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Murphy v. NCAA: New Jersey Wins Big After Betting on Unconstitutionality of Federal Sports-Betting Ban

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30 May 2018
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May 30, 2018

Murphy v. NCAA, 584 U.S. ___ (2018) (Alito, J.).
Response by Jeff Ifrah & David Yellin
Geo. Wash. L. Rev. On the Docket (Oct. Term 2017)
Slip Opinion | New York Times | SCOTUSblog

Murphy v. NCAA: New Jersey Wins Big After Betting on Unconstitutionality of Federal Sports-Betting Ban

In a recent 6–3 ruling in Murphy v. NCAA,1 the Supreme Court struck down the Professional and Amateur Sports Protection Act of 1992 (“PASPA”),2 ending the federal ban on sports betting and opening the door for states to begin legalizing sports gambling. This ruling immediately legalizes sports betting in New Jersey, opens up a logjam that states, casinos, and foreign sportsbooks have been hoping to break for years, and will likely lead to a rush to legalize sports betting in many states that already have casino gambling.

The Court’s ruling relied on a fairly straightforward application of the anti-commandeering doctrine. Under this doctrine, first described by the Court in 1992, federal laws cannot require states to take actions implementing federal policy.3 As the Court explained, “[w]here a federal interest is sufficiently strong to cause Congress to legislate, it must do so directly; it may not conscript state governments as its agents.”4 Because PASPA acted by prohibiting states from authorizing sports betting, many scholars had come to believe it was a clear violation of this doctrine.5 But, because of America’s conflicted views on the morality of sports betting6—and because the Court had previously declined to consider the issue—there was a surprising amount of uncertainty over how the Court would rule on this seemingly straightforward question.7

Sports Betting in the United States

The United States has long had a complicated relationship with gambling—particularly with regard to sports betting. On one hand, the overwhelming majority of states have stringent restrictions or prohibitions on gambling—often in their state constitutions.8 On the other, gambling has been increasing in popularity in recent years, with many states embracing it as a way to collect substantial tax revenue while providing entertainment opportunities to their citizens.9

Against this backdrop, PASPA has long been an outlier. PASPA was enacted to “stop the spread” of sports gambling based upon fears that it could “change the nature of sporting events from wholesome entertainment . . . to devices for gambling,” undermine confidence in sports, and promote underage gambling.10 But whereas other federal gambling laws only covered gambling already illegal under state law,11 PASPA prohibited states from “sponsor[ing], operat[ing], advertis[ing], promot[ing], licens[ing], or authoriz[ing] by law or compact” any form of sports betting12 (except for existing sports betting, such as in Nevada, which was grandfathered in).13 PASPA also made it unlawful for any person to engage in the same conduct pursuant to state law.14

Over the next two decades, outlooks began to change on gambling. Several states that had outlawed it completely began to experiment with legalizing casino gambling.15 And even as sports betting remained illegal in forty-nine states, Super Bowl pools, March Madness brackets, and various fantasy games became increasingly integrated into basic sports fandom. The prohibition on sports betting has increasingly been honored in the breach.16

New Jersey’s Quest for Legal Sports Betting

In this context—and seeking to capitalize on doubts about PASPA’s constitutionality—New Jersey enacted a comprehensive law legalizing sports betting and providing a robust regulatory structure.17 The MLB, NFL, NBA, NHL, and NCAA successfully sued to enjoin this law from taking effect, with the Third Circuit ruling that by prohibiting the affirmative authorization of sports betting, PASPA did not commandeer state governments by requiring them to do anything specific.18 The Supreme Court denied certiorari, seemingly ending the matter for the foreseeable future.19

Taking the Third Circuit at its word, in 2014 New Jersey simply repealed its prohibitions on sports wagering in certain casinos and racetracks without expressly authorizing or licensing it.20 The sports leagues challenged this second law and, this time, the Third Circuit ruled, en banc, that even the repeal of prohibitions in more than a de minimis way was an “authorization” of sports gambling.21

This time, the Supreme Court took the case. Although the constitutional issues seemed relatively clear, the fact that the Third Circuit had twice upheld PASPA, combined with a long history of hand-wringing over the morality of gambling, made the outcome hard to predict.

The Murphy Ruling and Invalidation of PASPA

The Court struck down PASPA 6–3, in an opinion authored by Justice Alito. The majority opinion acknowledged that “Americans have never been of one mind about gambling,”22 and that “[s]ports gambling . . . has long had strong opposition.”23 Yet Justice Alito set aside the history of gambling and antigambling sentiment in the United States in an unusually doctrinaire opinion, concluding 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 . . . . PASPA is not [constitutional].”24

To reach its conclusion, the Court agreed with the Third Circuit—and the sports leagues—in finding that New Jersey had “authorized” sports betting in violation of PASPA.25 But it was precisely that finding that necessitated the conclusion that PASPA “unequivocally dictates what a state legislature may and may not do . . . . It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine.”26 Because nearly every state had a sports-betting prohibition on the books when PASPA was enacted, simply declining to legislate at all was not an option,27 and under PASPA, no state was free to repeal its prohibitions.

There was no real disagreement with this conclusion by any of the nine Justices. Indeed, even in dissent, Justice Ginsburg simply assumed it was correct without expressly agreeing.28 Rather, the dissenters, including Justice Breyer in his partial dissent,29 only disagreed with the Court on whether the rest of PASPA—prohibiting individuals from engaging in sports betting pursuant to state law and prohibiting advertising of sports betting—could be severed and stand on its own. The majority found the provisions to be inseparable, noting, for one, that it would be incongruous to prohibit private sports-betting activity only if authorized by state law—particularly in light of other federal laws that rely on state law to define illegal gambling.30 The dissenters disagreed and would have left intact the provisions prohibiting individuals from engaging in sports betting, essentially preserving PASPA’s ban.31

Aftermath of Murphy

From a constitutional and doctrinal standpoint, the Murphy ruling shows that the anti-commandeering doctrine is alive and well. However, the lineup of Justices does create questions as to how it might be applied in other circumstances that may come to the Court. For example, if the Court were to take up the issue of sanctuary cities, could that compromise the apparent doctrinal clarity of the conservative Justices or discourage the hairsplitting of the more liberal Justices?

More immediately, as states move to legalize sports betting (and New Jersey moves to erect a more robust regulatory structure), state legislatures are faced with new and novel issues. Though it would be relatively simple for states with casino gambling to authorize sports books, most sports gambling is more likely to occur online—where most sports fans already turn for fantasy sports, March Madness brackets, and football pools.32 This will likely require innovative approaches, though some states, such as New Jersey, Nevada, Delaware, and Pennsylvania, are already introducing online gambling.33

At the same time, sports leagues will likely try to find new ways to exercise control over sports betting. Though past efforts to use intellectual property law to tamp down on gambling have failed,34 as state legislatures take up new sports-betting legislation there will be opportunities to lobby to control which games can be bet on and seek out benefits such as “integrity fees”—kickbacks to sports leagues paid by sports books ostensibly to prevent match fixing by flush leagues that already work to keep their games fair.

One thing is certain: the horse is now out of the barn. Given the popularity of sports betting in the United States and the number of states looking to implement it legally, there is little question that it is now here to stay.

Jeff Ifrah, founding partner of the Washington, D.C. law firm Ifrah Law, is considered one of the world’s foremost attorneys in Online Gaming Law. Jeff and his firm have been at the center of most of the important prosecutions and lawsuits in the iGaming industry. He is a founding member of the iDevelopment and Economic Association (iDEA), a non-profit trade association representing the interests of the online gaming industry. On behalf of iDEA, Ifrah Law submitted an amicus brief to the U.S. Supreme Court in Murphy v. NCAA, the pivotal case which now allows states to decide whether to allow sports betting within their borders.

David Yellin is an Associate at Ifrah Law PLLC. He focuses on the areas of Online Gaming and Entertainment, and Payment Processing and Finance. He was part of the team that submitted an amicus brief to the U.S. Supreme Court in the sports-betting case Murphy v. NCAA. With a strong expertise in federal procedure, David is known for his rigorous representation of individuals and companies embroiled in high stakes situations across a range of industries, from telecommunications and entertainment to financial services.

  1. No. 16-476, slip op. (U.S. May 14, 2018).
  2. 28 U.S.C. §§ 3701–3704 (2012).
  3. See New York v. United States, 505 U.S. 144 (1992); see also Printz v. United States, 521 U.S. 898 (1997).
  4. New York, 505 U.S. at 178.
  5. See, e.g., Matthew D. Mills, The Failure of the Professional and Amateur Sports Protection Act, 16 U. Denv. Sports & Ent. L.J. 215, 217–20 (2014); Jonathan Wood, Symposium: In Sports-Betting Case, the Supreme Court Should Bet on Federalism, SCOTUSblog (Aug. 16, 2017, 3:06 PM). http://www.scotusblog.com/2017/08/symposium-sports-betting-case-supreme-court-bet-federalism.
  6. See, e.g., Bill Bradley, The Professional and Amateur Sports Protection Act—Policy Concerns Behind Senate Bill 474, 2 Seton Hall J. Sport L. 5, 7 (1992) (“Legalizing sports gambling would encourage young people to participate in sports to win money. They would no longer love the game for the purity of the experience.”).
  7. See generally Summer Symposium on Christie v. NCAA, SCOTUSblog, http://www.scotusblog.com/category/special-features/summer-symposium-on-christie-v-national-collegiate-athletic-association.
  8. See, e.g., N.Y. Const. art. I, § 9 (prohibiting gambling other than state-run lotteries); Md. Const. art. III, § 36 (prohibiting lotteries not run by the state); Md. Const. art. XIX (permitting video lottery terminals); N.J. Const. art. 4, § 7, ¶ 2 (prohibiting gambling except in Atlantic City).
  9. See, e.g., Marc Levy, Pennsylvania Approves Gambling Expansion—Betting Not Just in Casinos Anymore, Pittsburgh Post-Gazette (Oct. 30, 2017, 5:52 PM), http://www.post-gazette.com/news/politics-state/2017/10/30/Pennsylvania-gambling-betting-online-airports-truck-stops-casinos-expansion-budget-2018/stories/201710300186; Thomas Kaplan, Expansion of Gambling in New York Is Approved, N.Y. Times (Nov. 5, 2013), https://www.nytimes.com/2013/11/06/nyregion/referendum-to-expand-casino-gambling-in-new-york-is-approved.html.
  10. S. Rep. No. 102-248, at 4–5 (1991), as reprinted in 1992 U.S.C.C.A.N. 3553, 3555.
  11. See, e.g., Interstate Wire Act of 1961, 18 U.S.C. § 1084 (2012); Illegal Gambling Business Act of 1970, 18 U.S.C. § 1955 (2012); Unlawful Internet Gambling Enforcement Act of 2006, 31 U.S.C. §§ 5361–5367 (2012).
  12. 28 U.S.C. § 3702(1) (2012).
  13. See id. § 3704.
  14. See id. § 3702(2).
  15. See, e.g., Levy, supra note 9; Kaplan, supra note 9.
  16. See Brief of American Gaming Ass’n as Amicus Curiae in Support of Petitioners at 11–14, Murphy v. NCAA, No. 16-476 (U.S. May 14, 2018).
  17. Murphy, slip op. at 6.
  18. Id. at 8.
  19. Id.
  20. Id.
  21. NCAA v. Governor of N.J., 832 F.3d 389, 402 (3d Cir. 2016) (en banc), rev’d sub nom. Murphy v. NCAA, No. 16-476 (U.S. May 14, 2018).
  22. Murphy, slip op. at 1.
  23. Id. at 3.
  24. Id. at 30–31.
  25. See id. at 7.
  26. Id. at 18.
  27. Id. at 24–25.
  28. Id. at 1 (Ginsburg, J., dissenting).
  29. Id. at 1–3 (Breyer, J., concurring in part and dissenting in part).
  30. See id. at 28–29 (majority opinion).
  31. See id. at 1 (Breyer, J., concurring in part and dissenting in part). Justice Thomas agreed in full with the majority but wrote a concurrence taking issue with aspects of the Court’s severability jurisprudence that were not raised in the Murphy case. See id. at 1 (Thomas, J., concurring).
  32. See, e.g., Joe Drape & Ken Belson, An Ad Blitz for Fantasy Sports Games, but Some See Plain Old Gambling, N.Y. Times (Sept. 16, 2015), https://www.nytimes.com/2015/09/17/sports/football/draftkings-fanduel-fantasy-sports-games.html.
  33. See Levy, supra note 9; Sophia Schmidt, Delaware and Nevada Set to Deal New Jersey Into Online Poker Games, Delaware Public Media (Apr. 24, 2018), http://delawarepublic.org/post/delaware-and-nevada-set-deal-new-jersey-online-poker-games; John Wilkerson, Nevada Approves Internet Gambling, ABC News (June 4, 2013), https://abcnews.go.com/US/story?id=93177.
  34. Cf. NBA v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997) (statistics and information about sporting events not protected by Lanham Act or Copyright Act).

Recommended Citation
Jeff Ifrah & David Yellin, Murphy v. NCAA: New Jersey Wins Big After Betting on Unconstitutionality of Federal Sports-Betting Ban, Geo. Wash. L. Rev. On the Docket (May 30, 2018), https://www.gwlr.org/murphy-v-ncaa-new-jersey-wins-big.

 

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