By Francis Baker & Elisabeth Ulmer, October 6, 2012

New Jersey is endeavoring to become the fifth State to legalize sports gambling, and in the latest conflict between a State and the NCAA and other similar sports organizations, the State will likely prevail unless its opponents can offer evidence of why legalizing sports betting will specifically be harmful.

In January 2012, the New Jersey legislature enacted the Sports Gambling Law, which legalizes and regulates “wagering at casinos or gambling houses in Atlantic City on the results of any professional, college, or amateur sport or athletic event” that is located outside of New Jersey and that does not involve “any New Jersey college team.”[1]

However, before New Jersey’s Division of Gaming Enforcement could finalize the new regulations, the nation’s major sports leagues cried foul.  On August 7, 2012, the NCAA, NBA, NFL, NHL, and MLB filed a complaint in New Jersey federal court alleging that the Sport’s Gambling Law violates the Professional and Amateur Sports Protection Act (PASPA).[2] Enacted by Congress in 1992, PASPA prohibits states from implementing any “betting, gambling, or wagering scheme based, directly or indirectly . . . . on one or more competitive games in which amateur or professional athletes participate.”[3]  PASPA contains exceptions for the sports-betting programs in Delaware, Montana, Nevada, and Oregon because these programs were already in place at the time of PASPA’s passage.[4] Interestingly, the terms of PASPA had originally given New Jersey a one-year window to implement its own acceptable sports-betting program.[5]  Now, twenty years later, New Jersey, in defiance of PAPSA, has decided to move ahead with its own sports-betting program.

Why do these leagues mind that New Jersey has decided to regulate and cash in on the already pervasive ritual of placing bets on sporting events?  The leagues allege that New Jersey’s Sports Gambling Law “undermines the public’s faith and confidence in the character of amateur and professional team sports” by “fostering suspicion that individuals and final scores of games may have been influenced by factors other than honest athletic competition.”[6]  Therefore, because the law risks compromising the “reputation and goodwill” of the leagues, they are requesting a formal declaration that the Sports Betting Law violates PAPSA.[7]

By the look of things, New Jersey is not taking any chances with this litigation. The State has hired some heavy-hitting Washington attorneys to articulate its response.  The most noticeable figure is Ted Olson, who famously argued on behalf of President Bush in Bush v. Gore and also led the charge against California’s ban on same-sex marriage in Perry v. Brown.

In a brief filed on September 7, New Jersey asserts that the named sports associations do not have standing under Article III of the Constitution to sue and that the suit should be dismissed for want of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1).[8]  The State argues that the sports associations’ non-specific assertion of damage to their reputation is not indicative of “the sort of reputational harms that courts have found sufficient to satisfy Article III” because their claim was not based on harm to just one person’s reputation.[9]

This claim is similar to the Supreme Court’s finding in Lujan v. Defenders of Wildlife that the Defenders of Wildlife did not prove that the threatened status of some species would directly impact one of their members, “apart from the members’ special interest in the subject.”[10] Thus, the claim of harm was likewise neither imminent nor particularized.

Furthermore, in Allen v. Wright, the Supreme Court held that standing “. . . . has a core constitutional component that a plaintiff must allege personal injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief.”[11]  Here, the state argues that overturning this state law would not result in more game-fixing occurrences, but it declares that, in the event that an increase in game-fixing does occur, the players or referees will be responsible, not the state law.[12]

Given the solid claims of the state as to why the sports associations will not have standing, it is more likely than not that the case will be dismissed.  However, if the case isn’t dismissed, New Jersey will have to wage war on the constitutionality of PAPSA.  The State’s likely plan of attack will focus on the Tenth Amendment, which grants to the states any powers unreserved by the federal government.[13]  New Jersey could persuasively argue that PAPSA interferes with the right of states to determine how they will raise money to finance their budgets.  Indeed, New Jersey Senator Raymond Lesniak (D. Union) argued in 2009 that “[PASPA] deprives the State of New Jersey of over $100 million of yearly revenues, as well as depriving our casinos, racetracks and Internet operators of over $500 million in gross income.”[14]

Nonetheless, considerable disagreement exists over the wisdom of the new law.  While some people, as mentioned above, believe that legalizing gambling and betting will lead to more game-fixing, others believe that it will not.[15] Ultimately, legalization is probably a good move because of the benefits that effective regulation and monitoring confer.  Sports gambling is already occurring, so, as New Jersey Governor Chris Christie, says, “If it’s going happen, let’s make the conduct legal, and let’s make the people who participate in it comply with certain laws.”[16]

Furthermore, this law already has the support of the New Jersey people, who approved the idea of being allowed to bet on sports in a nonbinding referendum by a 2-to-1 margin in the fall, and treatment programs for compulsive gamblers will receive half of the money made from sports betting.[17] The State of New Jersey is optimistic that the courts will uphold this law.[18]