Sports Law

Third Circuit Rejects New Jersey's Bid to Legalize Sports Betting—Again

For the second time in two years, the Third Circuit Court of Appeals has rejected the state of New Jersey's attempt to legalize sports betting because it conflicts with federal law.

In a 2-1 decision in NCAA v. Christie (Christie II)1, the Third Circuit in August affirmed a District Court ruling that a New Jersey statute seeking to partially repeal the state's ban on sports betting constituted an "authorization" in violation of the federal Professional and Amateur Sports Protection Act (PASPA).

New Jersey has waged a four year legal battle against five major sports leagues and the federal government to legalize sports betting in the hopes of rescuing the state's flagging casino industry. A statute expressly authorizing sports betting was struck down by the District of New Jersey in 2013 under the Supremacy Clause of the Constitution. The Third Circuit affirmed (Christie I)2, finding that PASPA, which bans state-sponsored sports gambling, did not commandeer state officials into regulating sports wagering in violation of the Tenth Amendment. States, the court determined, were not required to keep prohibitions on sports betting in place and retained the option to repeal those prohibitions altogether.

In October 2014, New Jersey availed itself of the option presented by the Third Circuit's ruling by enacting a new statute that repealed the state's prohibition on sports betting, but only at state-regulated casinos and racetracks and only for bettors 21 years or older.3 The leagues once again sued to prevent implementation of the law, arguing that the state's selective repeal was merely an authorization by another name. In November 2014, the District of New Jersey sided with the leagues.4

On appeal, the Third Circuit agreed that "[w]hile artfully couched in terms of a repealer," the 2014 law authorizes sports betting in violation of PASPA. The majority explained: "[T]he 2014 Law authorizes sports gambling by selectively dictating where sports gambling may occur, who may place bets in such gambling, and which athletic contests are permissible for such gambling. . . . That selectiveness constitutes specific permission and empowerment." The court concluded, "States may not use clever drafting . . . to escape the supremacy of federal law."

Interestingly, Judge Julio Fuentes, who wrote the majority opinion upholding PASPA in Christie I, was the lone dissenting judge in Christie II. This time around, Judge Fuentes sided with New Jersey, writing that because the partial repeal statute "renders the previous prohibitions on sports gambling non-existent," it is not an authorization in violation of PASPA. Fuentes also pointed to a logical flaw in the majority's reasoning, noting, "If withdrawing prohibitions on 'some' sports wagering is the equivalent to authorization by law, then withdrawing prohibitions on all sports wagering must be considered authorization by law." Such an outcome would leave New Jersey with no choice but to maintain prohibitions on sports betting in order to comply with PASPA—precisely the opposite of the court's holding in Christie I.

New Jersey officials have indicated that they intend to pursue a rehearing en banc before the entire Third Circuit. Although en banc hearings are rare, the fact that the judge who authored the prior opinion dissented here provides a possible reason that rehearing could be granted. The state could also seek certiorari to the U.S. Supreme Court, though the Supreme Court already declined to hear the case once following the Third Circuit's ruling in Christie I.

In striking down the partial repeal statute, the Third Circuit went out of its way to acknowledge frustration with the country's current legal regime in this area. The court recognized New Jersey's "salutary purpose in attempting to legalize sports gambling to revive its troubled casino and racetrack industries" and the fact that PASPA has "stymied" those attempts. The court also noted criticisms of PASPA, including that the law has encouraged the spread of illegal sports gambling. The court then reiterated its suggestion from Christie I that New Jersey (and others dissatisfied with PASPA) pursue a Congressional repeal of the statute. Politicians and influential figures in the sports industry have echoed this suggestion, including NBA commissioner Adam Silver, who has advocated legalizing sports betting under a heavily-regulated federal framework. A ruling for New Jersey by the Third Circuit would have opened the floodgates to other states enacting their own partial repeals to get around PASPA, increasing the pressure on Congress to reexamine the federal statute. But with the Third Circuit siding with the leagues and the federal government once again, that urgency is now gone.

1NCAA v. Christie, -- F.3d --, 2015 WL 5010799 (3d Cir. Aug. 25, 2015).

2NCAA v. Christie, 730 F.3d 208 (3d Cir. 2013), cert. denied, 134 S.Ct. 2866 (2014).

3Under the statute, betting on collegiate sporting events involving New Jersey colleges or taking place in New Jersey also remained expressly prohibited.

4NCAA v. Christie, 61 F. Supp. 3d 488 (D.N.J. 2014).



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