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SCOTUS Strikes Down Federal Sports Betting Ban In Monumental Victory For States’ Rights

This is the definitive breakdown of the Supreme Court's gambling decision.

By The Legal Blitz  
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The Supreme Court has issued opinions at a glacial pace this term. But today, it dropped a bomb on the sports world by striking down the federal prohibition on sports betting.

In a 7-2 decision packed with heady legal concepts like commandeering, federalism, preemption, and severability, Justice Samuel Alito’s majority opinion in Murphy v. NCAA pulled no punches in backhanding Congress for overstepping its authority in enacting the Professional and Amateur Sports Protection Act (“PASPA”).

Alito, joined by Roberts, Kennedy, Thomas, Kagan, and Gorsuch (and Breyer in part), explained that PASPA’s declaration that it is unlawful for a state to “sponsor, operate, advertise, promote, license, or authorize” sports betting is plainly unconstitutional.  The Court held:

The PASPA provision at issue here—prohibiting state authorization of sports gambling—violates the anti-commandeering rule. That provision unequivocally dictates what a state legislature may and may not do. And this is true under either our interpretation or that advocated by respondents and the United States. In either event, state legislatures are put under the direct control of Congress. 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.

This is a critical passage.  Not only did Alito explain why Congress cannot regulate sports betting in the manner prescribed by PASPA, but he then teed up how this conservative Court will treat future Tenth Amendment challenges.  

After providing some historical context of the anti-commandeering doctrine through the lenses of New York v. United States, 505 U. S. 144 (1992), and Printz v. United States, 521 U. S. 898 (1997), Alito explained that it does not matter whether a federal law compels states to affirmatively do something or simply withhold from acting, because in either situation, Congress would violate state sovereignty.  In thrashing the respondents’ (NCAA, NFL, NBA, MLB, and NHL) arguments, and the argument of the Trump Administration, he stated:

Neither respondents nor the United States contends that Congress can compel a State to enact legislation, but they say that prohibiting a State from enacting new laws is another matter. . . Noting that the laws challenged in New York and Printz “told states what they must do instead of what they must not do,” respondents contend that commandeering occurs “only when Congress goes beyond precluding state action and affirmatively commands it.”

. . .

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This distinction is empty. It was a matter of happenstance that the laws challenged in New York and Printz commanded “affirmative” action as opposed to imposing a prohibition. The basic principle — that Congress cannot issue direct orders to state legislatures — applies in either event.

Here is an illustration. PASPA includes an exemption for States that permitted sports betting at the time of enactment, §3704, but suppose Congress did not adopt such an exemption. Suppose Congress ordered States with legalized sports betting to take the affirmative step of criminalizing that activity and ordered the remaining States to retain their laws prohibiting sports betting. There is no good reason why the former would intrude more deeply on state sovereignty than the latter.

Advocates for the decriminalization of marijuana or for the creation of “sanctuary cities” must be salivating.  Seven justices agreed on this potentially overlooked point — both commanding an affirmative action and imposing a prohibition will violate state sovereignty. This is a huge win for states’ rights champions as Alito described the anti-commandeering principle as integral for “protections of liberty,” promoting “political accountability,” and preventing “Congress from shifting the costs of regulation to the States.”

Alito then took an ax to the sports leagues’ preemption arguments. After wading through the conflict and express preemption morass, he found that:

Regardless of the language sometimes used by Congress and this Court, every form of preemption is based on a federal law that regulates the conduct of private actors, not the States.

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Once this is understood, it is clear that the PASPA provision prohibiting state authorization of sports gambling is not a preemption provision because there is no way in which this provision can be understood as a regulation of private actors.

But the one shocking piece of the majority’s opinion is that it completely invalidated PASPA.  Remember, PASPA contains two parts – one directed at a “governmental entity” and one at “a person.”  So despite what the majority held, PASPA did touch upon private conduct. The leagues had argued that even if the Court struck down the part related to state conduct, that the remaining prohibition against “persons” from engaging in sports betting should remain. However, the Court decided not to sever the two provisions, which drew the ire of Justice Ginsburg in her dissent.

Ginsburg questioned why the majority “wields an ax . . . instead of using a scalpel to trim the statute.”

But it was clear that the majority felt that PASPA was an excessive intrusion into states’ rights and that each state should have the power to determine whether or not to legalize sports betting.

Of course, there is always a “but.”

Here, the closing lines of the majority opinion could prove ominous. In summarizing the holding, Alito wrote:

The 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. PASPA “regulate[s] state governments’ regulation” of their citizens, New York, 505 U. S., at 166. The Constitution gives Congress no such power.

While this certainly seems to open the floodgates for legal sports betting, it also signals that Congress can go ahead and regulate sports betting directly — rather than commanding the states to do so — if it really want to.

Leaving anything up to Congress is probably ill-advised, but that is what the sports leagues are still hoping for.

Moments after the Court issued its decision, the NBA and NFL called for Congress to step in and take action. The NFL said it intends to call on Congress to “enact a core regulatory framework for legalized sports betting” and NBA Commissioner Adam Silver said the league “remain[s] in favor of a federal framework that would provide a uniform approach to sports gambling.”

So the party might be short-lived for sports betting proponents.

Yet, envisioning any scenario where Congress could agree on something as divisive as sports betting is, quite frankly, too hard to truly imagine. But if the leagues do not get a cut of the action through their proposed “integrity fees” at the state level, they will certainly lobby vigorously to get Congress to rain on this parade.

The more likely result of today’s decision is that states will start scrambling to open sports books as soon as possible to cash in on additional tax revenue.  New Jersey, Pennsylvania, West Virginia, and Mississippi seemed poised to get their books open by the start of football season. Several other states, including New York, would likely have regulations in place by the next Super Bowl with at least a dozen more states soon to follow. It is certainly not inconceivable that more than 20 states could have legalized sports betting within the next two years.

And Alito must have thought of this immediate explosion of sports betting because he signaled that the Wire Act and Illegal Gambling Business Act would not come into play since the underlying conduct would be legal under state law.  He explained:

Under 18 U. S. C. §1955, operating a gambling business violates federal law only if that conduct is illegal under state or local law. Similarly, 18 U. S. C. §1953, which criminalizes the interstate transmission of wagering paraphernalia, and 18 U. S. C. §1084, which outlaws the interstate transmission of information that assists in the placing of a bet on a sporting event, apply only if the underlying gambling is illegal under state law.

Thus, it would seem that the takeaway is that if states legalize sports betting, it is truly all systems go except in the rare chance Congress tried to block sports betting again in some manner.  What will be interesting to see if how this all plays out in interstate betting pools, mobile wagering, and the use of cryptocurrencies.

It is not often that overnight a nation gains access to a multi-billion dollar a year market, so there are plenty of unknowns still floating around.

Thanks to the persistence of New Jersey, however, Nevada just lost its monopoly on sports betting.  Kudos to the Garden State.

Steve Silver is a former sports reporter for the Las Vegas Sun and is now a lawyer in Portland, Maine. He is teaching a class on the law of sports betting at the University of Maine School of Law in the Fall. You can reach him at steve@thelegalblitz.com or on Twitter @thelegalblitz.

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