Repealing vs Authorizing, Part 2 – The Third Circuit’s Hearing on Sports Betting

Today marked another installment in New Jersey’s efforts to implement sports betting at its casinos and racetracks. The United States Court of Appeals for the Third Circuit heard an en banc argument in NCAA v. Christie.  This is the third time that the question of sports betting has been in front of the Third Circuit in the last several years, with the sports leagues winning the last two battles.

To simplify, the Professional and Amateur Sports Protection Act (“PASPA”) prohibits a state from, including other things, “licensing” or “authoriz[ing] by law” sports betting.  It does not prohibit sports betting in its own right.  New Jersey initially challenged the constitutionality of PASPA, arguing that it violated the Tenth Amendment of the United States Constitution.  The Court of Appeals disagreed, holding that PASPA gave the states a choice between continuing their existing criminal prohibitions on sports betting or repealing those prohibitions.  While an unattractive choice, the Court reasoned, it was not a circumstance where a state had no choice at all, which would violate the Tenth Amendment.

Acting on this, New Jersey then partially repealed its prohibitions on sports betting to the extent that they applied to casinos, racetracks, and former racetracks.  After a challenge by the leagues, the courts concluded that this narrow repeal amounted to authorizing sports betting by law, which was prohibited by PASPA.

Today the Court focused on two issues:  how much of a repeal is necessary before the repeal no longer constitutes an authorization by law, and is PASPA constitutional on an overall basis.  The state’s argument is that the limited repeal, because it is a repeal and not an affirmative act, is consistent with PASPA.  The leagues conceded that PASPA gives the state more than two options and the DOJ noted that states could “tinker” with their sports betting provisions.  One example that the leagues stated would comply with PASPA is a repeal of state criminal laws to the extent that they prohibit bets of under $1,000 between acquaintances on sporting events.  The question the court struggled with is where, then, is the line – if some partial repeal complies with PASPA, how much of a repeal is necessary?  There was no clear answer at the end of the hearing.

The other question raised by the Court is whether the constitutionality of PASPA should be revisited.  Several judges had questions about whether PASPA, as construed, essentially commandeers the states and forces them to implement a federal policy.  While many thought this issue was closed after Christie I, several judges seemed interested in it today.

It’s always difficult to tell where a court may be headed, but it seems that the Court had more difficult questions for the state than for the leagues.  That said, there seems to be three camps on the Court:  those who believe PASPA is unconstitutional (and thus NJ gets regulated sports betting);  those who believe PASPA is constitutional but NJ has complied with PASPA in its partial repeal (and thus NJ gets unregulated sports betting in casinos and racetracks) and those who believe PASPA is constitutional and that NJ’s partial repeal violates it (and thus no sports betting).  How the votes ultimately shake out, and whether there is a compromise position, may make the result of this case interesting indeed.