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Rhode Island has been slow to hit its stride with legal sports betting, despite its head start. The state which saw a $22.2 million handle in September has not seen that translate into significant revenue via the 51 percent tax that was imposed.
While the small state may still eliminate potential hurdles to profit maximization by eliminating things like in-person registration for mobile, another issue may stall the state’s revenue ambitions.
Over the last several months, a plaintiff in Rhode Island has been seeking to challenge the state lottery and state casinos’ ability to offer sports betting without a referendum from the state’s voters and an amendment to the state’s constitution.
An earlier attempt by the plaintiff to challenge the enactment of the RI sports betting law was thwarted by the lottery and casinos, arguing that the plaintiff lacked standing to bring the lawsuit. The Rhode Island Superior Court agreed, and granted a motion to dismiss.
It appears, however, as though the plaintiff may have failed to include in his third amended complaint that he had actually placed a wager in the state. With the court’s permission, the plaintiff amended his complaint stating that he placed a bet on the New England Patriots in December 2018 at the Twin River-Tiverton casino, which he lost.
The state lottery and casino defendants moved to dismiss the Plaintiff’s fourth attempt. They argued that he still lacked standing — even though he now acknowledged placing a bet — to challenge the law.
The plaintiff countered that he “has standing to challenge the enactment of sports wagering because he placed a sports wager that was authorized pursuant to an unconstitutional statute and suffered economic harm thereby.”
In order for a plaintiff to prove that they have standing they must show that they can satisfy three elements:
The first element a plaintiff must prove is an “invasion of a legally protected interest.”
This term lacks a uniformly accepted meaning, but courts have found that monetary harm, or the type of loss suffered by the plaintiff, may satisfy the element of injury in fact required to prove standing.
The Rhode Island Superior Court found that the “Plaintiff has alleged the invasion of a legally protected interest: interest in the money that he spent and lost on a sports wager.”
The second element for the establishment of standing is a concrete and particularized injury. This means that there must be an actual injury, as opposed to a hypothetical or abstract ailment. The injury must also affect the plaintiff in “a personal and individual way.”
The Rhode Island court concluded that the plaintiff’s injury was both concrete and particularized. Indeed, “Plaintiff’s alleged economic harm of losing money on a sports wager is nonspeculative; rather, it is actual and measurable as a definite amount of money.”
Relatedly, the loss of money was held to be particularized because it was the plaintiff’s own money, and would thus affect him in a personal way.
The final element necessary to establish standing is that the “alleged injury must be actual or imminent.” The court quickly concluded that the plaintiff established an actual injury for purposes of standing. The plaintiff lost money by wagering on the Patriots, and no longer has that money as a result of what the plaintiff claims is an unconstitutional law.
Whether a court can hear a claim depends on more than just standing. The plaintiff must also establish that the case is otherwise “justiciable.” This includes a showing by the plaintiff that what they are seeking the court to grant them is something within the court’s power.
Unfortunately for the defendants in the case, the Rhode Island court found that a state court has the ability to review the constitutionality of a state law and award corresponding damages to an injured plaintiff.
The defendants argued that because the plaintiff had placed a sports bet voluntarily, this precluded him from challenging the law. Their argument is that by placing a sports bet, the plaintiff conceded that the statute enabling such behavior was constitutional.
The court rejected this argument, noting that this behavior has a long precedent as a means for challenge statutes.
The final element that the Court looked to in determining whether the claim was justiciable was whether the action causing injury could be traced to the defendants. The court found that losing money on a sports bet at a casino offering sports betting satisfied the traceability requirement.
The immediate takeaway from the decision is that the plaintiff’s lawsuit will continue. The lawsuit survived an early challenge, but this decision doesn’t appear to threaten sports betting in Rhode Island.
The immediate decision allows the case to continue. It’s not a decision on the merits of the plaintiff claim, only a threshold issue allowing the claim to proceed.
The Rhode Island Superior Court judge noted that the defendants only filed a motion arguing that the plaintiff lacked standing. The defendants seemed to argue, however, that the plaintiff also failed to state a claim.
Though the judge noted the scope of the motion as limited to standing, it leaves the door open that the defendants may file a motion alleging that the plaintiff’s complaint fails to state a claim. Such a motion would need to satisfy a different standard.
While this lawsuit could derail the state’s sports gambling, there are many legal proceedings to come before approaching that point.