By Daniel Wallach
April 23, 2018
As anticipation continues to build toward a decision in the New Jersey sports gambling case — with this week presenting yet another possibility that the Supreme Court will finally issue its long-awaited ruling — a variety of potential outcome scenarios have been debated. From my vantage point, the most likely outcome in the case — based on the justices’ questions and comments from the bench during the Dec. 4 oral argument — is that the Supreme Court will issue a ruling declaring PASPA to be unconstitutional.
A decision along those lines — which many inaccurately refer to as a “complete repeal” (courts invalidate or strike down statutes; they don’t “repeal” them) — would likely be predicated on a finding that PASPA impermissibly commandeers state legislatures in violation of the 10th Amendment. Such a decision would allow New Jersey, and scores of other states, to enact laws authorizing sports gambling free from any federal interference.
But there is another path for a New Jersey victory other than a complete invalidation of PASPA. As previously highlighted in my analysis of the Dec. 4 oral argument, the Supreme Court could decide the case on narrow grounds. It could rule as a matter of statutory interpretation that New Jersey’s partial repeal law (which lifts state prohibitions against sports gambling at casinos and racetracks) does not constitute a violation of PASPA because the state would not be “authorizing” sports gambling when it merely decriminalized such activity. Or, alternatively, the Court could hold that PASPA is unconstitutional but only to the extent that it prohibits states from repealing their sports betting prohibitions. (The latter was the specific question presented in New Jersey’s original petition to the Supreme Court.)
Under either narrow ruling, New Jersey would end up in the exact same place: with sports betting allowed at the state’s racetracks and casinos, possibly as soon as two or three weeks following the Court’s decision.
But for the 20 or so other states that have enacted laws or introduced bills to legalize sports gambling, a narrow victory for New Jersey would likely be of little benefit to them because those states would be highly unlikely to emulate New Jersey’s “regulation-free” approach to sports betting.
The Section 3702(2) Conundrum
A narrow ruling along those lines for New Jersey would largely leave intact PASPA’s prohibition in Section 3702(1) against state “authorization” of sports betting, save for repeals of state laws to varying degrees. It would likely also leave in place the other five prohibitions contained in Section 3702(1) — forbidding states from “sponsoring,” “operating,” “advertising,” “promoting” or “licensing” sports gambling schemes — which New Jersey is not challenging in the Murphy v. NCAA case before the Supreme Court.
Potentially more problematic for would-be sports betting operators is that a limited ruling for New Jersey would also leave untouched PASPA’s separate prohibition in Section 3702(2) against “persons” operating sports gambling schemes “pursuant to the law or compact of a governmental entity.”
Notably, New Jersey is not separately challenging the constitutionality of the “private party” prohibition in Section 3702(2). Rather than challenge Section 3702(2) head-on, New Jersey is arguing that if the Supreme Court invalidates Section 3702(1) on constitutional grounds, it must also strike down Section 3702(2) because the latter provision is “textually tethered” to Section 3702(1)’s prohibition against state authorization of sports gambling and cannot be “severed.” As explained in New Jersey’s opening merits brief, “the text of Section 3702(2) demonstrates that it was not intended by Congress to be a freestanding prohibition, but rather a complement to Section 3702(1)’s impermissible prohibition against state authorization by law.”
While that is certainly a compelling argument if the Supreme Court does indeed strike down Section 3702(1) in whole or in part, it does not address a potentially more vexing question — namely, could New Jersey still “lose” by winning?
More specifically, if Section 3702(1) survives either because the Supreme Court decides the case in favor of New Jersey on narrow statutory grounds or because it limits its finding of unconstitutionality to any federal efforts to utilize PASPA to block state-law “repeals,” would Section 3702(2) still prohibit private companies (such as casinos and racetracks) from operating sports books in reliance on a state law repealing sports gambling prohibitions?
The five major U.S. sports leagues argued in their brief defending PASPA that even if New Jersey’s partial repeal law does not constitute a PASPA-forbidden “authorization” (or if PASPA is unconstitutional only to the extent that it prevents state repeals of sports gambling prohibitions), PASPA would still “independently prohibit casinos and racetracks from relying on [New Jersey’s partial repeal law] to engage in conduct that federal law forbids.”
The leagues’ attorney, Paul Clement, emphasized this point during the oral argument, asserting that the “pursuant to law” language in Section 3702(2) “is broader than the ‘licensed or authorized by law’ language contained in Section 3702(1), which is directed at state governments.”
There Is 'No Law' For The Purposes Of Section 3702(2)’s Private Party Prohibition
Putting aside the absurdity of such an outcome — whereby the state would be allowed to repeal its existing sports betting prohibitions but no private party would be able to engage in the activity — existing case law should prevent such an incongruous result. This is because courts generally treat a “repealed” law as if it never existed.
For example, the U.S. Supreme Court (the court deciding the Murphy case) stated in Ex Parte McCardle that “when an act of the legislature is repealed, it must be considered ... as if it never existed.” Likewise, the D.C. Circuit, a federal appeals court, reasoned in Anderson v. USAir Inc. that “common sense dictates that repeal means a deletion.” The Fourth Circuit U.S. Court of Appeals has put it even more bluntly, stating in Duke Power Co. v. S.C. Tax Comm’n that “the repeal of a statute has the effect of blotting it out completely as if it had never existed.”
New Jersey courts also recognize the same principle, which would seem pretty important here since the partial repeal law under consideration in the sports gambling case is a New Jersey statute. In Kemp by Wright v. State, Cty. of Burlington, the New Jersey Supreme Court, quoting Parsippany Hills Assocs. V. Rent Leveling Bd., asserted that “‘in this State, it is the general rule that where a statute is repealed and there is no saving clause or a general statute limiting the effect of the repeal, the repealed statute, in regard to its operative effect, is considered as though it had never existed.’”
In his dissenting opinion in the Christie II case, Third Circuit Judge Julio Fuentes applied this principle in the context of New Jersey’s repeal of its state-law prohibitions against sports betting, concluding that as a result of New Jersey’s repeal, there was “no law” on the books with respect to sports betting. He explained in his dissenting opinion that the partial repeal simply returned New Jersey to “the state it was in” before it enacted sports betting prohibitions, which was “no law” governing such activity:
A repeal is defined as an “abrogation of existing law by legislative act.” When a statute is repealed, “the repealed statute in regard to its operative effect, is considered as if it never existed.” If a repealed statute is treated as if it never existed, a partially repealed statute is treated as if the repealed sections never existed. The 2014 Repeal, then, simply returns New Jersey to the state it was in before it first enacted those prohibitions on sports gambling, In other words, it is as if New Jersey never prohibited sports wagering at casinos, gambling houses and horse racetracks. Therefore, with respect to those locations, there are no laws governing sports wagering.
Although Judge Fuentes was in the minority in the Third Circuit's Christie II opinion, his reasoning draws from well-settled U.S. Supreme Court, federal circuit and New Jersey legal precedent. As the above cases uniformly hold, when a state repeals a law, there is no longer any “law” there, which is significant in light of Section 3702(2)’s “pursuant to law” language.
Therefore, if the Supreme Court decides the case narrowly and leaves in place Section 3702(1)’s prohibitions, sports betting operators would likely not have to fear the repercussions of Section 3702(2).
This article was originally published in Forbes.com on April 23, 2018.