Sports betting, states' rights on tap at Supreme Court

Richard Wolf | USA TODAY

Show Caption Hide Caption Supreme Court to hear arguments in states' rights sports betting case New Jersey Gov. Chris Christie is arguing against a 1992 law that prevents any state but Nevada from legalizing single-game sports betting. Video provided by Newsy

WASHINGTON -- New Jersey Gov. Chris Christie gambled big-time five years ago when he signed a law authorizing sports betting at casinos and racetracks and dared anyone to "try to stop us."

That's exactly what college and professional sports leagues and the federal government have done, thanks to a succession of court rulings upholding a 25-year-old federal law that prohibits gambling on sports outside Nevada and three other states with small sports lotteries.

But Christie has one last shot before leaving office next month. The Supreme Court on Monday will hear oral arguments in his case and could decide, as many court-watchers predict, that the ban violates states' rights. Such a ruling could open the floodgates to sports betting in any state willing to regulate it.

It's not often that the high court tackles a case with so much weighty drama -- not just sports and gambling, but a classic constitutional battle between the federal government and the states over the 225-year-old system of government known as federalism.

“To use a gambling term, it’s a trifecta,” Paul Clement, the attorney representing the NCAA and pro sports leagues, said recently.

Clement will face off Monday against Theodore Olson, his former boss in the U.S. solicitor general's office. Olson headed the office for the first three years of President George W. Bush's tenure and was followed by Clement for the next four years. Together they have argued nearly 150 cases at the court.

The two gladiators will tangle over the Professional and Amateur Sports Protection Act (PASPA), passed by Congress in 1992 to preserve what lawmakers felt was the integrity of the games. Sponsored by former senator Bill Bradley, a New Jersey Democrat who once played small forward for the New York Knicks, the law preceded the advent and growth of Internet gambling.

Because Nevada had legalized sports betting in 1949, it was grandfathered in, and the state now handles nearly $5 billion annually. Delaware, Montana and Oregon were allowed to keep previously authorized sports lotteries. Other states were given a year's leeway to get in on the action, but even New Jersey failed to take advantage of the offer.

Now even Delaware, which has a leg up on 46 states by virtue of its complicated "parlay" betting involving three or more National Football League games, is watching its neighbor's Supreme Court case with great interest. The state's handle has risen each year since 2009 but topped out last year at $46 million -- just 1% of Nevada's take.

“If we could bet on all sports and not just football, and make all kinds of wagers and not just parlay wagers … we would make out better in the long run,” said Vernon Kirk, director of the Delaware Lottery.

'Mom and apple pie'

The Congress that passed PASPA with only five dissents thought it was keeping college and professional sports free from the taint of gambling, with its connection to organized crime. That hasn't proven true. Today, illegal sports betting in the United States is a $150 billion business -- nearly 10% of which is bet on the Super Bowl and the NCAA's "March Madness" college basketball tournament.

"Far from stopping sports betting, PASPA has just moved it into the shadows, all while Americans' views on the matter have evolved," the American Gaming Association argues in legal papers. The group cites polling that shows 85% of Americans now view casino gambling as acceptable.

And unlike 1992, most states as well as tribal nations have the infrastructure to support sports betting at casinos and racetracks. Forty states have more than 1,000 casinos supporting 1.7 million jobs. Forty-eight states have lotteries.

The Casino at Delaware Park in Wilmington is one of three locations in the state where bettors can wager on NFL games. Given its proximity to New Jersey, it's not surprising that some of the customers head south on game days.

“We’re definitely in position if the Supreme Court shot down PASPA," said Kevin DeLucia, senior vice president of finance at Delaware Park. "We already have a law on the books in the state of Delaware that we can do it.”

The sports leagues remain opposed, at least in principle, to easing or erasing the federal law's rules. The brief submitted by the NCAA and the four major pro sports leagues quoted from a Senate report in 1992 that considered the attraction of new state revenue but concluded that "the risk to the reputation of one of our nation's most popular pastimes ... is not worth it."

However, in the decades since the legislation was passed, the National Hockey League has located a team in Las Vegas, and the NFL's Oakland Raiders are due to follow. National Basketball Association commissioner Adam Silver has endorsed sports betting, and Major League Baseball has invested in fantasy leagues.

While the federal government stands behind the law, the most vocal opposition is coming from an eclectic mix of Christian and Muslim religious groups and others promoting public health and economic justice. In legal papers, they argue that state-regulated betting on sports will harm young people, low-income households and others who become addicted.

Sports gambling is "a regressive tax on the least fortunate people in society, and it often takes advantage of addiction," Deepak Gupta, the lawyer representing the groups, said. "Some members of the court may be concerned about unleashing the specter of unregulated, commercial gambling throughout the nation.”

But the number of groups that are backing New Jersey in its quest far outnumbers the other side. They include 18 states led by West Virginia, the National Governors Association, and Rep. Frank Pallone, D-N.J., who is sponsoring legislation that would strike down the federal ban if the high court doesn't.

“At the end of the day, in the long run, I expect to see sports betting all across the country,” says Geoff Freeman, president of the American Gaming Association. "The concept of betting on sports in this country is mom and apple pie."

Federal power, states' rights

To get there, proponents have to convince the justices that the federal law runs afoul of the 10th Amendment, which reserves for the states all powers not delegated to the federal government.

To date, federal courts have upheld the law -- even after New Jersey repealed its own prohibition on sports betting in hopes of circumventing a previous negative ruling.

To the Garden State, that's a violation of the "anti-commandeering" principle established by Supreme Court precedent. The federal government, it says, cannot force the state to do something against its will.

"A federal court, purporting to enforce federal law, now is dictating the contents of New Jersey's state law concerning sports wagering," the state argues, using its preferred term for bettors' activities. (By contrast, the sports leagues and federal government call it "gambling.")

States aligned with New Jersey argue that such a ruling from the Supreme Court could extend to other issues in the future, from gun control and physician-assisted suicide to the regulation of self-driving cars.

But the sports leagues say to comply with PASPA, New Jersey and other states simply must do ... nothing. The law prohibits sports betting operations by states and third parties but does not require them to take any affirmative action whatsoever.

"New Jersey complied with PASPA for two decades," their brief says, "without doing anything at all."

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