202.5

How Supreme Court’s decision on sports gambling could have seismic implications

LAS VEGAS, NV - SEPTEMBER 13: The sports book at MGM Grand Hotel & Casino displays the betting line and proposition bets for the upcoming fight between WBC, WBA and IBF middleweight champion Gennady Golovkin and Canelo Alvarez on September 12, 2017 in Las Vegas, Nevada. Golovkin will defend his titles against Alvarez at T-Mobile Arena on September 16 in Las Vegas. (Photo by Ethan Miller/Getty Images)

WASHINGTON — On Monday, the Supreme Court will hear oral arguments in a sports gambling case the impact of which could reach well beyond both gaming and sports.

The grounds on which Christie v. NCAA made its way to the highest court in the land are of particular note, and the way the court rules could affect everything from legalized marijuana, to firearm laws, to immigration issues and more.

Case background

In 1992, Congress passed the Bradley Act, more formally known as the Professional and Amateur Sports Protection Act (PASPA). Introduced by then-New Jersey Sen. Bill Bradley, the former NBA player, the act prohibited state-sanctioned sports betting in every state except Delaware, Montana, Nevada and Oregon. The state of New Jersey had a one-year window at the time to apply for a similar exemption, but failed to do so.

In 2011, New Jersey voters approved a state constitutional amendment to allow sports betting, which the state legislature wrote into law the following year. But five sports leagues — the Big 4 plus the NCAA — sued under PASPA to keep New Jersey from enacting its new law, and won a Third Circuit Court of Appeals decision in 2016. New Jersey failed to win a decision at every turn of the judicial process, and earlier this year, the Trump-appointed Solicitor General recommended against the Supreme Court hearing the case. Despite this recommendation, and despite no split among lower court decisions, the Supreme Court agreed to hear the case.

Why the court is hearing the case

Attorneys and experts on the matter descended on D.C. over the past couple of weeks, holding events on Capitol Hill and at the National Press Club to help explain why the court would hear such an unusual case and the impact that its ruling might portend.

The grounds upon which the Supreme Court is hearing the case are vital to understanding its potential further-reaching implications. The case is being heard on that grounds that PASPA violates the Tenth Amendment to the Constitution’s anti-commandeering doctrine. Essentially, PASPA does not expressly prohibit regulated sports gambling — it prohibits states from creating their own laws to enact regulated sports gambling.

Related Stories

The argument against PASPA is that requiring states to maintain prohibitions of a law is just as much of a constitutional violation as forcing them to act. In legal terms, it’s the difference between preemption — the federal government regulating directly — and commandeering — when the federal government directs the states how to act. Or, as Matt McGill of Gibson Dunn put it Friday at the National Press Club, a command to stay awake can be seen as a prohibition on sleeping.

The NCAA’s argument in favor of PASPA is that it requires nothing of the states and protects them from the potential social ills that come with legalized gambling. But sports leagues have embraced daily fantasy sports and continue to search for new revenue streams, and NBA Commissioner Adam Silver has been outspoken ever since a 2014 editorial in the New York Times argued that sports gambling should be legalized and regulated. Yes, the same NBA that is technically aligned with the NCAA against the state of New Jersey.

Pros and cons of legalization

Because nearly all of it is illegal and off the books, the estimated size of the sports betting market varies wildly, from anywhere around $80 billion up to nearly $400 billion. Bringing that money online, where it can be taxed, has obvious benefits for states. But there are questions of how much of the market that already operates offshore would just continue to do so, especially if tax rates take a high enough percentage of potential winnings. But clearly, there is a huge monetary market that the sports leagues could potentially tap.

The leagues hope to benefit in multiple ways. A study cited in the briefing on Capitol Hill indicated that non-betting NFL fans watch an average of 16 games per year — essentially just their chosen team’s games — while a betting fan averages 40 games per year. Convert more non-betting fans into bettors, and perhaps you boost viewership that drives the leagues’ lucrative television contracts.

But there’s also the direct monetary implication. A study by Gambling Compliance indicated the U.S. betting market would be worth $2 billion per year in annual gross gaming revenue, something that owners, such as Monumental Sports’ Ted Leonsis (who was also at the Capitol Hill event), seemed eager to tap. He referenced sporting venues in the United Kingdom that have attendants who visit suites to take wagers before and during games, envisioning a scenario that could turn Capital One Arena into its own fully functional sports book.

If New Jersey wins its appeal, a host of other states have laws lined up to be enacted, as the fallout could create something of a gold rush to not be left out of the new share of tax dollars, seeing people go to neighboring states with their betting money. Another potential negative to an appeal is the fact that gambling revenues tend to come disproportionately from low-income citizens, meaning that the tax functions regressively. It also potentially opens the door for increased match-fixing, especially at the amateur level, where athletes’ lack of compensation raises the specter of potential point-shaving. For instance, in 2011, a University of Toledo running back intentionally fumbled in a game for a mere $500 payoff.

Further implications

If the Supreme Court rules in favor of the NCAA, the status quo will remain. But the fact the court is hearing the case despite no split in the lower courts and against the Solicitor General’s recommendation makes that seem unlikely. Additionally, the Court reversed 83 percent of the time when reviewing federal court of appeals decisions last year. That points to at least some measure of reversal.

A narrow reversal, in which the court simply declares that PASPA can’t keep states from creating their own regulated sports gambling laws, would open up the gold rush mentioned above. Of course, Congress could enact a federal law at some point in the future, expressly prohibiting sports gambling but that potential future legislation would be well down the road and would require the requisite votes, along with the president to sign it into law. (President Donald Trump has sided with the NFL against sports gambling.)

But a broad reversal, in which the Supreme Court rules PASPA unconstitutional on Tenth Amendment grounds, could lay the foundation for the litany of state versus federal issues that have arisen in recent years to give much more power to the states in governing themselves.

“It is the most important federalism case the Supreme Court will have heard in many, many years,” said Daniel Wallach, attorney at Becker & Poliakoff and expert in gaming and sports law, on Capitol Hill. “This is less about sports betting and much more about the tension between federal sovereignty and state sovereignty.”

If Wallach is correct, the implications are staggering, potentially affecting a host of other state/federal issues that have been contested in recent years — from marijuana legalization to gun control, immigration, sanctuary cities and perhaps even women’s health rights.

Elbert Lin, former West Virginia Solicitor General, wrote the amici briefs filed in both iterations of the Christie vs. NCAA case and was also on hand Friday at the National Press Club. Lin said the result of the case “should be of concern to states on both sides of the aisle,” as it “ensures that states retain their ability to dissent.”

While oral arguments take place Monday, the Court isn’t expected to rule until early 2018.


Like WTOP on Facebook and follow @WTOP on Twitter to engage in conversation about this article and others.

© 2017 WTOP. All Rights Reserved.



Advertiser Content