Ted Olson Argues for New Jersey Sports Betting before Third Circuit Court of Appeals

Most media reports about Wednesday’s “en banc” court hearing before the Third Circuit Court of Appeals stated New Jersey received a harsh line of questioning. The consensus among the assembled media was New Jersey faces an uphill battle in striking down the PASPA law and legalizing sports betting across the United States.

New Jersey would argue that striking down the PASPA is not a part of its strategy. In fact, that is exactly what its lead attorney, Ted Olson, argued on Wednesday. It will be months before we know whether those arguments worked, but many judges appeared to save their harshest questions for Olson.

Ted Olson Versus Paul Clement

The hearing was a star-studded performance. Arguing for New Jersey was former Solicitor General Ted Olson. Arguing for the NFL-led sports leagues and the NCAA was former Solicitor General Paul Clement.

Two of America’s top litigators stood before a panel of 12 federal judges, who peppered both sides with questions in a 90-minute session. “En banc” rulings almost never happen in the American legal system, so the event received significant attention simply for the legal drama.

The debate centered on several constitutional concepts and the legal definition of the word “authorize”. At the heart of the debate were interpretations of the “equal sovereignty doctrine,” the “anti-commandeering principle”, and states rights issues stemming from the Tenth Amendment. Below, we analyze all three subjects.

The Equal Sovereignty Clause

In discussing state versus federal powers, people discuss the “equal sovereignty clause” as if it is a part of the U.S. Constitution. There is no such clause in the Constitution, though case law supports its existence to a degree.

“Equal sovereignty” is the idea that the federal government will treat each state equally. Ted Olson argued that 1992 PAPSA law carves out rights for 4 states — Nevada, Delaware, Montana, and Oregon — by giving them the right to have sports betting, while banning it in 46 other states.

Paul Clement argued that those states were given exemptions because they had legal sports betting before the PASPA law went into effect. Clement also argued that New Jersey (and other states) were given a year to enact pro-sports betting laws at the time of the imposition, but it chose not to. It’s an argument which has worked before for the sports leagues.

The Anti-Commandeering Principle

Ted Olson also argued that the Tenth Amendment to the Constitution provides for the “anti-commandeering principle”. Essentially, if the Constitution does not specifically stipulate powers for the federal government, then the states are given those powers.

U.S. states do not want to be coerced (“commandeered”) by the federal government into enacting laws which conflict with state laws. Olson argued that the State of New Jersey is being forced to use its resources to enforce a law which it clearly does not want to enforce.

In that light, New Jersey is seeking to strike down a law it does not want on its books anyone — a ban on gambling — not the Professional and Amateur Sports Protection Act (PASPA). Ted Olson argued that New Jersey is not seeking to authorize an act in violation of the federal government, but instead “is seeking to repeal an existing prohibition”.

Backdoor Authorization

Paul Clement argues that New Jersey is seeking to do just that. By allowing sports gambling to go on at specific locations (Monmouth Park), while restricting it elsewhere, the state is authorizing a violation of the law. In the eyes of Paul Clement and the sports associations, looking the other way is in itself a form of authorization — at least when the state tries to enforce gaming laws on “illegal” bookies.

Daily Fantasy Sports

People following the case point out the hypocrisy of the sports leagues, because they sign corporate sponsorship deals with DFS companies like DraftKings and FanDuel, while claiming in court that sports betting is a grave threat to the integrity and existence of their leagues. Daily fantasy sports, another hot-button legal topic these days, was not discussed in the court on Wednesday.

Still, Paul Clement touched on the idea of private bets among friends. One judge asked whether a $1,000 private bet among friends would be a violation of PASPA. Clement said it would not be, because it was not attempting to commercialize the bet.

Joe Asher on Sportsbooks and DFS Sites

That sounds suspiciously like sportsbooks, betting exchanges, and daily fantasy sports sites. That’s why Joe Asher, the CEO of William Hill (and partner of Monmouth Park), recently said it is impossible to split hairs between DFS and sports gambling.

When asked about his opinion on the cases before the courts, Asher said, “There’s no way you can be intellectually honest and be for one and not for the other.“