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Caveat Vendor

Supreme Court Opens Door To State-Authorized Sports Betting In Far-Reaching Opinion

The Supreme Court today, in a 7-2 decision, invalidated the Professional & Amateur Sports Protection Act (“PASPA”), paving the way for States to authorize and regulate sports betting if they wish.  Only Justices Ginsburg and Sotomayor dissented entirely from the decision.  The reasoning of the decision is so broad as to give support to those looking to permit (intrastate) mobile and online sports betting as well, not just bricks and mortar.  Nearly 20 states either have already enacted sports-betting laws in anticipation of the Court’s ruling or have bills in various stages of consideration.

The statute, enacted in 1992, made it unlawful for States and localities to “sponsor, operate, advertise, promote, license, or authorize” betting on sports, and further prohibited private actors from sponsoring, operating or promoting any State-authorized sports betting activity.

The statute exempted Nevada and, to a limited extent, Delaware, Oregon and Montana, from its proscriptions.  New Jersey, which had been afforded a limited window to enact its own sports betting law but failed to do so, experienced a change of heart more recently and challenged the constitutionality of the statute.

The Court, in a majority opinion authored by Justice Samuel Alito, held that PASPA’s bar on States' enactment of legislation authorizing sports betting unconstitutionally “commandeered” State legislatures into enforcing federal policy.  As Justice Alito colorfully put it:

It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine.

This opinion is a resounding victory for the gaming industry and for those states that wish to legalize sports betting.  In striking the entire statute, the Court rejected two potentially narrower options: (1) allowing for a “partial repeal” of the sort New Jersey enacted, which likely would have limited attraction to many states, and (2) severing the statute to preserve its prohibitions on private actors.

On that latter point, six of the justices (with Justice Breyer joining the dissent on this issue) rejected the arguments of the sports leagues and the United States that, even if the provision regulating state conduct were unconstitutional, the bar on private actors should be retained.  By invalidating the entire statute the Court has given the green light to states to authorize and regulate sports betting however they see fit.

Also of great significance is a passing comment in the majority opinion that seems to clear the path to states legalizing not only sports betting in the casino, but its mobile and online variations as well.

The Court, in rejecting the attempt at severability, noted the “general federal approach to gambling,” whereby conduct violates federal law “only if the underlying gambling is illegal under state law.”  As the Court stated, “These provisions implement a coherent federal policy: They respect the policy choices of the people of each State on the controversial issue of gambling.”  Among the statutes cited in support of that statement was the Wire Act (18 U.S.C. 1084).

The Wire Act has been understood as a potential barrier to online and mobile sports betting even if PASPA were invalidated.  The Court’s characterization, if understood seriously, would seem to indicate that the Wire Act should be construed narrowly not to interfere with states’ prerogatives to regulate sports betting within their borders, however they choose to do so.