Third Circuit Refuses to Accept New Jersey’s Sports Bet

The Third Circuit denied New Jersey’s request that the Court rehear arguments en banc in National Collegiate Athletic Association, et al. v. Governor of New Jersey, et al. (previously chronicled in the Goodwin Gaming Blog here). A divided three-judge panel of the Third Circuit affirmed summary judgment in favor of the major American professional sports leagues in their suit to stop enforcement of New Jersey’s law providing for regulated sports wagering, because it conflicted with federal law: the Professional and Amateur Sports Protection Act of 1992 (“PASPA”).

Under Federal Rule of Appellate Procedure 35(a), rehearing is “not favored” and available only when “necessary to secure or maintain uniformity of the court’s decisions” or “the proceeding involves a question of exceptional importance.” New Jersey had argued that the Panel’s ruling conflicts with several Supreme Court rulings related to commandeering and state sovereignty:

• New York v. United States, 505 U.S. 144 (1992), Printz v. United States, 521 U.S. 898 (1997), and Coyle v. Smith, 221 U.S. 559 (1911), cases in which the Supreme Court has struck state laws on anti-commandeering grounds, and which New Jersey contends bar “a federal prohibition on the exercise of state regulatory power”;
• Northwest Austin Municipal Utility District Number One v. Holder, 557 U.S. 193 (2009) and Shelby County v. Holder, 133 S. Ct. 2612 (2013), two recent Voting Rights Act cases in which the Supreme Court invalidated federal laws on “equal sovereignty” grounds, because PASPA favors Nevada (and other grandfathered states) over the other states.

New Jersey had also argued that the case presents an issue of exceptional importance warranting en banc rehearing under Fed. R. App. P. 35(a)(2): namely, “whether Congress—rather than regulating an activity directly—may regulate the activity indirectly by dictating the manner in which certain disfavored States must regulate that activity.”

The petition emphasized the “choice” PASPA puts to a state such as New Jersey, which can either (1) maintain a blanket ban on sports betting or (2) “repeal its sports wagering ban.” This latter option, argues New Jersey, encourages unregulated gambling, and Congress’ decision prevents the state’s “effort to shift sports wagering out of black markets and into closely regulated casinos and racetracks” despite the overwhelming public support of New Jersey’s citizens. (In addition to allowing state regulation, bringing sports betting into the open would raise revenue for Atlantic City casinos.) Essentially, contends the state, Congress has achieved its desired result of prohibiting legalized gambling, but escaped political accountability by shifting the blame to state officials.

Four other states—Georgia, Kansas, Virginia, and West Virginia—filed a brief amici curiae in support of New Jersey’s argument that PASPA impermissibly commandeers state legislatures and infringes upon state sovereignty. In one passage arguing that Congress, through PASPA, has impermissibly shifted blame for its sports-betting ban onto the states, the brief quotes Sophocles and Shakespeare on the blame that attaches to “the bringer of bad news”. The brief also attacked the Third Circuit’s line-drawing between constitutionally permissible bans and impermissible “affirmative commands” to state legislatures: Congress, argued the amici, should not be able to achieve a commandeering result by phrasing legislation in terms of prohibitions rather than affirmative obligations. Finally, the amici argue that the panel majority overstated Congress’ power to preempt state law, and that “[p]rohibiting State laws without establishing federal laws is not preemption to preserve an existing federal scheme; it is the forcing of States to create a de facto federal regime.”

On November 15, 2013, the request for en banc rehearing was denied in a short order, with no dissents, which noted that “no judge who concurred in the decision [] asked for rehearing, and a majority of the judges of the circuit in regular service [did] not vote[d] for rehearing.”

Under Supreme Court Rule 13(3), New Jersey now has ninety days—or until February 14, 2014—to petition the Supreme Court for certiorari.