The Next Legal Challenge To The Federal Sports Betting Ban Could Come This Year

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WV sports betting

Editor’s note: This is the first of two articles taking a closer look at West Virginia sports betting legislation. Part 2 here.

West Virginia is not the most obvious choice as the next legal battleground for sports betting. It is the 12th least-populous state in the United States and with only four casinos,

But for those who have been closely following the New Jersey sports betting saga, West Virginia’s emergence as a potential PASPA challenger should come as no surprise.

The backstory of WV and sports betting

West Virginia has long been a vocal supporter of New Jersey’s right to legalize sports betting.

It filed amicus curiae — or “friend of the court” — briefs with the Third Circuit and the United States Supreme Court in both iterations of the New Jersey sports betting case (e.g., Christie I and Christie II). In fact, it is the only state that can claim such a designation. (There has been a virtual “revolving door” of amici states in both cases, with the only constant being West Virginia.)

Moreover, the state solicitor general — Elbert Lin (a former clerk to Supreme Court Justice Clarence Thomas) — was the principal author of the state amici briefs filed in Christie I and Christie II (even though each brief was joined by several other states).

West Virginia has been on the edges of the sports betting legalization debate since 2013. Until now, however, it has only supported New Jersey’s quest for legalized sports betting out of a desire to protect state sovereignty, a core federalism principle, without necessarily taking a position on the wisdom of state-sanctioned sports betting.

Things change with new sports betting bill

But, now, West Virginia appears to be “all in” on sports betting.

Last week, eleven West Virginia delegates from the state House of Representatives introduced a bill that would bring legal sports betting to the Mountaineer State. The proposed measure (HB 2751) was introduced on March 1, 2017. It would authorize the State Lottery Commission (which oversees all gambling in West Virginia) to promulgate rules regulating sports wagering at the state’s licensed casinos. (For more analysis of HB 2751, I refer you to Dustin Gouker’s article last week in LSR)

Possibly signaling an intent to challenge PASPA in court (a la New Jersey, but in a different federal judicial circuit—the Fourth Circuit), the West Virginia bill contains several legislative “findings” that are quite revealing.

The bill declares that PASPA is “unconstitutional” and “in clear violation of the Tenth Amendment of the U.S. Constitution,” and, for good measure, adds that the U.S. Congress “has no power to prevent state governments from authorizing sports betting as a form of gaming.”

Viewed through this lens, the West Virginia bill “authorizes” the lottery commission to proceed with establishing rules for sports betting “notwithstanding the federal prohibition” against such activity. In other words, West Virginia may not be merely content to “stand by” and await the outcome of Christie II.

This measure, if it is passed by the state legislature and signed into law by the aptly named Gov. Jim Justice, sets the table for the next PASPA court challenge, perhaps as early this year.

West Virginia is not like the other ‘stand-by’ measures

West Virginia is the sixth state to introduce sports betting legislation since early January, joining:

This is certainly a positive development for proponents of expanded legal sports betting. The flurry of legislative activity is unprecedented. However, it does not mean that the courthouse doors are about to swing open for the next spate of PASPA litigation.

The bills preceding West Virginia’s latest measure are what I would characterize as “stand-by” bills in the sense that the timing for the authorization of sports betting in each measure is tied to a specific future event (e.g., an amendment to the state constitution, the repeal or amendment of PASPA, or a court ruling that declares PASPA to be unconstitutional). Those events may or may not come to pass; certainly they will not happen by the end of this year.

WV bill sort of like others, sort of not

Even the West Virginia bill arguably contains such “stand-by” language. To that end, HB 2751 contains the following proviso in proposed Section 29-25A-1 (emphasis added):

. . . [By] enactment of this law, the Legislature intends to create a mechanism to enable the West Virginia Lottery Commission to authorize and regulate sports betting at our state casino gaming facilities upon removal of federal restrictions prohibiting sports betting in West Virginia.

The words “upon removal of federal restrictions” seemingly tie the lottery commission’s ability to “authorize” and “regulate” sports betting in West Virginia to a future event, such as a repeal of PASPA or a favorable Supreme Court decision. Such language is similar to the verbiage employed in the state bills that tie those states’ ability to authorize sports betting to another future event, such as the amendment of a state constitution (as in the case of New York, Michigan, South Carolina and Maryland) or the repeal of PASPA (as in the case of each of the aforementioned states plus Pennsylvania).

In each instance, those states are anticipating that the US Supreme Court may grant certiorari in Christie vs. NCAA and ultimately decide the case in New Jersey’s favor. That raises the specter that the court may declare PASPA unconstitutional as soon as 2018. That would remove the primary federal obstacle to state-sanctioned sports betting.

There is now a realistic possibility that this judicial parlay may actually occur. As such, these six states (and likely others in the near future) are ramping up legislative efforts. By doing so, they can be in a prime position to legalize sports betting without undue delay were New Jersey to prevail in court.

Legal obstacles may preclude PASPA litigation for some states

But the conditional nature of these bills — while offering one pathway to legalized sports betting in the not-too-distant future — could present a jurisdictional barrier to those states hoping to advance any PASPA court challenges in 2017.

The case study in New Jersey

This is because of the federal jurisdictional principle known as “standing.” Federal courts only hear “cases or controversies” that are actual, present-day controversies rather than hypothetical disputes that deal with future events.

New Jersey ran into this jurisdictional obstacle in in 2011. That’s when it attempted to challenge the constitutionality of PASPA before state lawmakers had even passed a law. It also came before New Jersey voters had approved a referendum amending the state constitution to allow sports betting.

In Interactive Media Entertainment & Gaming Ass’n, Inc. v. Holder, 2011 WL 802106 (D.N.J. Mar. 7, 2011), several New Jersey parties (including the New Jersey Thoroughbred Horsemen’s Association and state Sen. Raymond Lesniak) challenged the constitutionality of PASPA under:

What happened in New Jersey

A New Jersey federal district court dismissed that lawsuit. It held holding that the plaintiffs lacked standing to challenge the constitutionality of PASPA. At the time of the court’s decision, sports wagering was not permitted under the New Jersey constitution. The state legislature had not yet authorized it, either.

Since neither of these critical actions had occurred, the court held that “[a]ny civil enforcement action [to challenge PASPA] would be premature, because New Jersey law does not permit the sports gambling sought by Plaintiffs,” adding that even “[i]f PASPA were found unconstitutional, New Jersey law would still prohibit the sports gambling activities Plaintiffs and their members seek to legalize.”

Subsequent to this decision, voters approved a referendum in 2011 to amend the state constitution to permit sports betting. Shortly thereafter, the state legislature enacted legislation authorizing sports betting. That set the stage for Christie I and Christie II.

The playbook for actually challenging PASPA

The takeaway from the Interactive Media case is that a proposed state law that authorizes sports betting if and when a specified future event occurs. (For example, an amendment to the state constitution, a Congressional repeal of PASPA or the Supreme Court invalidating the federal law.)

It would not be a trigger for immediate litigation given the conditional nature of the bill. Until the specified future event(s) actually occur, a state plaintiff hoping to challenge PASPA in court would likely not be considered “aggrieved.” A federal court would not review the controversy. Thus, any state law that contains such caveats (by tying it to the occurrence of a future contingent event) would not be sufficiently ripe for federal judicial review under the “case or controversy” requirement of Article III of the US Constitution.

However, the West Virginia bill goes much further than the other “stand-by” measures, and appears to signal the state’s immediate interest in challenging PASPA in court.