New Jersey Sports Betting Case Could Impact DFS In California
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Legal Sports Report

View: California Daily Fantasy Sports Bill Faces A Steep Climb In 2016

California DFS
Not that long ago, there was quite a bit of chatter on Twitter and elsewhere about California daily fantasy sports.

While everyone’s enthusiasm about the subject is appreciated, chances are — save for one potentially game changing event — a DFS bill won’t be passed in California this year. A bill regulating DFS has been on hiatus since it passed the Assembly by an overwhelming majority.

The problems for California and DFS

First, generally speaking, legislation rarely gets passed on the first try — especially something involving gambling, which is a charged issue for many. (And let’s be honest here, DFS is gambling. We’re not talking about passing the budget or something like Megan’s Law.)

There are some politically powerful entities who support DFS — people like NFL owners Jerry Jones and Robert Kraft and NBA Commissioner Adam Silver. However, they are politically powerful on a national level, not so much in regards to California politics.

So, while they may have some influence in certain jurisdictions regarding the legality of DFS, it is more likely they could influence a bill in New York, where both the pro sports leagues are headquartered, than in California.

A DFS bill rewrite?

The bill probably needs a rewrite to be more in line with legislation already drafted on online poker and the sports betting. Such a rewrite would likely require a DFS operator to partner with a stakeholder in the state (compacted tribe, cardroom of a certain size or racetrack) for it to gain traction in the legislature.

It’s my understanding that there is at least one such rewrite of the bill out there; whether it comes to light is unknown at this point.

Tribal issues

The tribes that have significant political clout — especially the Agua Caliente and Pechanga bands — could pose a problem.

If their respective chairs — Jeff Grubbe and Mark Macarro — don’t like a bill, chances are it will be killed. (This is in spite of a recent dust-up between Macarro and Assembly Governmental Organization Committee Chair Adam Gray, the author of the DFS legislation).

The harsh reality is that large tribes in California participate heavily in the political process, and as a result, legislators are wary of saying “no” to them — especially people like Grubbe and Macarro.

What could change the dynamic in California?

What would be a game-changer for California?

Look to the New Jersey sports betting case, where the state has passed a law allowing unregulated wagering. The legality of that law is the focus of litigation between NJ, the sports leagues and the NCAA for several years.

We’ve surpassed 150 days since the Third Circuit heard oral arguments in an en banc rehearing. Usually opinions are rendered within 90 to 120 days of hearing oral arguments.

It’s my belief that New Jersey has a fairly decent chance at winning this case.

The longer, the better?

In Constitutional law, the more direct argument is usually the winning one, as long as it isn’t too conclusory. As such, the analysis to uphold PASPA should be fairly direct, since the Third Circuit has done so twice already.

To unwind the Court’s reasoning as such, is a fairly complicated manner. This is why I believe the longer it goes on, the better New Jersey’s chances are of getting a reversal.

The problem with the plaintiffs

It is long settled in the law that parties who seek equity must do equity. You have some plaintiffs here that are acting very un-plaintiff-like.

Consider the NFL’s year-old partnership with SportRadar, who supplies statistical info to internet sportsbooks.

More importantly, consider Silver’s public stance on sports betting. He’s very much in favor of it being legal and regulated, because a more transparent betting market (read: eliminating illegal or unregulated sportsbooks) helps protect integrity of the games.

While this is undoubtedly true, the stance is equally problematical for a party seeking an injunction here, and certainly this is something the court is aware of.

The impact of an NJ win

Should NJ win its case, it is likely that the Third Circuit will hold PASPA to be unconstitutional. If this is what happens, expect legislation to pop up in Pennsylvania lan the Virgin Islands iterally overnight. (The other Third Circuit jurisdiction, Delaware, already has parlay cards, and was one of the states that opted out of PASPA when enacted in 1992).

California is in the Ninth Circuit and a decision in the Third Circuit would only be strongly persuasive and not binding. But if NJ wins, I believe that the sports betting bill would come to life fairly quickly, and would have a chance of being passed this year.

The legislature may well decide to include online poker and DFS in an omnibus internet gambling bill and be done with it.

There may not be not enough money involved to get an online poker bill or DFS bill passed by itself; there’s simply too much dissension among not only stakeholder groups, but within the groups themselves.

However, there certainly is more than enough money to make everyone happy if sports betting is legal in California, the market is estimated by some as being worth $50 billion a year.

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Vincent Oliver
- Vincent Oliver is an attorney whose primary area of practice is gaming law with emphasis on development and emerging markets. He is a member of the California bar and consults with clients in CA, NV and FL. He is based alternatively in Los Angeles and Las Vegas, and can be reached at [email protected]