New Jersey Wins US Supreme Court Case Allowing Legal Sports Betting

Posted By Eric Ramsey on May 14, 2018 - Last Updated on July 14, 2019

New Jersey is cleared for legal sports betting!

This morning, the US Supreme Court decided Murphy vs. NCAA in the state’s favor, allowing it to legalize and regulate the activity. The ruling ends a five-year battle against sports leagues costing the state at least $8.6 million.

Here’s the conclusion of the court’s opinion:

The legalization of sports gambling requires an im­portant policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not. PASPA “regulate[s] state governments’ regulation” of their citizens… The Constitu­tion gives Congress no such power.

The judgment of the Third Circuit is reversed.

Read the full decision on the SCOTUS website.

The complete, broad victory is good news for other states, too. The nine-member court voted 6-3 to repeal PASPA, the federal ban which prohibited single-game wagering outside Nevada.

NJ sports betting is coming soon, and other states won’t be far behind.

Breakdown of SCOTUS opinion

Justice Samuel Alito penned the court’s majority opinion, which was joined by five others:

  • Chief Justice John Roberts
  • Justice Anthony Kennedy
  • Justice Elana Kagan
  • Justice Neil Gorsuch
  • Justice Clarence Thomas

The majority opinion centers around “dual sovereignty” and “severability.”

The Constitution confers on Congress not plenary legislative power but only certain enumerated powers. Therefore, all other legislative power is reserved for the States, as the Tenth Amendment con­firms. And conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the States.

The court contends that PASPA violates the Tenth Amendment by “commandeering” states into enforcing a law they don’t want. It extends its interpretation of anti-commandeering to include attempts to prevent states from enacting new laws they do want. In New Jersey’s case, it wants to enact a sports betting law.

In trying to figure out how to implement its decision, the court considered three parts of PASPA as potentially “severable.”

  • Prohibits states from operating, sponsoring or promoting sports betting
  • Prohibits private actors from doing the same
  • Prohibits advertising based on sports betting

Given its stance on commandeering, none of those prohibitions can be severed without changing the statute’s effect. According to the court, its “decision regarding the anti-authorization provision dooms the remainder of PASPA.”

Dissenting opinion

Justice Ruth Bader Ginsburg wrote the dissenting opinion, joined by Justice Sonia Sotomayor. The gist of their argument is that the court is going too far with a full repeal:

When a statute reveals a constitutional flaw, the Court ordinarily engages in a salvage rather than a demolition operation: It “limit[s] the solution [to] severing any problematic portions while leaving the remainder intact.”

They contend that removing the language being interpreted as commandeering would allow PASPA to remain in place and still accomplish its initial goal:

In PASPA, shorn of the prohibition on modifying or repealing state law, Congress permissibly exercised its authority to regulate commerce by instructing States and private parties to refrain from operating sports-gambling schemes. On no rational ground can it be concluded that Congress would have preferred no statute at all if it could not prohibit States from authorizing or licensing such schemes. Deleting the alleged “commandeering” directions would free the statute to accomplish just what Congress legitimately sought to achieve: stopping sports-gambling regimes while making it clear that the stoppage is attributable to federal, not state, action.

The dissenters argue that the court “wields an ax” on PASPA rather than “using a scalpel to trim the statute.”

Breyer and Thomas offer separate opinions

That leaves Justice Stephen Breyer, who was of two minds on the matter. Breyer concurred with all but one section of the majority opinion, joining the dissenters on the other.

The section that troubled him explained the court’s reasons for toppling PASPA. The majority essentially cited irreparable issues with the statute. Breyer contends that regardless of PASPA’s flaws, Congress still has the power to prohibit sports betting.

So call the vote 6.5 to 2.5 in the end.

Incidentally, Justice Thomas countered some of Breyer’s logic in a separate concurrence. He argued that the court came to the best ruling it could given the problematic precedents of severability.

Because PASPA is at least partially unconstitutional, our precedents instruct us to determine “which portions of the… statute we must sever and excise… The Court must make this severability determination by asking a counterfactual question: “‘Would Congress still have passed’ the valid sections ‘had it known’ about the constitutional invalidity of the other portions of the statute?”… I join the Court’s opinion because it gives the best answer it can to this question, and no party has asked us to apply a different test. But in a future case, we should take another look at our severability precedents.

What’s next for NJ sports betting?

New Jersey already has partial legislation on the books regarding sports betting. A 2014 law only removes some of the state’s own prohibitions, so lawmakers and regulators will still need to build a framework for the industry.

That should happen quickly, possibly under a new Assembly bill that’s gaining sponsorship. It would allow the state’s casinos and horse betting tracks to offer sports betting, overseen by the NJ Division of Gaming Enforcement.

Read more about A3911 here.

Monmouth Park will almost certainly be the first NJ property to accept a sports wager. Thanks to a partnership with bookmaker William Hill, its existing sports lounge should be ready to take bets within weeks of regulation.

Thereafter, the other tracks and several Atlantic City casinos should follow suit. Borgata reportedly has $7 million blueprints ready to go, and the new owner of the Ocean Resort Casino says he wants a best-in-market sportsbook.

The proposed law also permits internet and mobile sports betting in NJ. Some casinos have already put software partnerships in place, and regulators will be approving those platforms along the way, as well.

What’s next for other states?

Today’s NJ sports betting ruling also activates new laws in five other states:

  • Connecticut: Passed in 2017; directs lawmakers to adopt regulations; more legislation needed to navigate tribal issues
  • Mississippi: Passed in 2017; lifts the statewide ban on sports betting
  • New York: Passed in 2013; allows sports betting at commercial casinos; more legislation needed to include racing industry
  • Pennsylvania: Passed in 2017; allows sports betting at casinos and racinos
  • West Virginia: Passed in 2018; allows sports betting at five casinos

These states are now allowed to move forward with regulating the industry they’ve created. West Virginia might be the first of the group to roll out, as regulators have had a couple months to prepare. Pennsylvania could come to market within the year, too.

The repeal of PASPA is also likely to spawn a much broader wave of legalization. About a dozen other states have recently considered sports betting bills, and several of them were on hold awaiting this federal resolution.

Timeline of NJ sports betting case

In 2011, New Jersey voters were presented with a sports betting referendum ballot question. A 63 percent majority voted to change the state’s constitution, legalizing the activity within the state. The NJ Sports Wagering Act became law in January 2012, codifying the referendum results.

Later that year, the five major sports organizations filed suit against the state, citing a violation of PASPA. Gov. Chris Christie argued that PASPA amounted to commandeering, forcing states to enforce a law they didn’t want. District Court ruled for the leagues in 2013, and the Third Circuit Court of Appeals upheld the ruling. The Supreme Court declined to hear the case.

In 2014, lawmakers tried again with a new Sports Wagering Act. This one attempted to word around PASPA by leaving the state out of the process. Casinos and racinos would be able to offer sports betting with essentially no regulatory oversight. Once again, courts decided the ensuing lawsuit in the leagues’ favor.

As a last gasp, Christie appealed to the US Supreme Court one more time. The nation’s highest court surprisingly decided to take up the case this time, granting an hour of oral arguments. The two sides presented their cases before the justices on December 7, 2017.

Since then, “SCOTUS watch” has taken over the sports betting industry. Justices seemed skeptical of PASPA during the hearing, and industry stakeholders were mostly optimistic for repeal.

Today, the hunch became a reality. The court struck down PASPA, allowing NJ and other states to regulate sports betting.

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Eric Ramsey

Eric is a reporter and writer covering the NJ gambling industry, online poker, sports betting regulation, and DFS. He comes from a poker background, formerly on staff at PokerNews and the World Poker Tour.

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