Supreme Court Ruling Allows States to Legalize Sports Betting

The Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) in May 2018 in Murphy v. NCAA, holding that PASPA “regulate[s] state governments’ regulation of their citizens,” which is not a power given to congress by the Constitution. As a win for New Jersey and other states seeking to legalize sports betting, the Supreme Court held that PASPA was a violation of the 10th Amendment, which stipulates that powers not given to the federal government or expressly taken away from states are given to the states. Basically, congress is able to regulate sports betting directly, but cannot tell the states how to regulate the industry.

What is PASPA & What Did it Do?

PASPA made several activities unlawful. Specifically, a state could not “sponsor, operate, advertise, promote, license, or authorize” by law a “lottery, sweepstakes, or other betting, gambling, or wagering scheme based on competitive sporting events.” 28 USC §3702(1) and (2). Sports gambling on its own was not a federal crime, but the Attorney General and professional or amateur sports organizations were legally allowed to sue the state civilly and join violations together. Four states were allowed to continue operations that had existed in those states at the time PASPA was passed. Additionally, New Jersey was allowed to set up a gambling scheme so long as it did so within a year of PASPA becoming law.

The following activities based on competitive sporting events were not allowed:

• Sponsorship, operation, advertisement, promotion, licensing or authorization
• Lottery, sweepstakes or other betting, gambling or wagering scheme

New Jersey passed the law that became the crux of the SCOTUS case in 2014. That law repealed New Jersey’s prohibitions against sports-gambling for individuals over 21 years old, so long as the bets were placed at a casino, gambling house, or horse track in Atlantic City, and only on sporting events. Gambling on college sports or events in the state were not part of the allowed activities. Although New Jersey was allowed to set up a gambling scheme, it failed to do so within the permitted year. The state then decided that it did want to legalize sports gambling. The problem was that New Jersey took years to come to that decision – long after the period of time allowed by PASPA. As a result, the NCAA and several major sports leagues sued New Jersey on a PASPA violation. New Jersey argued that PASPA violated constitutional law, specifically anticommandeering principles, by prohibiting states from changing or striking down laws, in this case laws that pertained to sports betting.

What Were the Odds?

Proponents of legalizing sports betting argued that legalizing the activity will generate revenue for states and reduce the strength of illegal betting organizations. Opponents of legalization argued that legalizing sports gambling will push people toward gambling and encourage unreasonable spending and financial practices.

The Supreme Court on Sports Gambling

The Supreme Court held that anticommandeering is a core right in the Constitution and equates to congress being unable to directly order the states to comply with something. Anticommandeering is just what is sounds like. The doctrine prevents the federal government from imposing restrictions on or “commandeering” state governments, especially in terms of laws that aim to target state activity by controlling or creating mandatory duties for the state legislatures or state officials. The Supreme Court stated that the federal government and the states both have sovereign powers that support our system of “dual sovereignty,” Murphy v. NCAA, (citing Gregory v. Ashcroft, 501 U. S. 452, 457 (1991)).

The Supreme Court held that congress did not have the authority to ban states from regulating sports gambling within their own state. PASPA was found to be a violation of the anticommandeering rule because it gave direct orders to state legislatures and prohibited states from authorization activity. As a result, the Supreme Court did not even need to evaluate whether New Jersey violated the PASPA anti-licensing provision.

Ultimately, the Supreme Court held that while Congress may regulate sports gambling by creating a federal set of guidelines for the industry, it could not force states to regulate their own industry.

Are There Larger Implications Within & Outside of Sports Betting?

Yes. Financially, allowing legal sports betting could bring a huge revenue influx to states that choose to allow it. For example, in Nevada, Las Vegas pulls in several billion dollars a year through sports betting. The illegal sports betting market is estimated at up to $100 billion dollars. By legalizing, this market would shift to legal venues and generate money for the state.

There are also non-gambling implications of the law. For example, Amy Howe, a writer for SCOTUSblog, wrote that supporters of “sanctuary-cities” may use this ruling as a precedent to not follow directions, rules, and laws set forth by immigration officials.

Can Congress Do Anything to Ban or Regulate Sports Betting?

Probably. Even though PASPA has been struck down and is no longer valid law, Congress could create a set of federal rules or guidelines that would give rise to uniformity among states.

What Exactly Does this Mean?

SCOTUS struck down the existing sports-gambling restriction that prevented states from regulating their own sports-betting industries. Now, states are free to engage in modifying, creating, or otherwise affecting sports-related gambling in their own state. Congress may move to create legislation to regulate the industry as a whole but lacks the power to dictate how states are to run their own sports-betting industries.