NJ Sports Betting Case Offers Up Potential Doomsday Scenario For Nevada Sports Betting

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The law of unintended consequences could apply to the New Jersey sports betting case.

Many are focused on the prospect of the US Supreme Court ruling in favor of the state in its quest to offer legal sports betting within its borders. That could open the possibility of states around the country changing their laws to offer sports betting, if the court rules that PASPA is unconstitutional. PASPA is the law that bans almost all forms of sports wagering, outside of Nevada.

But there’s a flipside to that possibility: Namely, SCOTUS could rule that PASPA is unconstitutional and shut down Nevada sports betting.

What could happen in the NJ sports betting case

First, let’s set the stage. There are several possible outcomes of the SCOTUS, but three appear to be the most likely:

The final point is the subject of the article from sports law experts Ryan Rodenberg and John Holden. And it’s one that has been largely ignored as a possibility.

Wait, Nevada sports betting could be in trouble?

The ongoing NJ sports betting case was the subject of a recent article in the Duke Law Review. The article, “Sports betting has an equal sovereignty problem,” was penned by Rodenberg and Holden.

The pair analyzes equal sovereignty and another academic article by Prof. Thomas Colby on the Shelby County v. Holder case, which struck down a portion of the Voting Rights Act. The issue in question in Shelby and, perhaps, Christie vs. NCAA (the NJ sports betting case) is equal sovereignty. That’s the principle that federal law must treat states equally.

Here is the takeaway from the Rodenberg/Holden piece:

If the equal sovereignty question is presented to the Supreme Court in the current Christie II litigation or a later sports gambling-specific dispute, Professor Colby … will likely be proven correct in questioning the validity of PASPA.

However, the appropriate remedy would be to sever out § 3704’s differential grandfather clause, not eviscerate § 3702’s blanket ban. Such a remedy would be an unwelcome result for New Jersey and Nevada, but a correct application of the equal sovereignty doctrine vis-à-vis PASPA.

That could mean ‘bye bye’ sports betting

The result of such a finding by SCOTUS would be the end of legal sports betting in Nevada. It would also end parlay betting in Delaware and limited wagering elsewhere. (While most usually refer to four states grandfathered in under PASPA — Oregon and Montana included — the Rodenberg/Holden article theorizes the number of states could actually be nine.)

Nevada, of course, has had legal sports betting for decades. PASPA has been on the books since 1992. A finding against the grandfathered states would be a huge hit to an industry that generates hundreds of millions of dollars for Nevada’s economy. That’s in addition to tax revenue for the state.

It would also mean the only path to legal wagering in the US would be to repeal PASPA via Congress. Of course, Nevada losing sports betting could accelerate such a scenario.

Equal sovereignty used to open up sports betting?

Other lawyers also see the possibility that that the equal sovereignty argument could be good news for NJ sports betting and bad news for PASPA. From sports law attorney Daniel Wallach:

While the Supreme Court declined to review Christie I, despite the apparent inconsistency with Shelby County, it may wish to address the equal sovereignty principle this time around. If that were to occur, PASPA might not survive scrutiny under the Shelby County test, which looks to whether the statute’s disparate geographic coverage is “sufficiently related to the problem that it targets.”

This is where PASPA is especially vulnerable, as the reason for the disparate treatment of Nevada, Oregon, Montana and Delaware (the four “grandfathered” states) was to protect the “strong reliance interests” of those states that had legalized sports betting prior to the enactment of PASPA.

But such carveouts do not appear to be “sufficiently related” to the targeted goals of PASPA, which are to stop the spread of legal sports betting and to protect the integrity of professional and amateur sports.

Which side of the coin — or either — SCOTUS will opt for on equal sovereignty is unknown.

Why did SCOTUS take the sports betting case?

Any analysis of why SCOTUS took Christie vs. NCAA is just speculation at this point.

What we do know is that SCOTUS usually only takes cases it deems very important and/or involve constitutional questions.

Will equal sovereignty come into play? Many believe it will. And that could be very good or bad news for both New Jersey and Nevada.