Symposium: Sports-betting ban clearly within Congress’ power over interstate commerce

Michael K. Fagan, an adjunct professor at Washington University Law, coordinates the Predatory Gambling Liability Project, a strategic litigation effort of the 501(c)(3) group, Stop Predatory Gambling. He served as a career federal prosecutor and as Special Attorney to U.S. Attorney General Janet Reno.

As its recent term drew to a close, the U.S. Supreme Court surprised many observers by agreeing to hear New Jersey’s and the commercial gambling industry’s appeals in Christie v. National Collegiate Athletic Association and New Jersey Thoroughbred Horsemen’s Association, Inc. v. NCAA. The cases have been consolidated and will be argued together, most likely in the late fall or early winter. The cert grants came despite the U.S. solicitor general’s opposition and despite the Supreme Court’s fairly recent denial of cert to the same parties in an earlier iteration of the cases.

The consolidated cases involve defiance of a federal statute, the Professional and Amateur Sports Protection Act, by New Jersey and its controlling partner, the commercial gambling industry. PASPA prohibits states and individuals from actively taking steps to facilitate or engage in state-sponsored commercial sports gambling, and it explicitly bans states from authorizing or licensing such activities. Enacted in 1992, PASPA excluded from its prohibition the handful of then-existing state-authorized commercial sports-gambling schemes. These pre-existing configurations were not seen as threats to interstate commerce and the national economy in the same harmful ways or to the same extent as widespread commercial sports gambling. PASPA also provided that if New Jersey were to authorize commercial sports gambling in its Atlantic City casinos within one year of PASPA’s effective date, the exemption from PASPA’s prohibition would extend to that action; however, New Jersey did not act in time and its potential exemption expired.

Nearly a generation later, however, with an eye toward raising state revenue via taxation and relying upon an intervening amendment to its state constitution, New Jersey twice passed laws attempting to allow commercial sports gambling to take place in the state – as long as the gambling did not involve college sporting events taking place in New Jersey or games played anywhere by teams from New Jersey colleges. Each time, the major professional sports leagues and the NCAA sought and received federal court injunctive relief (as PASPA enables affected sports leagues to do) to block New Jersey’s perceived disregard of PASPA. Two district-court judges, two different panels of the U.S. Court of Appeals for the 3rd Circuit, and the en banc appellate court rejected claims that PASPA violates the anti-commandeering doctrine by requiring a state to administer or enforce a federal regulatory program. (In each of the appellate rulings, dissents were filed.)

Defending its most recent enactment, New Jersey maintained that its statute merely repealed state laws against commercial sports gambling and was neither an authorization or licensing of such gambling, so that PASPA was not violated. The sports leagues and the federal courts’ majorities, however, observed that the language used in New Jersey’s statute plainly was intended and served to authorize commercial sports gambling only at limited, pre-existing licensed gambling venues and only for certain people. Substance prevailed over form. The practical authorizing effect of the state statute controlled, said the 3rd Circuit majorities, rather than any legislative effort to beguile by labeling the law as a mere repeal. Finding a plain conflict between the state law and PASPA’s prohibitions, the appellate majorities then determined that PASPA did not offend the anti-commandeering doctrine, because it did not require the state to do anything affirmatively. The courts concluded that PASPA barred the state from permitting commercial sports gambling.

One way some have framed the issue now before the Supreme Court is whether PASPA, seen as a federal statute that prohibits modification or repeal of state-law prohibitions on private conduct, impermissibly commandeers the regulatory power of states in contravention of two 1990s-era cases, New York v. United States and Printz v. United States. PASPA, however, does not prohibit modification or repeal of state-law prohibitions on solely private conduct. Rather, it prohibits states (actually, any “governmental entity”) or persons “acting pursuant to the law or compact of a governmental entity” from engaging in certain conduct. That prohibited conduct is “to sponsor, operate, advertise, promote, license, or [as might a governmental entity, to] authorize by law or compact” any gambling scheme on any athletic game or individual performance in a game. PASPA’s prohibitions do not preclude conduct unless it is pursuant to some government’s authorizing or licensing law, which, by definition, makes the conduct something other than entirely private. PASPA’s prohibition on governmental conduct is also not a prohibition on “private” conduct, because governmental conduct is, by definition, public.

The 1990s-era cases cited above gave rise to the judge-made anti-commandeering doctrine, a doctrine rooted not in the words of the 10th Amendment or elsewhere in the Constitution (originalists, take note), but in a perceived structuring by that document of relationships between the federal and state governments. The contours of that structuring, of course, depend on which justices, activist or otherwise, are doing the perceiving. The doctrine presently says that Congress cannot compel the states to enact or enforce a federal regulatory program affirmatively or directly. It protects states from being “commandeered” against their will into spending their resources or their officials’ reputations on some federal regulatory effort.

Yet PASPA’s prohibitions plainly do not require the legislating state either to act affirmatively or to expend resources or reputation by regulating a federal program. Instead, PASPA obligates states (and other governmental entities) not to act in ways that may injure and corrupt channels of interstate commerce; that impair other states’ commercial and quality-of-life interests; that defy national protective policies inherent in the constitutionally assigned federal powers over interstate and foreign commerce and taxation; and that, in the aggregate, remove capital from productive uses to involve it in sterile transfers of wealth.

The commerce and supremacy clauses of the United States Constitution have long afforded the federal government ample power to prohibit a state from passing laws that shift from the legislating state to other states and to the national government the costs of a state-authorized vice occurring in the legislating state, when that vice both necessarily affects interstate commerce and does so by design. This is especially the case when the legislating state has not allowed or provided recompense for the harms associated with the vice.

New Jersey’s attempt to authorize commercial sports wagering necessarily affects interstate commerce, most plainly because the state’s statute bans bets on games involving New Jersey colleges. This, of course, attempts to protect New Jersey colleges from the integrity risks inherent in sports gambling. The ban, however, shifts the risks of corruption to other states’ college games and related commercial interests. Precluding such self-interested legislation that disadvantages other states is a key reason why the U.S. Constitution granted the federal government broad powers over interstate and foreign commerce. Since Gibbons v. Ogden in 1824, Congress’ power to prevent commercial wars among the states (as PASPA does) has been well-established.

The Supreme Court has repeatedly upheld those broad federal powers, especially when they are exercised (i) to limit the use of interstate and foreign commerce as vehicles for criminal activity; (ii) for nonproductive or illicit wealth transfers; (iii) for tax-evasive activities; (iv) for thwarting state laws prohibiting, limiting or regulating commercial gambling; and (v) for increasing wealth disparity, imposing costly mental and other health burdens, and harming family cohesion. PASPA advances each of these aims. People may argue over whether PASPA promotes a wise policy, but nothing about the statute violates settled constitutional law.

Like all commercial gambling (and unlike noncommercial gambling), government-authorized commercial sports gambling’s business model seeks:

[1] to get as many people as possible

[2] to gamble as often as possible,

[3] for as long as possible,

[4] and to bet as much as possible.

These four goals are largely absent from noncommercial (e.g., private, social or most charitable) gambling. They ensure that both gamblers and nongamblers would lose from nationally-expanded legalization of commercial sports gambling, because there is no way to limit to only gamblers or the industry the social and economic harms and costs inherent to commercial gambling. PASPA recognizes this reality.

Organized harm, made unlawful, does not become harmless simply because a state attempts to make it lawful. PASPA recognizes this reality, too. And when that organized harm affects interstate or foreign commerce, the power to regulate or prohibit it resides with Congress, as it has for centuries.

Unless at least five members of the Supreme Court seek to markedly expand or modify the anti-commandeering doctrine, it is difficult to see why the court granted certiorari in this case, in which the primary issues are clearly political, not constitutional.

(The Supreme Court may address other doctrinal arguments, such as PASPA’s interplay with the equal-sovereignty or private-non-delegation doctrine, but the cert grant focused on the anti-commandeering issue, so I have not discussed these other arguments here.)