[toc]This is a breaking story and will be updated with more details.
The New Jersey sports betting case is down to its final out.
The US Solicitor General’s office recommended to the US Supreme Court that it not hear New Jersey’s appeal in its quest to legalize sports betting within its borders.
You can read the whole brief here.
The SG, SCOTUS and NJ sports betting backstory
The new development deals a blow to New Jersey’s hopes that SCOTUS would hear its appeal in the ongoing federal court case.
New Jersey has twice passed laws trying to repeal its own sports betting prohibition.
To date, the major US professional sports leagues and the NCAA have successfully blocked New Jersey from doing so at every step of the way. Courts have so far ruled that the federal sports betting prohibition — PASPA — prevents the state from allowing sports betting.
The Supreme Court had asked for a brief from the SG to weigh in on the case in January. That was good news for New Jersey, as SCOTUS dismisses most cases without such a step.
What did the Solicitor General say on the NJ sports betting case?
The document from the acting Solicitor General, Jeffrey Wall, is 30 pages. (A new SG for the administration of President Donald Trump has not yet been confirmed by Congress.)
The SG tackles the question of whether PASPA — the Professional and Amateur Sports Protection Act — goes against the Tenth Amendment of the Constitution. That’s the principle argument from New Jersey throughout — that PASPA violates state’s rights when it comes to whether it or other states can legalize sports betting.
The SG brief says lower courts have correctly ruled that PASPA does not stand in conflict with states’ rights:
Section 3702(1) does not violate the Tenth Amendment because it neither compels States to regulate according to federal standards nor requires state officials to administer federal law. Instead, Section 3702(1) prohibits States from operating sports-gambling schemes themselves or affirmatively licensing or authorizing private parties to do so.
And then, a relevant section of PASPA:
…does not obligate States to enact any law or to implement or administer any federal regulatory requirement.
The SG noted the lack of disagreement in the federal courts, and a lack of will from other states in conflict with PASPA, in telling SCOTUS to pass on this case:
Indeed, although PASPA has been on the books for a quarter century, it has apparently given rise to only a handful of suits, all in the Third Circuit.
No other State has enacted legislation claimed to conflict with PASPA, and even petitioners’ amici States do not profess any desire to enact laws comparable to the 2014 Act. The absence of a conflict on the question presented and the paucity of PASPA litigation of any kind counsel against this Court’s review. …
The limited practical consequences of the question presented confirm that this Court’s review is unwarranted.
What’s next for NJ sports betting?
With the surfacing of the SG brief, SCOTUS is likely to announce whether it will hear the NJ case appeal next month.
The SG brief coming down against New Jersey is unwelcome news for the state:
While cert denial the more likely outcome now in NJ sports betting, #SCOTUS could still depart from SG. Important federalism issues raised.
— Daniel Wallach (@WALLACHLEGAL) May 24, 2017
If the SG had come down on New Jersey’s side, it would have meant a very good likelihood that the appeal would move forward in the Supreme Court. When SCOTUS asks the SG to get involved and the SG agrees that an appeal should move forward, SCOTUS grants appeals in a majority of such cases.
If looking for a silver lining, New Jersey can take solace in the fact that involving the SG at all still improves the odds that the court will grant the appeal. The case already has defied the odds in the past, getting an en banc review by the Third Circuit Court of Appeals that NJ eventually lost.
NJ sports betting may be on life support (for now), but it has already achieved 2 Hail Mary's: en banc rehearing + CVSG. Can it pull a 3rd?
— Daniel Wallach (@WALLACHLEGAL) May 24, 2017
Still, this is bad news for legal New Jersey sports betting happening any time soon.
The SG’s brief intimates that a conflict from another state on PASPA — and a ruling different than the ones given so far in the Third Circuit — might give rise to a need for SCOTUS to tackle PASPA.
So far, however, no state has come close to enacting the sort of laws New Jersey has passed.
NJ moves forward with fantasy sports/sports betting lite?
As the case nears its endgame, New Jersey is already looking ahead.
On Tuesday, the state Assembly approved a bill that would legalize and regulate paid-entry fantasy sports in the state. That would include daily fantasy sports sites such as DraftKings and FanDuel. (Previously, lawmakers had expressed an unwillingness to enact such a law while the sports betting case.)
Using a fantasy sports law to offer something that is more like sports betting than DFS would present New Jersey with a new way to circumvent the federal ban. A fantasy sports/sports betting-esque product is already in the works for Resorts Atlantic City, independent of the bill.
Given the way courts have ruled in the past, New Jersey could use the so-called “nuclear option” to offer sports betting. That would involve a full repeal of the state’s prohibition on sports betting, allowing literally anyone to offer sports betting in an unregulated environment. This option seems exceedingly unlikely.