Breaking Down SCOTUS on Sports Betting

Editor's note: We got this one right, down to hedging on whether Justice Breyer would side with New Jersey. In the end, he dissented "in part."

May 9, 2018: Here at AttentionFWD, we began our research on sports betting four years ago, and in early 2016, we made the prediction that sports betting had a small but meaningful chance to become legal in the US.

In the Future of Sports 2.0, we covered the future intersection of fantasy sports and sportsbook betting. We felt New Jersey’s efforts were going to intersect with the rise of federal-state conflict, due to the increasing partisanship of our country, and create a legal landscape that could result in sports betting being decriminalized, and even legalized, state by state.

Every year, the U.S. Supreme Court is besieged with some 7,000 appeals. Only about a hundred of them are chosen by the Court to be heard with oral arguments. Those are some long odds … 1.4% is what it calculates out to. But then, on June 27th, 2017, New Jersey’s case was picked. Not because any justices were particularly interested in sports betting, but because of their interest in better defining the line between states’ rights and federal powers.

Despite the long odds that New Jersey has faced to this point, we believe the odds of a favorable ruling from the Supreme Court justices, and being able to legally offer sports betting, are now dramatically in New Jersey’s favor. In the spring of 2018, late during the Supreme Court’s term, we predict the Professional and Amateur Sports Protection Act of 1992 will be ruled unconstitutional.

  • 79%
    Likelihood Supreme Court will side with New Jersey
  • 0%
    Supreme Court’s interest in legalizing sports betting
  • 100%
    Supreme Court’s interest in federal vs state powers
  • 7 – 2
    Likely Supreme Court vote

History

Senator Bill Bradley, the New York Knicks legend, sponsored the PASPA legislation in 1992 to protect sports integrity. The law didn’t make sports betting a crime, and it left betting alone in states that already had it. Bradley just wanted to stop sports betting from expanding. To accomplish this, Congress invoked its right to regulate interstate commerce, and forbade state governments from further authorizing sportsbooks.

Even before it was passed, the Department of Justice warned of serious concerns about the law’s constitutionality. State revenue was traditionally the concern of the states. The federal government can’t tell state governments what to do in areas not named by the Constitution. And it was one thing for the US Attorney General to represent the federal government, as written in PASPA, but very problematic to write into the law that the NCAA and professional sports leagues had standing as well, as if they were government agencies.

The Supreme Court justices’ opinions on this case could have sweeping ramifications along the fault line of states versus federal powers:

  • Sanctuary city laws protecting illegal immigrants
  • Marijuana decriminalization and legalization
  • State gun permitting restrictions and concealed carry laws

The fate of all of the above are going to be influenced by this case. The justices care more about those issues than they care about sports betting, and they don’t want this case to set the wrong precedent for the other tensions.

Precedent

  • Supremacy Clause – Federal law takes precedence over state law
  • 10th Amendment – Powers not spelled out in constitution are reserved for the states
  • Commerce Act – is sport betting commercial activity, or is it criminal activity?
  • Wire Act of 1961 – JFK’s ban on making sports bets over the phone was an attempt to weaken organized crime.
  • Brady Act – Ruled unconstitutional in 1997 in the case Printz v. United States, The Brady Act mandated that state law enforcement officers conduct background checks on gun purchasers until the national background check system could be created. Critically, the whole statute was not voided, as the NRA had argued. Just the provision that compelled local law enforcement was struck – the rest of the law was upheld.
  • 2006 Unlawful Internet Gambling Enforcement Act – prohibiting using the internet wherever gambling was forbidden by state or federal law. However, the law also carved out the exception for games of skill (versus games of chance). That exception gave rise to Daily Fantasy and its many iterations.

Judge by Judge Predictions:

 

Justice Gorsuch

Will Favor:
New Jersey

President Trump chose Gorsuch for the court over Thomas Hardiman, who had ruled against New Jersey as a judge with the U.S. Third Circuit Court of Appeals. Trump, who advocates for sports betting, might have had New Jersey’s case in mind. Gorsuch is a textualist, inclined to restrict federal power in deference to state authority – mostly for the sake of clarity.

Justice Roberts

Will Favor:
New Jersey

Generally suspect of anything the federal government does which doesn’t treat states equally. He has written that the Voting Rights Act of 1965 might at some point be declared unconstitutional because it singles out certain states.

Justice Alito

Will Favor:
New Jersey

In 1998, Justice Alito sided with the majority in declaring unconstitutional certain provisions of the Brady Bill that forced state law enforcement to do background checks. That precedent-setting decision is applicable here, because while there is no federal law against sports betting itself, to enforce PASPA it would require New Jersey law enforcement to interrupt (and arrest) casino sportsbook operators – even though New Jersey no longer has a law against offering sports betting any more.

Justice Thomas

Will Favor:
New Jersey

Most concerned with protecting against state gun control laws that infringe on people’s right to bear arms. His concurring opinion overturning parts of the Violence Against Women Act of 1994 made it clear Congress can’t appropriate state police powers for commercial activity. To the extent sports betting in casinos isn’t a federal crime, Thomas is likely to rule against PASPA.

Justice Kennedy

Will Favor:
New Jersey

Like Alito and Thomas, Kennedy sided with the majority in ruling parts of the Brady Bill unconstitutional. Though he has taken the leading role in expanding constitutional protection to homosexuals, rebuffing states that deny such protected status, his arguments maintain the need to shield individual citizens’ rights and liberties. He won’t think sports betting falls under inherent individual liberties, any more than marijuana use does – in 2005 he affirmed that the federal government can still ban possession of the drug in states that have eliminated sanctions for medical use.

Justice Kagan

Will Favor:
New Jersey

Her time as Solicitor General under Obama attuned her to political gridlock, and she has advocated for the smooth administration of federal laws without piecemeal exceptions. She won’t like the prospect of states randomly copying New Jersey, repealing laws against sports betting to manufacture an end-around of federal law. It’s a kind of legislative gerrymandering that just leads to confusion. As a progressive, her vote for New Jersey will surprise many.

Justice Breyer

Will Favor:
NJ / Split

Though Breyer was in the dissent on the Brady Bill in 1998, he has shown some signs of not wanting to be a permanent dissenter, and accept that he needs to move his position as precedent moves. Breyer sided with Roberts and conservatives overturning the expansion of Obamacare funding to states as coercive. This time around, Breyer will have protecting sanctuary cities on his mind, after President Trump attempted to revoke funding from sanctuary cities by executive order. To protect states’ rights, Breyer will side with New Jersey – even though he will likely dissent from joining the majority’s arguments.

Justice Sotomayor

Will Favor:
NCAA

Will read PASPA narrowly, in such a way it doesn’t establish generalizable precedent on state vs federal powers. This is a point she has argued on other cases, quite influentially. Though she is likely to affirm PASPA, she might note in her opinion that states have the option to not enforce it – and the fact they are not required to enforce it is exactly why it’s not unconstitutional. If her view sways others, it would lead to state-by-state decriminalization of sports betting. That would throw sports betting into a gray area – not legal, but not enforced either – that would halt major investment.

Justice Ginsburg

Will Favor:
NCAA

A former civil rights lawyer, Ginsburg feels Congress has sweeping powers, and applying different rules to different states is not unusual, as long as they are reasonable. She’ll note how reasonable it was that PASPA gave states a one-year window to pass legislation if they wanted sports betting – a chance New Jersey didn’t take at the time.