary choice between a complete repeal of existing laws or a complete ban on sports gambling. The Third Circuit rejected New Jersey's arguments, concluding that despite New Jersey's use of "repeal" the law selectively authorizes sports gambling in casinos and racetracks across the state. Additionally, PASPA does not unconstitutionally commandeer the states because it does not create a coerced binary choice between a total repeal or total ban. The fact that New Jersey's partial repeal was ruled to violate PASPA does not exclude the chance that other partial repeals may be deemed satisfactory under the federal law.

Extended Summary: In 1992 Congress passed the Professional and Amateur Sports Protection Act of 1992 ("PASPA") to prohibit state authorized sports gambling. Congress included in the law an exception for New Jersey, but only if the State enacted a sports gambling scheme within one year of PASPA's enactment. New Jersey failed to do so. In 2011, after a statewide referendum, the New Jersey Legislature amended the state constitution to permit sports gambling. In 2012, after voters approved the constitutional amendment, the New Jersey Legislature enacted the Sports Wagering Act, which provided for state authorized and regulated sports wagering in casinos and racetracks. In response, the NCAA, NFL, NBA, NHL, and MLB ("the Leagues") sued to enjoin the 2012 law. Before the Third Circuit, New Jersey challenged PASPA as unconstitutional under the anti-commandeering doctrine because it prohibited the repeal of New Jersey's sports gambling prohibitions. The Court rejected this argument, reasoning that PASPA did not require that the states keep any law in place, but it only prohibited affirmative authorization of gambling schemes by states.

Undeterred, the New Jersey Legislature passed SB 2460 in 2014. The law did not affirmatively authorize sports wagering, but repealed any existing prohibitions on the practice insofar as they apply to casinos, gambling houses, or horse racetracks in the state. SB 2460 also limited sports gambling to those over the age of 21 and prohibited placing bets on New Jersey collegiate teams or collegiate competitions taking place in the state. The Leagues again filed suit, this time to enjoin SB 2460. New Jersey argued that SB 2460 does not violate PASPA and is consistent with the ruling in Christie I because the law is a repeal and not an affirmative authorization. The Leagues argued in opposition that SB2460 is actually an authorization of sports gambling cleverly disguised as a repeal. The Third Circuit agreed.

In reviewing the relevant arguments and laws, the Third Circuit provided three distinct reasons that SB 2460 violated PASPA. First, SB 2460 effectively authorized sports gambling at casinos and racetracks, while other laws prohibit such a practice at other establishments. New Jersey has numerous laws in place that prohibit sports gambling throughout the state including at casinos and racetracks. Since sports gambling is undoubtedly illegal throughout the State, the enactment of SB 2460 allows an activity that would otherwise be prohibited and, thus, is an authorization in violation of PASPA.

Second, the Third Circuit reasoned that SB 2460 violated PASPA by selectively dictating where sports gambling may occur, who can place those bets, and which contests are permissible to bet on. Under SB 2460, New Jersey removed sports gambling prohibitions from casinos, gambling houses, and horse racetracks provided the bettors are over the age of 21 and no wagers are placed on New Jersey collegiate teams or collegiate competitions to take place in New Jersey. Using the Black's Law Dictionary definition of authorize, "to empower; to give a right or authority to act," the Third Circuit concluded that SB 2460 empowers casinos, racetracks and persons to conduct practices that other businesses and people cannot. This constitutes permission or authorization in violation of PASPA. New Jersey argued that SB 2460 is simply a repeal not an authorization, which the Third Circuit rejected by reasoning that merely because the state law is couched as a repeal does not stop the Court from examining what the law actually does - selectively authorize sports gambling at casinos and racetracks for certain persons.

Third, the exception in PASPA for New Jersey, which the State did not take advantage of, indicates that Congress perceived sports gambling in New Jersey to violate PASPA. The Third Circuit emphasized that statutory provisions will not be read as surplusage. Thus, if Congress did not believe sports gambling in New Jersey would violate PASPA then it would not have needed to include the New Jersey exception in the federal law.

Finally, the Third Circuit addressed New Jersey's contention that PASPA unconstitutionally commandeers the states. New Jersey claimed that Christie I held that PASPA is constitutional because it allows States to choose not to prohibit sports wagering, even if authorizing it is prohibited. The Third Circuit explained that despite its determination that SB 2460's selective repeal of certain prohibitions amounts to authorization under PASPA, it does not mean that states cannot create their own partial repeals that are acceptable under PASPA. The Court did not state where the line should be drawn for when partial repeals amount to authorization, but simply concluded that SB 2460 crossed it. Thus, since PASPA does not force a coercive binary choice or an affirmative adoption of federal law, it does not unconstitutionally commandeer the states.

A copy of the court's decision can be found here: http://www2.ca3.uscourts.gov/opinarch/144546p1.pdf


Panel: Ambro, Fuentes, Smith, Fisher, Jordan, Hardiman, Greenaway Jr., Vanaskie, Krause, Restrepo, Rendell, and Barry, Circuit Judges

Argument Date: February 17, 2016

Date of Issued Opinion: August 9, 2016

Docket Number:14-4546, 14-4568, 14-4569

Decided: Affirmed.

Case Alert Author: David A. Rosenfeld

Counsel: John J. Hoffman, Esq., Jeffrey S. Jacobson, Esq., Stuart M. Feinblatt, Esq., Peter M. Slocum, Esq., Matthew M. Hoffman, Esq., Ashley E. Johnson, Esq., Theodore B. Olson, Esq., Matthew D. McGill, Esq., Counsel for Appellants Governor of the State of New Jersey; Elliott M. Berman, Esq., Ronald J. Riccio, Esq., Edward A. Harnett, Esq., Counsel for Appellant New Jersey Thoroughbred Horsemen's Association; Michael R. Griffenger, Esq., Counsel for Appellants Stephen M. Sweeney and Vincent Prieto; Paul D. Clement, Esq., Erin Murphy, Esq., Jeffrey A. Mishkin, Esq., Anthony J. Dreyer, Esq., William J. O'Shaunghnessy, Esq., Richard Hernandez, Esq., Counsel for Appellees NCAA, NBA, NFL, NHL, and MLB.

Author of Opinion: Circuit Judge Rendell

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Mary E. Levy

    Posted By: Susan DeJarnatt @ 09/02/2016 12:18 PM     3rd Circuit  

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