Assessment of the New Jersey Sports Betting and the Interstate Horseracing Act
By Steve Barham, Associate Coordinator of the Race Track Industry Program at the University Of Arizona
In June of this year sports betting was legalized in New Jersey, challenging the designation of which states can conduct sports wagering under the federal Professional and Amateur Sports Protection Act (PASPA).
The restriction that the bet has to be made in person and while in the designated areas of either the casino or the racetrack located in New Jersey appears to be aimed at minimizing the chance of federal intervention, and allowing a state’s rights argument in allowing sports betting to be implemented in New Jersey. This restriction limits the argument that the betting runs afoul of the Interstate Wire Act (Title 18 Chapter 50 Sec. 1084), since all wagering done through mobile devises will only be able to be transmitted within designated areas of the casino or the racetrack properties. And possibly more important, it allows the argument that all of the business (betting) occurs in the state of New Jersey, thus it is not interstate commerce and is solely a “state’s rights” issue, and therefore congress has no right under the Interstate Commerce Clause to take action.
The interstate commerce issue may not be as clear cut as what New Jersey may want it to appear. Is the “commerce” simply the betting activity, or is the “commerce” more inclusive?
The Interstate Horseracing Act (IHA) (Title 15 Chapter 57 Sec. 3001-3007) is the federal law that governs the wagering on horse races across state lines. Section 3001 (b) states, “It is the policy of Congress in this chapter to regulate interstate commerce with respect to wagering on horseracing, in order to further the horseracing and legal off-track betting industries in the United States.” When the IHA was first passed in 1972, states conducting wagering on out-of-state races did so using “separate state pools” so all of the wagering activity was conducted in a single state on a race run in another state. This separate pool wagering met the definition of interstate commerce when Congress passed the IHA.
In horseracing, there is the wager and there is the race (event) which produces the result that determines the winning wagers. In sports betting, there is the bet and the game (event) that produces the result that determines the winning bets. If all of the betting was done in person in New Jersey and all of the events that determined the winning wagers were played in New Jersey, it would clearly be only intra-state commerce. However, if the games (events) are played outside of the state of New Jersey even though the betting is done solely in the state of New Jersey, under the logic used by Congress when passing the IHA, it may be Interstate commerce. It likely is a question of how closely the wager or bet and the event that provides the outcome are linked.
There may be some argument that a race is conducted for the purpose of providing the event that can be wagered on, while a sporting event, such as a football game is played for purposes other than providing a wagering event, and therefore the commercial link is closer between the race and the wager than between the game and the wager, but is this enough to limit the Interstate Commerce argument if congress decides it wants to take action?
Barham can be reached at sbarham@ag.arizona.edu
Class discussion questions for professors:
Can the logic used in the IHA in defining wagering in one state on a horse race run in another state as interstate commerce, be used in analyzing the “interstate commerce” issues in sports betting?
How closely should the link between the wagering activity and the event being wagered on have to be in order to be seen as commerce?
How far could congress legally push the interstate commerce argument if they decided they wanted to regulate sports betting?
The NFL is publically opposed to sports betting on professional football games, does this help or hinder the interstate commerce argument?
