Anticommandeering: How New Jersey Overcame PASPA’s Two-Decade Betting Ban

Although New Jersey passed a constitutional amendment banning all forms of gambling in 1897, the state would relax its rules as the nineteenth century progressed. By 1976, casino gambling became legal within Atlantic City (Murphy, 2)[1]. In 1992, Congress passed PASPA, making it illegal for states to “authorize” sports betting (Id. at 6). However, PASPA exempted four states that already legalized sports betting, and gave New Jersey one year to pass a similar law that would apply to Atlantic City (Id. at 5-6). New Jersey neglected to exercise the option within the time allotted, but subsequently passed a constitutional amendment allowing the legislature to authorize sports gambling in 2011 (Id. at 6). The state legislature soon after legalized sports betting in 2012 (the “2012 Law”) (Id.).

In National Collegiate Athletic Assn. v. Christie, the NCAA and other sports organizations sued to enjoin New Jersey from implementing the 2012 Law under PASPA, which allowed sports organizations to file for a civil injunction (Id. at 5; Christie). New Jersey argued that the anticommandeering principle, which prevents Congress from issuing orders to the states, made PASPA unconstitutional (Murphy at 6). The anticommandeering doctrine was born out of the Tenth Amendment, which prevents Congress from infringing on state sovereignty except through its enumerated constitutional powers (Id.). The trial court did not buy New Jersey’s argument that PASPA unconstitutionally prohibited its legislature from “modifying or repealing its laws prohibiting sports gambling” (Id. at 6-7). The Third Circuit affirmed, ruling that PASPA did not give an affirmative command, such as “do not repeal,” and therefore Congress did not issue an order (Id. at 7). The Supreme Court denied New Jersey’s petition for certiorari on this issue (Id.).

However, in 2014, New Jersey passed an ingenious law (the “2014 Law”). Although the 2014 law stated that it was “not to be interpreted… to authorize… sports gambling,” it repealed prohibitions on sports betting, effectively making it legal (Id. at 8). Of course, the NCAA and other sports leagues sued, and the Third Circuit once again upheld the federal law, holding that New Jersey’s “artful” legislation still authorized gambling (Id. at 9). This time, because the effect of PASPA was now to state “do not repeal,” the Supreme Court granted certiorari (Id. at 1). The Court agreed with the Third Circuit that the 2014 Law authorized sports gambling in violation of PASPA (Id. at 11-12). The Court then held that PASPA was unconstitutional under the anticommandeering principle because it “unequivocally dictate[d] what a state legislature may and may not do” (Id. at 18). The Court also found PASPA inseverable (see discussion here).

Thus, with some creative legislation, New Jersey managed to take what would seem like a losing scenario and use it to eliminate federal regulation on sports betting.

Post-PASPA State Reactions and Policy Arguments

Some states, such as Delaware, began drafting legislation before the Court decided Murphy in anticipation of a favorable outcome (NYT). New Jersey legalized sports betting shortly after the decision, on June 14, 2018 (CBS). Eleven more states followed suit and legalized sports betting before the start of the NFL season (ESPN).

However, states legalize sports betting in different, often limited ways, which has legally complicated the sports and gambling industry. In general, states take one of three approaches to legalizing sports betting: (1) altogether, (2) only in-person, or (3) only electronically (CBS). Even within these categories, state laws vary. For example, North Carolina passed legislation permitting sports gambling in-person, but only at two Cherokee casinos (Id.). Illinois prohibits sports betting only for in-state collegiate games (Id.). Alabama proposed delegating regulation powers to a separate commission to make rules (Id.).

Various policy arguments have been advanced in support of, and in opposition to, the legalization of sports betting. An amici brief signed by several anti-gambling and religious organizations argued that gambling might be immoral and likely to cause social harms (Brief of Stop Predatory Gambling et al.). One poll suggests that legalization disproportionately affects less educated[2] and lower-income people[3] because they are more likely to engage in sports betting (Morning Consult)[4]. However, the benefits of legalization might outweigh possible social harms. Many states, such as New Jersey, use sports betting as a means of improving their economy and attracting tourists (NYT). After legalizing sports betting, states can impose taxes on wagers to fund state-sponsored programs, such educational or infrastructure projects. States also benefit from taxes on sports games, which are predicted to have higher attendance  where betting is legalized (Morning Consult).

[1] All citations to Murphy reference the Opinion of the Court.

[2] “Less educated” defined as people with a High School education or less.

[3] “Lower-income” defined as people who make under $50,000 a year.

[4] Poll conducted May 18-21, 2008 among 2,204 U.S. adults, with a margin of error of +/- 2%.