Paving the way for legalized gambling—and advertising for the industry—the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) in a challenge involving the state of New Jersey.
In detailing the history of gambling in the United States, Justice Samuel Alito noted that “Americans have never been of one mind about gambling, and attitudes have swung back and forth.”
New Jersey’s attempts to legalize sports gambling hit an obstacle when PASPA was enacted in 1992. Section 3702(1) made it “unlawful” for a state or any of its subdivisions “to sponsor, operate, advertise, promote, license, or authorize by law or compact … a lottery, sweepstakes, or other betting, gambling, or wagering scheme based … on” competitive sporting events.
In 2011, New Jersey voters approved an amendment to the state constitution making it lawful for the legislature to authorize sports gambling, and the following year, the legislature passed a law doing just that. The National Collegiate Athletic Association (NCAA) and major professional sports leagues filed suit, seeking to enjoin the new law on the ground it violated PASPA.
The state argued that PASPA interfered with the state’s lawmaking power by prohibiting it from modifying or repealing its law prohibiting sports gambling. The district court found no anti-commandeering violation, a panel of the U.S. Court of Appeals, Third Circuit affirmed, and the Supreme Court denied review.
Picking up on a suggestion from the Third Circuit decision that a partial repeal might be permitted under the statute, the New Jersey legislature enacted a second law in 2014 that declared it was not to be interpreted as causing the state to authorize, license, sponsor, operate, advertise or promote sports gambling. Instead, the measure repealed the provisions of state law prohibiting sports gambling.
The same plaintiffs again filed suit, and both the district court and the Third Circuit concluded that the new law also violated PASPA by authorizing sports gambling. This time, the Court granted certiorari and, in a 7-2 decision, reversed.
When a state completely or partially repeals old laws banning sports gambling, it “authorize[s]” this activity, the majority said, which in turn means that PASPA violates the anti-commandeering doctrine.
Section 3702(1) “unequivocally dictates what a state legislature may and may not do,” Justice Alito wrote. “It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine.”
Having struck down the main provision of the federal statute, the justices found the rest of PASPA should fall as well, including the provisions prohibiting the advertising of sports gambling.
“If these provisions were allowed to stand, federal law would forbid the advertising of an activity that is legal under both federal and state law, and that is something that Congress has rarely done,” the Court said, noting that even advertising for cigarettes, while heavily regulated, is not totally banned. “In light of these developments, we do not think that Congress would want the advertising provisions to stand if the remainder of PASPA must fall.”
“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make,” the majority concluded. “Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not.”
Justice Clarence Thomas filed a concurring opinion, writing separately to discuss the issue of severability, while Justice Stephen Breyer authored an opinion concurring in part and dissenting in part. Justice Ruth Bader Ginsburg dissented, joined by Justice Sonia Sotomayor.
To read the opinion in Murphy v. National Collegiate Athletic Association, click here.
Why it matters: Within hours of the closely watched case, states were moving to legalize gambling, and the NCAA and professional sports leagues were trying to come to terms with the possibility of a state-by-state approach to sports gambling. As the statute’s prohibition on advertising was also struck down, the new industry will offer advertisers a host of opportunities.