Type: Law Bulletins
Date: 05/14/2018

Supreme Court Strikes Down Federal Law Prohibiting Sports Betting

On May 14, 2018, in Murphy, Governor of New Jersey, et al. v. National Collegiate Athletic Association et al. and New Jersey Thoroughbred Horsemen’s Association, Inc. v. National Collegiate Athletic Association et al., the U.S. Supreme Court—in a 6-3 decision—struck down a federal law that prohibited states from legalizing sports betting. The Court held that the Professional and Amateur Sports Protection Act of 1992 (PAPSA), a federal law prohibiting most states (other than Nevada and three other states that had been grandfathered in) from legalizing or otherwise permitting wagering on sports contests, violated the anti-commandeering rule of the Tenth Amendment. The Court’s ruling opens the door for individual states to legalize and regulate sports betting under state law.

New Jersey and other states had sought to permit sports gambling as a way to encourage tourism and tax revenue. The states argued that PAPSA commandeered state governments to enforce a federal initiative, which was unconstitutional under the Tenth Amendment and principles of federalism. In opposition, the major sports leagues, including the NCAA, NFL, NBA, MLB, and NHL, argued that PAPSA did not compel states to take any particular action but rather merely directed them as to what not to do.

Writing for the Court, Justice Alito rejected the sports leagues’ argument. “PAPSA . . . is not a preemption provision because there is no way in which this provision can be understood as a regulation of private actors. It certainly does not confer any federal rights on private actors interested in conducting sports gambling operations. (It does not give them a federal right to engage in sports gambling.) Nor does it impose any federal restrictions on private actors. . . . Thus, there is simply no way to understand the provision prohibiting state authorization as anything other than a direct command to the States. And that is exactly what the anticommandeering rule does not allow.” 

Justice Alito concluded that “[t]he legalization of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not.”

The American Gaming Association has estimated that Americans illegally wager about $150 billion on sports each year. Immediately after the Court’s ruling, the stock price for Caesars Entertainment rose 6%, and DraftKings announced that it will enter the sports betting market. Legal scholars have also speculated that this decision could have implications for a wide range of other state laws, including marijuana legalization, state laws decriminalizing physician-assisted suicide and those regulating self-driving cars.

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