What now for the New Jersey sports betting case?

Jan 24, 2013 |
By: Jon Campbell
What now for the New Jersey sports betting case?
What does the DOJ's intervention mean for New Jersey?
What does the DOJ's intervention mean for New Jersey?
After two months of holding our breath, sports bettors exhaled a collective sigh of disappointment on Tuesday. The U.S. Department of Justice filed intent to join the suit by the NCAA and the major pro sports leagues against the state of New Jersey to halt it from legalizing sports betting.

Disappointing, but it depends on who you ask as to whether or not this was expected.

"I didn't expect the Justice Department to come in and intervene in the case, but it’s no great moment,” State Sen. Ray Lesniak told the New Jersey Star-Ledger. Lesniak is the prime sponsor of the legislation.

“It would be very unusual for the Department of Justice to decide not to defend the constitutionality of a statute," Bernard Bell, a law Professor at Rutgers University told The Atlantic City Press this week.

The filing, the DOJ wrote, was "for the purpose of defending the constitutional challenges to the Professional and Amateur Sports Protection Act” made by the state and it came on the final day of deadline to do so given by U.S. District Court Judge Michael Shipp.

The DOJ now has until Feb. 1 to respond to the constitutionality claims and oral arguments will be heard on Valentine’s Day.

So where does the case sit now for New Jersey and when would be the earliest we might see legalized sports wagering there?

To help explain it all, I contacted Griffin Finan (@G_Finan), an associate at Ifrah Law in Washington D.C. who specializes in gaming law, and Brad Polizzano (@taxdood), a New York City tax attorney & accountant who also focuses on gaming.  Here’s what they had to say: 

JC: In short, how much does the intervention of the DOJ hurt New Jersey’s cause/help the cause of the leagues?

GF (Mr. Finan):  Before the DOJ intervened, both sides were already well represented by quality counsel with former Solicitor General Ted Olson representing New Jersey and the leagues represented by Paul Clement who succeeded Olson as Solicitor General. The arguments in the case have not changed, but the persuasive effect that they have may have been altered by DOJ intervening. DOJ intervening is not dispositive, but a federal judge may be more persuaded by the arguments on the constitutionality of the statute if they are presented by DOJ.

JC: On the issue of whether the leagues have ‘standing’ in this case. We know the judge already ruled they do have standing, but can you explain why it’s worth noting now?

Mr. Polizzano: If the DOJ had joined the case at the outset, then New Jersey likely would not have raised the standing issue at all. The Department of Justice is charged with enforcing and protecting federal laws. The DOJ clearly has standing in a case as a plaintiff if the case involves the alleged violation of a federal law, such as PASPA.

Of course, it's possible that New Jersey would have nevertheless filed a motion to dismiss the NFL et al as parties from the case on the basis of lack of standing. But even if New Jersey prevailed on that issue against the professional sports leagues (which it ultimately didn't), the case still would have proceeded on the merits - as it is now - against the DOJ as plaintiff.  

JC: Why did the DOJ wait until the 11th hour to intervene when they were given a 60-day deadline? 

GF: I don't think that there is too much to read into the DOJ decision to wait until the deadline. I think it is largely reflective of their internal procedures to meet deadlines as they arise and needing to meet those deadlines with limited resources. 

JC: Are there any other prominent federal laws you can think of that make exceptions for only a handful of states or just one state?

GF: There are no other prominent federal laws that I can think of that make an exception for a handful of states in the way PASPA does. The state has argued in court papers that this is unequal treatment of the states, which violates the principle that all states enjoy equal sovereignty. I expect that New Jersey will emphasize this point during oral arguments. 

JC: On a bigger picture scale, if everything goes New Jersey’s way, what’s a realistic timeline we could see legalized sports betting in the state?

GF: Any decision made by the district court in New Jersey could be appealed to the U.S. Court of Appeals for the Third Circuit. I expect an appeal from whichever side loses in the district court. Any decision from the Third Circuit could be appealed to the U.S. Supreme Court, which would have the option to decide if they want to hear the case. The appeals process could take significant time to complete.

The state would be free to implement the law while the appeal is pending, but the leagues could ask for the court to issue a stay or an injunction to prevent the state from moving forward with the law during the appeals process. Additionally, in order to offer sports betting an operator would have to apply to the state and be granted a license. That process will take some time, but would not dramatically slow down an operator from offering sports betting. 

Additionally, if New Jersey wins then the decision opens up the whole country to sports betting. Any other state would be free to pass their own sports betting law and I imagine that many states would look at it because of the potential for revenue and job creation.  

JC: If everything goes the leagues’ way, what’s next? Will it be up to each state to take on this law and would there be any point with this precedent?

GF: If the court rules in favor of the leagues, I would expect New Jersey to appeal the decision to the Third Circuit and it would follow the same appeals process that I outlined above. 

In theory, another state could pass a law, as New Jersey did, that is in direct contravention with PASPA and a district court outside of the Third Circuit would not be bound by the decision in this case but it would be very persuasive and hard for me to envision that a state would succeed or even try taking this route. Otherwise, it would take Congress passing a new law that altered PASPA to allow for states to pass their own gambling laws. 

The leagues have already succeeded in getting this case delayed until after the Super Bowl.  If they lose I expect the leagues to continue to use tactics intended to delay the process.

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