Third Circuit Rejects New Jersey’s Effort To Sanction Sports Wagering

Tony Soprano's business is safe, for now — the Third Circuit recently invalidated New Jersey's attempt to legalize sports wagering because it violated a federal law that prohibits most states from licensing such activities. In NCAA v. Christie, the Court rebuffed New Jersey's challenge to the constitutionality of the federal Professional and Amateur Sports Protection Act (PASPA), holding that the act is a valid exercise of Congress' commerce powers. No. 13-1713, 2013 U.S. App. LEXIS 19167 (3d Cir. Sept. 17, 2013).

In 1992, Congress passed PASPA. That statute prohibits states and private persons from sponsoring amateur and professional sports wagering schemes. 28 U.S.C. § 3701, et seq. (1992). The expressed purpose of the act was to stop the spread of state-sponsored sports wagering. The law contained a grandfather clause that permitted Nevada to continue to license sports wagering and gave New Jersey the option to permit sports wagering in Atlantic City, had it chosen to do so, within one year of PASPA's enactment. The New Jersey Legislature declined to exercise this option. The law also allowed states to continue to permit sports wagering to the extent they allowed it when PASPA was passed. See, e.g., Office of the Comm'r of Baseball v. Markell, 579 F.3d 293 (3d Cir. 2009). For instance, PASPA prohibits Delaware from authorizing single-game betting, but allows the state to sanction multi-game parlay wagers because the state allowed such wagers at the time Congress passed PASPA.

Almost two decades later, as New Jersey watched wagering revenues dwindle, the legislature approved a referendum to amend the state's constitution to authorize sports wagering. Voters approved the ballot initiative by a wide margin. The legislature attempted to exercise the voters' choice by adopting the "Sports Wagering Law." N.J. Stat. Ann. § 5:12A-1, et seq. (2011). The law authorizes licensed casinos and racetracks to operate sports wagering lounges. The NCAA and the four major sports leagues filed suit in federal court in August 2012 to invalidate the state law as a violation of PASPA. NCAA v. Christie, No. 12-4947, 2013 U.S. Dist. LEXIS 27782 (D.N.J. Feb. 28, 2013). The leagues prevailed and an appeal shortly followed.

The countervailing public policy concerns at issue in the debate are plain. On the one hand, some estimate that New Jersey would stand to earn $100 million in revenue the first year the law is in effect. On the other hand, the sports leagues are...