New Jersey Faces Tough Climb In Winning Over Judges In Sports Betting Case

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NJ sports betting case

New Jersey’s quest to legalize sports betting returns to the spotlight on Wednesday, when a Third Circuit en banc panel — consisting of 12 judges — conducts a one-hour rehearing of the issues raised in the case commonly referred to as “Christie II.” (For a brief explainer of the entire case, click here).

This week’s oral argument represents New Jersey’s best chance to date of legalizing sports betting through the federal courts, since a legislative solution does not appear to be on the horizon anytime soon).

Although New Jersey was on the losing side in the original Christie II decision (and Christie I before that), its fortunes received a significant boost when a majority of the active judges on the Third Circuit bench (at least five) believed that this case merited a rehearing by the full court. Since rehearing en banc is rarely granted (only one was granted in the Third Circuit all of last year), the conventional wisdom is that New Jersey is the favorite to prevail on rehearing.

The problem for New Jersey

However, the composition of the en banc panel suggests that New Jersey may face an uphill battle on rehearing. A new judicial appointment and some familiar faces complicate New Jersey’s path to victory.

For several months after the rehearing was granted, it was thought that the en banc panel would consist of only 11 judges (the court’s nine active judges plus the two senior judges who participated in the original panel decision). But in early January, the Third Circuit welcomed a new member: Judge Luis Felipe Restrepo.

The addition of Judge Restrepo to the en banc panel several weeks ago puts the panel at an even 12 judges. The difference between 11 judges and 12 judges is not inconsequential: New Jersey now has to persuade 7 out of 12 judges (rather than the 6 out of 11 that had constituted the en banc panel prior to Judge Restrepo’s ascension).

By contrast, the four major professional sports leagues and the NCAA (the appellees in the case) need only convince 6 of the 12 judges since a tie vote would leave the district court’s decision (siding with the leagues) intact. Maybe this isn’t a big deal, but it does lengthen New Jersey’s odds somewhat.

Familiar faces are not good for NJ

In addition, the presence of several familiar faces on the Third Circuit panel poses a further obstacle for New Jersey.

Of the remaining 11 judges on the panel, five have previously weighed in on the merits on the controversy. Judges Julio Fuentes, D. Michael Fisher and Thomas Vanaskie comprised the three-judge panel in Christie I, and Judges Fuentes, Marjorie Rendell and Maryanne Trump Barry were the panelists in Christie II. In fact, Judge Fuentes was the author of both the majority opinion in Christie I and the dissent in Christie II, highlighting the “intra-circuit” conflict that likely prompted the Third Circuit to want to rehear the case en banc.

Their prior opinions shed some light on how these five judges could rule in the Christie II rehearing. After all, they are not writing on a blank canvas here. All five jurists have touched in some fashion (some more than others) on the core issue of whether a “partial repeal” of a state-law ban on sports betting constitutes an “authorization” of sports betting in violation of the Professional and Amateur Sports Protection Act (“PASPA”).

This issue will be front and center at Wednesday’s oral argument, as New Jersey continues to press its claim that a partial repeal does not constitute an authorization, with the sports leagues stressing the “selective” nature of the repeal.

Fuentes/Fisher: Partial repeal does not violate PASPA

While the five judges are in apparent agreement that a complete repeal would not violate PASPA, they fundamentally disagree on whether a partial repeal law (the type enacted by New Jersey in 2014) raises PASPA concerns.

Two of the judges (Fuentes and Fisher) seem to be of the view that a partial repeal would be within the state’s policy-making prerogative and does not implicate PASPA. Judge Fuentes, in particular, is the most vocal proponent of this position. As he wrote in the Christie I majority opinion:

PASPA . . . leave[s] much room for the states to make their own policy. Thus, under PASPA, on the one hand, a state may repeal its sports betting ban, a move that will result in the expenditure of no resources. On the other hand, a state may choose to keep a complete ban on sports gambling, but it is left up to each state to decide how much of a law enforcement priority it wants to make of sports gambling, or what the exact contours of the prohibition will be.

In his Christie II dissent, Judge Fuentes differentiated between a “repeal” (even a partial one) and an “authorization” in a way highly favorable to New Jersey:

Repeal is defined as to “rescind” or “an abrogation of an existing law by legislative act.” When a statute is repealed, “the repealed statute, in regard to its operative effect, is considered as if it had never existed.” A repealed statute is treated as if it never existed; a partially repealed statute is treated as if only the remaining part exists.

After the repeal, it is as if New Jersey never prohibited sports gambling in casinos, gambling houses, and horse racetracks. Therefore, with respect to those areas, there are no laws governing sports wagering and the right to engage in such conduct does not come from the state. Rather, the right to do that which is not prohibited stems from the inherent rights of the people.

Judge Fuentes also declared that the Christie II majority’s holding — equating a partial repeal with an authorization — “rested on a false equivalence” between the two concepts and “raised a series of constitutional problems” that Christie I had sought to avoid:

If withdrawing prohibitions on “some” sports wagering is equivalent to authorization by law, then withdrawing prohibitions on all sports wagering must be considered authorization by law. Under this logic, New Jersey is left with no choice at all—it must uphold all prohibitions on sports wagering in perpetuity or until PASPA is no more. This is precisely the opposite of what we held in Christie I—“[n]othing in these words requires that the states keep any laws on place”—and why we found that PASPA did not violate the anti-commandeering doctrine.

Look for Judge Fuentes to continue to press this point at Wednesday’s hearing, with the added possibility of revisiting the constitutionality of PASPA (especially as applied to the New Jersey partial repeal law).

Why am I including Judge Fisher as being in alignment with Judge Fuentes? Simple. Even though he did not author a separate opinion in Christie I, he was part of the 2-1 majority in that case, and, presumably, shares Judge Fuentes’ view. But that is far from guaranteed.

Rendell/Barry: Selective partial repeal = authorization

Unfortunately for New Jersey, three of the prior panelists (Rendell, Barry and Vanaskie) seem to be aligned with the “all-or-nothing” school of thought (complete repeal OK; partial repeal not OK) based on their prior opinions, suggesting that anything less than a complete repeal of a state-law ban on sports betting would violate PASPA (leaving no middle ground for even a partial repeal).

In Christie II, Judge Rendell wrote that “without New Jersey’s partial repeal law, the sports gambling prohibitions would apply to casinos and racetracks. Consequently, she concluded, the 2014 law “provides the authorization for conduct that is otherwise clearly and completely legally prohibited.”

Specifically, she took issue with the “selective” nature of New Jersey’s repeal law (which allows sports gambling to take place only at casinos and racetracks), describing it as “selectively dictating where sports gambling may occur, who may place bets in such gambling, and which athletic contests are permissible subjects for such gambling.”

That “selectiveness,” she concluded, “constitutes specific permission and empowerment,” which transforms the partial repeal law into an “authorization” for purposes of PASPA.

Judge Rendell conceded that “had the 2014 Law repealed all prohibitions on sports gambling [e.g., repealing the ban on a statewide basis], we would be hard-pressed, given Christie I, to find an “authorization by law” in violation of PASPA. But, she stressed, “that is not what occurred here,” stating that the use of the term “repeal” . . . does not change the fact that the 2014 Law selectively grants permission to certain entities to engage in sports gambling.”

Judge Rendell noted that while the 2014 law is “artfully couched as a repealer,” it “essentially provides that, notwithstanding any other prohibition by law, casinos and racetracks shall hereafter be permitted to have sports gambling.” As a result, she concluded, “this not a repeal; it is an authorization.”

Although Judge Barry did not author a separate opinion, she was part of the Christie II majority and presumably shares the same views on this subject as Judge Rendell.

Vanaskie: PASPA unconstitutional, but partial repeals are not OK

The real wild card here is Judge Thomas Vanaskie, who wrote the dissenting opinion in Christie I. Although he sided with New Jersey in concluding that PASPA was unconstitutional, Judge Vanaskie rejected the Christie I majority’s suggestion that a partial repeal of a state-law ban would not violate PASPA. On that point, he wrote:

Contrary to the majority’s supposition, it certainly is open to debate whether a state’s repeal of a ban on sports gambling would be akin to that state’s “authorizing” gambling on sporting events, action that PASPA explicitly forecloses.

Judge Vanaskie removed any and all doubt about where he stood on the “partial repeal” issue when he wrote the following in a key footnote:

The majority asserts that the two “choices” presented to a state by PASPA — to “repeal its sports wagering ban [or] to keep a complete ban on sports wagering” — “leave much room for the states to make their own policy.” (Maj. Op. at 233). Even if the majority’s reading of PASPA as affording these choices is correct, I fail to discern the “room” that is accorded the states to make their own policy on sports wagering. It seems to me that the only choice is to allow for completely unregulated sports wagering (a result that Congress certainly did not intend to foster), or to ban sports wagering completely.

Therefore, it would be a mistake to assume that Judge Vanaskie will side with New Jersey in Christie II simply because he wrote the dissenting opinion in Christie I. It would seem, based on the above-quoted footnote, that Judge Vanaskie is more aligned with the sports leagues’ position that a partial repeal constitutes an “authorization” under PASPA.

But perhaps he will join Judge Fuentes in a new broadside attack on the constitutionality of PASPA. That remains a real possibility in Christie II, as an en banc panel (and only an en banc panel) is free to overturn the precedent of a prior three-judge panel. This could turn Christie II into a referendum on PASPA.

New Jersey’s steep climb: 5 out of 7

Assuming that these five judges adhere to their prior votes and/or reasoning, this would present an unenviable task for New Jersey: having to practically “run the table” on the remaining judges.

With New Jersey needing seven votes to win (and with three already leaning towards the leagues, with only two seemingly in the New Jersey camp), five out of the remaining seven judges would have to side with New Jersey in order for the state to prevail on rehearing. That’s not impossible, but daunting nevertheless.

But New Jersey has made it this far. It stands closer to legal sports betting than ever before, and pulled off the near-miracle of persuading the Third Circuit to rehear the case en banc.

Since a minimum of five judges was needed to secure rehearing (two shy of ultimate victory), perhaps New Jersey’s chances for success are much stronger than this snapshot indicates. We will know soon.