May 18, 2024
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May 18, 2024
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US Supreme Court Bets on State Rights

Wanna bet? If so, the Supreme Court came down with good news for you this week when the Court in a 6-3 decision ruled that the federal government cannot force states to enforce a federal rule. While the case was about the limits of the feds’ reach over the sports-betting industry, the decision, while not saying so outright, can have implications far beyond. Especially in areas where local governments differ with the reach of the federal government.

The key takeaway from NCAA v. Murphy is that the 10th Amendment lives. The 10th Amendment is sometimes referred to as the “Reserve Clause.” As a rule, it is very simple, a short sentence and barely legalese. The amendment says: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Basically what it means is that any law not written in the Constitution itself is outside the realm of the federal government and up to the states to decide how or when to legislate—or not. Twenty years ago there was a genuine debate as to whether the 10th Amendment had any real meaning. Government had taken authority of more and more areas of legislation and regulation—and pretty much without more than a modicum of dissent. There were some commentators who said, in all seriousness, that the reserve clause was an anachronism, and merely a truism—but without any real practical meaning. Whatever the government wanted to control it could, as each law has an effect on interstate commerce, and interstate commerce is totally within the authority of the federal government.

It is in this framework that the Professional and Amateur Sports Protection Act was passed in 1992. Until 2011, no one considered challenging PAPSA.

Basically what PAPSA did was twofold. With some narrow exceptions, PAPSA prohibited states from passing laws allowing any form of sports gambling. But the second part of the law is more controversial. The legislation not only prohibits sports betting but also requires states to use their police power to regulate against games involving sporting events. While Congress may, at times, regulate states—specifically in matters involving interstate commerce—they cannot require states to enforce federal laws. This is a policy that Justice Samuel Alito referred to as “commandeering,” and commandeering violates the Constitution’s limitations as to the states’ reserved powers.

In 2011, New Jersey held a state-wide referendum in which voters were asked if the state should change the law and allow sports gambling. New Jersey voters overwhelmingly voted in favor of legalizing sports gambling. The government, backed by Governor Chris Christie, backed the plan. But all of the major league sports leagues and the National Collegiate Athletic Association, which governs college sports, immediately sued New Jersey. Major League Baseball, the National Football League, the National Hockey League and the National Basketball Association joined the NCAA in asking for an injunction to force New Jersey to comply with PAPSA. The leagues argued that if gambling were permitted the integrity of the games would be at peril.

However, New Jersey, under what could end up being the most enduring legacy of Governor Christie, fought back. Christie questioned the Constitutionality of a law that tells the states what it must police and what it cannot legalize, even without any specific Constitutional authority of the federal government.

Christie pointed to the recent popularity in many states of marijuana decriminalization. Although there are distinct federal regulations prohibiting the sale and possession of cannabis, states like Colorado, Washington and California have loosened the reins without sanction. Further, many cities, and even some states, like California and New York, declare themselves “sanctuaries” in direct contravention of federal immigration law. Christie asked how New Jersey, in effect declaring itself a sanctuary for sports betting, is different? The state argued that state and local governments always have had wide discretion in formulating prosecutorial priorities and allocation of resources. Here, Christie argued New Jersey simply would be using its prerogative not to enforce PAPSA.

Two courts below the Supreme Court ruled against New Jersey. The 3rd Circuit Court of Appeals sitting in Philadelphia agreed with the leagues citing the doctrine of pre-emption. Where a federal law has spoken, there is no room for the state to differentiate from federal law.

But before the case reached the Supreme Court, the leagues, as a matter of practicality, blew up their own case. While the leagues argued that “integrity” required wagering be kept far away from sport, two leagues, the NHL and the NFL, approved multi-million dollar deals locating franchises in Las Vegas! It is with that background that the Supreme Court took a fresh look at New Jersey’s challenge.

While the leagues, officially, retained their “integrity” argument, there was some shift at the high court level. The NBA specifically said it would be unfair for the states to profit off of the league’s intellectual property and, rather than arguing for a full ban on betting, they shifted to a demand that gambling should only be allowed if the leagues could get a piece of the pie.

It was too late, because that position had nothing to do with the legislation the league challenged. The purity of the integrity position had fallen by the wayside.

The court is fully aware of the shock waves that may follow, which presumably explains why Justice Alito’s decision is so narrow. Looking at the text, there is no mention of sanctuary or decriminalization, although it does not take much imagination to expect that proponents of local control will use this ruling as precedent to argue for more states’ rights and less federal control.

But that argument is for another day. For today what we learn is that states do have rights, real ones, and that the 10th Amendment is no anachronism. But we also learn that this autumn you will most likely be able to make a bet on the Jets to cover the point spread on opening day in Detroit in a New Jersey casino, and you can do so legitimately, without violating the law.

By Stephen Loeb

 Stephen R. Loeb heads the Law Office of Stephen R. Loeb, a civil practice in New Jersey and New York. He can be reached at [email protected].


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