The Mouthpiece


By Martin Owens
Contributing Editor


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    Martin Owens

    In Uncle Sam's Face (and about time); New Jersey takes on PASPA

    "[A] little rebellion, now and then, is a good thing... a medicine necessary for the sound health of government."
    Thomas Jefferson


    There is a rebellious streak in New Jersey, going all the way back. The first significant victory of the American Revolution was won at the Battle of Trenton in 1776, and the Garden State has been known for unique and independent ways ever since. What other place could have produced Woodrow Wilson, Bruce Springsteen and Tony Soprano?

    No surprise, then, that New Jersey was one of the first states to re-establish casino gambling, and one of the first to approve expanded Internet gambling. Though this was deflected into a referendum by the cautious (and White House conscious) Governor Chris Christie, the independent spirit continues to burn bright.

    True to form, in response to the first rebuff, Jersey has gone all in : the November 8th election card contained not one, not two, but three Internet gambling initiatives. First, there is the expansion of casino- style gaming online that made it but didn't make it the first time. This is likely to pass.

    Second is a measure that would bring the "racino model" to New Jersey. The horseracing tracks around Atlantic City would be permitted to install online slots. This is a proven method of increasing attendance at the tracks, and the tracks need it badly, particularly in New Jersey. A

    But the third one is where the real action is. That measure would allow residents of New Jersey to engage in licensed sports betting, including online. This is a direct challenge to Federal law, namely the Professional and Amateur Sports Protection Act (PASPA). And about time, too.
    PASPA (28 U.S. Code sec 3704) was inflicted on the country in 1992. It's a piece of pious humbug, the sort of holier-than-thou publicity stunt that politicians so often resort to instead of doing their real jobs. In pursuit of the fatuous notion that the pure spirit of American sport needed protection from Wicked Gambling (never mind that football, basketball, and most college sports became media powerhouses precisely because people were betting on them), PASPA prevented state and even tribal governments from legalizing sports betting - except for Delaware, Montana, Nevada and Oregon, which were " grandfathered" in.

    Which makes the whole thing preposterous on its face. This law, in effect, says that a $10 bet on the Bengals is safe when made in that stronghold of clean living called Las Vegas, but a threat to society if it comes from such sinkholes of depravity as Salt Lake City or Colorado Springs.

    Worse yet, PASPA is unconstitutional as hell. It violates the Tenth Amendment, for the Federal government must not intrude into matters reserved to the states, and the regulation of gambling is definitely one of those. It violates the Fifth Amendment's guarantee of due process, for while it outlaws "lottery, sweepstakes, or other betting, gambling, or wagering schemes" based on professional or amateur sport, it does not define what those things are. It violates the Commerce Clause and the Equal Protection Clause. Bets and wagers have been formally recognized by the US Supreme Court as items of interstate and international commerce since 1903. This law places unequal and irrational burdens on the flow of that commerce. The only reason those four states were "grandfathered" was to avoid a political fight, nothing else. And lastly, it gives professional and amateur sports leagues (like Major League Baseball or the NCAA) the same standing to sue for enforcement as the Federal government itself. Imagine the howls if the oil or airline industries were given the same kind of power over state laws that affect them! Oh, and by the way, that violates another Amendment- the Eleventh.

    Knocking out PASPA will be a two step process. First will come the passage of the state law. Next, inevitably, will be the action in court. As a general proposition, Federal law trumps state law if they conflict. What New Jersey will have to do is to convince a court of PASPA's unconstitutionality, and continue through the inevitable appeals, quite possibly to the Supreme Court itself. It remains to be seen whether the Federal courts will grant the request for a preliminary injunction against operating sports betting meantime, guaranteed to be filed by the DOJ or the major leagues, quite possibly all of them.

    But that is the last wrinkle, and it isn't clear how that's going to turn out. Governor. Christie has expressed support for this challenge to PASPA, and even gone so far as to say he will vote for. But more is needed. The last lawsuit to strike down PASPA was dismissed for lack of standing. Last time, Interactive Media Entertainment & Gaming Association (iMEGA), together with New Jersey state Senator Lesniak, plaintiffs, were told that they could not appear as injured parties. To be effective the lawsuit will have to be filed by New Jersey itself. It remains to be seen whether Governor Christie will actually take his support that far, provided the voters indicate that's what they want.

    UPDATE: Nov 9th: The sports-betting initiative has passed. The long process has begun. As outlined above, there will surely be opposition. But my own belief is that sports betting will eventually be legalized, not only in New Jersey but nationwide. Freedom of choice is the core belief of our system, after all, and if a man can't be trusted, in his own home, with a few dollars of his own money and an hour or two of his own time, then how can he possibly be trusted with the power of the vote?

    Mr. Owens is a California attorney specializing in the law of Internet and interactive gaming since 1998. Co-author of INTERNET GAMING LAW with Professor Nelson Rose,( Mary Ann Liebert Publishers , 2nd ed 2009) ; Associate Editor , Gaming Law Review & Economics; Contributing Editor, TSN. Com Comments and inquiries welcome at to mowens@trade-attorney.com.

    Copyright 2011


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