The Supreme Court of the United States (SCOTUS) has struck down a 1992 law passed by Congress that made it illegal for most states to legalize sports betting within their borders.
The decision came down 6-3, representing a victory for several states that would like to tap into sports gambling as a way to generate revenue and bring in tourism. New Jersey was the ringleader of the effort, though it did enlist support from 17 other states and three additional state governors. The federal prohibition on sports betting was backed by the NCAA, NFL and NBA.
“I am thrilled to see the Supreme Court finally side with New Jersey and strike down the arbitrary ban on sports betting imposed by Congress decades ago,” New Jersey Governor Phil Murphy said Monday, May 14. “Today’s ruling will finally allow for authorized facilities in New Jersey to take the same bets that are legal in other states in our country.”
The suit was originally brought by Murphy’s predecessor in the New Jersey governorship, Chris Christie.
According to the court, the 1992 federal law ran afoul of the 10th amendment, which prohibited the federal government from controlling state policy. The law, according to SCOTUS, was unconstitutionally forcing states to prohibit sports betting under their own laws.
“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make,” Justice Samuel Alito wrote in the 6-3 opinion. “Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own.”
The ruling was good news for those in the sports gaming business—the stock price for Caesars Entertainment rose 6%, and DraftKings said it will enter the sports betting market.
“Today’s decision clears the way for all states to make their own decisions about legalizing sports betting, and in one fell swoop gets rid of Nevada’s monopoly on the subject and the 1992 federal statute that had protected it,” said Steve Vladeck, CNN Supreme Court analyst and professor of law at the University of Texas School of Law.
“The question now is whether Congress will leave the states to make their own choices or will now try to enact some kind of federal regulation of sports betting,” Vladeck added.
The lawsuit had its origin in the 2011 passage of a New Jersey law that allowed sports betting as a move to bolster the local casino economy in the face of difficult economic times. But professional sports leagues immediately challenged New Jersey’s new law, noting that it was in direct violation of a 1992 federal law that banned sports betting in states where it did not already exist.
The Professional and Amateur Sports Protection Act of 1992 made it unlawful for a state to “sponsor, operate, advertise, promote, license or authorize by law” sports wagering. The law was passed to preserve the integrity of sporting events and prevent them from becoming mere devices for gambling. New Jersey could have moved to be grandfathered in under the law, with states like Nevada and Oregon, had it passed a sports betting law within a year of the law’s effective date, but chose not to at the time.
New Jersey ultimately changed its mind, but lost in federal court to the sports leagues that brought suit under the law. They tried again in 2014 by repealing key provisions of its prohibitions on sports wagering to the extent that they applied at race tracks and casinos. But the courts shot that down, and so Christie decided to go to the Supreme Court.
New Jersey argued the case as a states’ right issue under the theory that the 1992 law is an unconstitutional violation of the “anti-commandeering” principle of the 10th Amendment, which bars Congress from ordering states to participate in a federal regulatory scheme.
“The majority relied upon the ‘anti-commandeering’ doctrine, holding that Congress can choose federal policies, but can’t dictate to states what their own policies must be,” Vladeck said.
Three justices dissented from the decision: Ruth Bader Ginsberg, Stephen Breyer and Sonia Sotomayor all criticized the ruling for using an ax to “cut down” a statute when it could have been “using a scalpel to trim the statute.”
The sports leagues, perhaps understandably, were less enthusiastic about the ruling than Governor Christie.
“New Jersey’s real complaint is that Congress has forbidden it from enacting the specific policy it prefers—namely, state sports gambling at its state-licensed casinos and race tracks,” wrote Paul D. Clement, a lawyer representing the NCAA, NBA, NFL and others.
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