By Griffin Finan, Associate, Ifrah, PLLC
The stage is set for the next round in the battle between the state of New Jersey against the four major professional sports leagues (MLB, NBA, NFL, NHL) and the National Collegiate Athletic Association (NCAA) over New Jersey’s efforts to offer sports betting in the state’s casinos and racetracks. The leagues won the first round, but the results may be different in the second round.
The first sports betting law passed in New Jersey authorized the state’s casinos and racetracks to offer sports betting pursuant to a state sponsored sports wagering scheme. The leagues sued New Jersey to stop the implementation of the sports wagering law and the U.S. Department of Justice (DOJ) later intervened as a plaintiff in the case. The district court found New Jersey’s sports wagering law to be invalid as conflicting with the federal Professional and Amateur Sports Protection Act of 1992 (“PASPA”). The decision was affirmed on appeal by the U.S. Court of Appeals for the Third Circuit and the Supreme Court denied a petition for certiorari earlier this year.
In its brief to the Supreme Court opposing the grant of certiorari, the Solicitor General of the United States observed that PASPA did not obligate New Jersey to leave in place the state-law prohibitions against sports gambling. “To the contrary,” the Solicitor General Asserted, “New Jersey is free to repeal those prohibitions in whole or in part.”
Seizing on this language, State Senator Raymond Lesniak introduced a bill to repeal all of the state’s prohibitions on sports betting in the state’s casinos and racetracks. The state legislature quickly passed the bill and Governor Chris Christie promptly signed it into law.
Just a few days later, the four major professional sports leagues and the NCAA sued to stop the state from implementing the bill and asked the court for a temporary restraining order (TRO) pending the outcome of the case, as well as a preliminary injunction. On October 24, the district court granted the leagues request for a TRO prohibiting any of the state’s casinos or racetracks from offering sports betting, though only Monmouth Park Racetrack has publically stated its intentions to offer sports betting. The court issued a scheduling order allowing for further briefing on the preliminary injunction to be followed by oral arguments on the preliminary injunction.
Briefing has now been completed and oral arguments will be held on November 20 in front of U.S. District Court Judge Michael Shipp, whose brother played in the NFL and later worked as a coaching fellow in the league, and is the same judge that presided over the first round of litigation over New Jersey’s sports betting law. The TRO in the case is set to expire on November 21, the day after the hearing. There are four key issues to watch for in oral arguments:
Is a Partial Repeal of Sports Betting Laws State Sponsorship?
The key issue at oral arguments will be if the state’s law, which repealed the state’s sports betting laws only at the state’s casinos and racetracks, an industry that is heavily regulated by the state, constitutes state sponsored sports betting. The leagues have argued that this partial repeal of the state’s sports betting laws constitutes state sponsored sports betting since bets can only be taken at locations that possess licenses issued by the state.
With its brief, the State of New Jersey filed declarations from the heads of the state Casino Control Commission, Division of Gaming Enforcement, and the Racing Commission stating that those agencies will not, and legally cannot, regulate sports wagering activities because state law prohibits them from doing so. New Jersey’s law does not set up any regime of state licensure or regulations to govern sports betting in the state, and therefore, the state will argue that any bets are not occurring pursuant to a state sponsored betting scheme. There is language from the Third Circuit opinion in the first sports betting case suggesting that a partial repeal of sports betting laws by a state is permissible under PASPA and how the district court interprets that language and applies it to this law will be crucial.
References to be made to DOJ’s Absence
DOJ did not immediately intervene in the first round of sports betting litigation and do not expect them to at any point in this round of litigation. DOJ intervened in the first case to defend the constitutionality of PASPA, but that is not an issue in this case. In the first sports betting case, the U.S. Attorney for New Jersey arguing on behalf of DOJ, stated that the state was free to repeal its state sports betting laws, in whole or in part. That statement, in part, led the state to repeal its sports betting laws at the state’s casinos and racetracks. Judge Shipp noted the absence of DOJ at the hearing on the temporary restraining order motion and the defendants may try to use DOJ’s absence to bolster their argument that this repeal is not in violation of federal law.
Why Can’t There be Bets on Other Sports?
After the district court initially applied the TRO to only games that were held by the plaintiff’s leagues, the next day it clarified its ruling on the TRO saying that the TRO applied to all sports, even for games hosted by leagues that are not parties to the case. Expect the New Jersey Thoroughbred Horseman’s Association, a defendant in the case representing the state’s racetracks, to argue that any preliminary injunction should not apply to games that are not operated by the plaintiffs. Their argument will focus on how the leagues could possibly argue that they will be “irreparably harmed” by betting on games that they have no interest in.
New Jersey had previously asked the court not to include the WNBA, NASCAR, the Canadian Football League, Ultimate Fighting Championship (UFC) matches, Professional Golf Association events, tennis matches, and worldwide soccer events in any TRO or injunction in the case. If those events are not included in the preliminary injunction then the state’s casinos and racetracks could move forward taking bets on those events immediately. Recently, the Executive Vice President of the UFC said that he believed that expanded legalized sports betting “will enhance the game as opposed to doing anything to hurt it” further fueling the argument that the plaintiffs in this case cannot argue that they will be irreparably harmed by betting on those events.
This Isn’t Over, but We Will Know Soon
Both sides know that the district court’s ruling in this case will not be final and an appeal is inevitable. The first case challenging New Jersey’s sports betting law was decided by the Third Circuit and this one will be too. The Supreme Court denied a petition to hear the first case on appeal, and there are less compelling reasons for the Court to agree to hear this case, so the Third Circuit will likely be the final arbiter in the case. Judge Shipp has a history of setting tight deadlines for himself and sticking to them, so the decision from the district court may come very quickly after oral arguments, especially given that the TRO is set to expire the day after oral arguments.
