Member Article

In a landmark ruling earlier this year, the United States Supreme Court overturned the ruling of the 3rd Circuit Court of Appeals that upheld the constitutionality of the Professional and Amateur Sports Protection Act (PASPA), the federal statute that effectively prohibits all sports betting in the United States by restricting states (other than a few grandfathered states, including Nevada) from authorizing sports betting. On June 27, 2017, the United States Supreme Court granted certiorari in the appeal of Nat'l Collegiate Athletic Ass'n v. Governor of N.J., 832 F.3d 389 (3d Cir. 2016), New Jersey's ongoing (and second) challenge to PASPA. New Jersey challenged PASPA on several grounds, including a violation of the Commerce Clause and the United States Constitution's anti-commandeering and equal sovereignty principles. The case was heard by the Supreme Court in early December 2017.

In a 7-2 ruling, the Supreme Court has reversed the 3rd Circuit opinion, holding (i) that “PASPA’s provision prohibiting state authorization of sports gambling schemes violates the anti-commandeering rule,” (ii) that “ PASPA’s provision prohibiting state ‘licens[ing]’ of sports gambling schemes also violates the anti-commandeering rule,” (iii) and that “[n]o provision of PASPA is severable from the provisions directly at issue” in the action, meaning to the extent that PASPA is unconstitutional for its violation of the anti-commandeering rule, the entire statute must be struck down. The Court held Congress can regulate sports gambling directly, but if it elects not to do so each state is free to act on its own.

Several states, including Connecticut, Mississippi, Pennsylvania, West Virginia, New York and New Jersey, have enacted legislation designed to spring into effect in the event PASPA was struck down, while other states have similar bills pending. Outside of Nevada, the illegal gambling market has thrived, and states have looked to take advantage of the substantial revenue opportunity that regulating – and taxing – legal sports betting can bring. According to the American Gaming Association, $150 billion was wagered on sports illegally in 2016 alone. The combined total of wagering on both Super Bowl 51 and 2017 March Madness was more than $15 billion, but only 3 percent of that number was wagered legally. A highly regulated wagering scheme – such as Nevada’s – will not only allow states to capitalize on licensing fees and taxes, but will also impose strict guidelines on operators and keep track of wagers, revenue and unusual betting patterns.

A link to the Supreme Court’s decision can be found here: https://www.supremecourt.gov/opinions/17pdf/16-476_dbfi.pdf 

Dinsmore’s Gaming Law Group has actively tracked the progress of the New Jersey case and individual state developments. Two members of the Dinsmore Gaming Group, Laura D’Angelo Holoubek and Kerry Irwin, are scheduled to present on PASPA, the New Jersey case, and the future landscape of sports betting at the upcoming 2018 Kentucky Bar Association Annual Convention in Lexington KY June 13, 2018. Laura Holoubek is also a member of the International Masters of Gaming Law association as well as the Gaming Law section of the American Bar Association. Both Holoubek and Irwin have written extensively on matters of gaming law.