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Thursday, January 19, 2017
 
Michigan Introduces Sports Betting Bill; Third State This Year

New Jersey's quest to overturn the federal ban on state-sanctioned sports betting had largely been a solo effort for the past four-and-one-half years. States that were interested in having legal sports betting within their borders (and there were many) were largely content to remain on the sidelines and let New Jersey carry the water--and, of course, all of the legal fees--on the issue and, hopefully, one day reap the dividends of a New Jersey victory. That eventuality may still come to pass, especially as it appears that the Supreme Court is inching towards taking a look at PASPA.

But several states are no longer content to wait it out, and have recently advanced legislation to legalize sports betting. Earlier this month, South Carolina and New York lawmakers introduced bills that would legalize sports betting through an amendment to that state's constitution (which would be accomplished through a voter referendum), although one influential New York lawmaker, Assemblyman J. Gary Pretlow (the Chair of the Assembly Racing and Wagering Committee), maintains that a constitutional amendment is not necessary in New York and plans on introducing his own bill (sans constitutional amendment) later this month.

The latest state to crash the party is Michigan. On Wednesday, State Rep. Robert Kosowksi (D-Westland) introduced House Bill No. 406, which seeks to amend the Michigan Gaming Control and Revenue Act to allow the holder of any state-issued casino license "to accept wagers on sporting events." The bill also seeks to empower the state gaming control board to promulgate rules to regulate the conduct of sports betting." (A link to the bill can be found here). The bill seeks to legalize sports betting in Michigan through a vote of "qualified electors of this state at the next general election after the effective date of this amendatory act." In other words, a voter referendum, similar to the South Carolina and New York measures. But with a slight variation. The Michigan bill proposes two referenda: a statewide vote and a vote by electors in the township or city where the sports betting would take place. Under the bill, which was referred yesterday to the Committee on Regulatory Reform, the proposed constitutional amendment to allow sports betting in Michigan would take effect "10 days after the date of the official declaration of the [statewide and local] vote." 

The reason why Michigan lawmakers would propose a voter referendum--rather than just legalize it themselves through a straight-up legislative enactment--is because of the state constitutional prohibition against gambling, which would require an amendment to the state constitution to create exceptions to that prohibition, such as for sports gambling. That's one of the reasons why iGaming faces such a uphill battle in Michigan. But there may be more of an appetite for legal sports betting in Michigan. The stronger opposition is more likely to come from forces outside the state, such as the four major professional sports leagues (NFL, NBA, MLB, and NHL) and the NCAA, which would assuredly bring a federal court lawsuit--invoking PASPA--to block the implementation of any state-sanctioned sports betting scheme.

Regardless of whether this new measure is ultimately approved by the state legislature (and by Michigan voters), we are finally seeing aggressive action from statehouses on the issue of sports betting. The New Year is only 19 days old, and we already have three new bills to legalize sports betting, with more likely on the way soon. This will be a fascinating development to watch unfold, especially against the backdrop of New Jersey's efforts to overturn PASPA in court (the Supreme Court), the Donald Trump "wild card," and the American Gaming Association's ongoing lobbying efforts before Congress. 2017 is shaping up to be a dynamic year on the sports betting legalization front, with multiple points of entry and plenty of intrigue and drama.

Wednesday, January 18, 2017
 
The Latest CVSG Analytics for NJ Sports Betting (2016-17 Version)

The "death defying" New Jersey sports betting case--having secured the rare daily double of a rehearing en banc grant and a CVSG ("call for the views of the Solicitor General")--has proven to be the ultimate zombie of sports law cases: just when you think it's dead and buried, it is resurrected against improbable odds. But how much have those odds improved as a result of the Supreme Court's latest action calling for the views of the Solicitor General? A lot. The Solicitor General's recommendation carries "significant weight" with the Supreme Court, and, historically, it is followed around 80 percent of the time, according a 2009 George Mason Law Review article penned by now D.C. Circuit Court Judge Patricia A. Mallett. But that article is nearly eight years old, and the Court's composition has changed since then (e.g., Scalia, Kagan, Sotomayor), not to mention that there have been five different acting solicitor generals since 2009. Perhaps a more relevant--and less dated--statistical barometer of New Jersey's chances can be gleaned through an analysis of the more recent cases involving CVSGs. 

I decided to do some independent research. With the help of certpool.com, and, of course, the indispensable SCOTUSBlog, I delved into the case histories of the 20 most recent cases (since the beginning of 2016) in which the Supreme Court acted on a cert petition following a Solicitor General response to a CVSG. (Note--there are 17 additional cases in which a CVSG has been issued during that time-period, but they cannot be meaningfully assessed since either the SG has yet to respond or the Supreme Court has not acted on the cert petition. Most involve CVSG's issued within the last three months). So review is limited to these 20 cases, admittedly a small (albeit, more recent) sample size.

And the results are surprising. Of the 20 most recent cases in which a CVSG has been issued and the SG filed a response brief (with action ultimately being taken), the Supreme Court followed the SG's recommendation one-hundred percent (100%) of the time. That's 20 out of 20 cases. Certiorari was granted in ten of those cases, and denied in the other ten. In other words, there has not been a single instance since the beginning of 2016 (covering 20 CVSG's) in which the Supreme Court has not followed the recommendation of the Solicitor General. Stated another way, Donald Trump could very well be deciding the future of New Jersey sports betting with his imminent solicitor general appointment. Maybe Chris Christie wants the job.

-- Daniel Wallach

Tuesday, January 17, 2017
 
The NJ Sports Betting "Invitational": My Quick Thoughts on Today's SCOTUS Order

For the case that has had nearly everything—e.g., three divided circuit opinions in succession and the rarity of en banc rehearing—we shouldn’t have been all that shocked by the latest twist and turn in the New Jersey sports betting case. The "invitation" to the Solicitor General can only be viewed as a positive for New Jersey's chances. After all, if this case were not “cert-worthy,” the Supreme Court would have just summarily denied the petition without even bothering to ask for the Solicitor General’s position. This “invitation” may very well signify that one or more of the Justices believe the Third Circuit went too far in Christie II. Contrary to popular belief, this case was never a ‘replay' of Christie I—the 'federalism' concerns raised in the later case are far more pronounced. In the Christie I case, New Jersey’s anti-commandeering argument was directed to PASPA’s 'negative command' forbidding states from licensing or authorizing sports wagering. That was always an uphill battle given the Supreme Court precedent limiting the anti-commandeering doctrine to cases where the federal government requires states to engage in some type of “affirmative activity,” such as taking title to radioactive waste or performing background checks on prospective handgun purchasers. But this time around, New Jersey’s commandeering argument addresses the flip-side of PASPA: its “affirmative requirement” compelling states to prohibit sports wagering (and thus blocking states from from "repealing" their sports betting laws). This view of PASPA fits more neatly into the Supreme Court’s anti-commandeering jurisprudence, and, as such, New Jersey’s prospects for Supreme Court review are arguably enhanced. For the first time, we had a federal appeals court preventing a state from “repealing” its own laws, after initially opining that a repeal would not violate PASPA. That represents a much greater encroachment on state sovereignty.

I think we may have actually underestimated Donald Trump’s impact on sports betting. Much of the recent speculation centered on how he could push for federal legislation, a process that could take up to several years to accomplish. But now, Donald Trump’s impact on the sports betting legalization debate will be immediate—and could be decisive. His choice of U.S. Solicitor General could end up tipping the scales in favor of a cert. grant, particularly if the new SG (whomever that may be) recommends that the issue be resolved by the Supreme Court. This is why the Solicitor General is often jokingly (and sometimes-not-so jokingly) referred to as the “Tenth Justice.” This is probably the most important brief that will be filed in the nearly five-year history of the New Jersey sports betting litigation. The Solicitor General’s brief will likely include a recommendation as to whether certiorari should be granted or denied, and, ultimately, who should win the case on the merits. If the  SG recommends that cert be granted, the odds for New Jersey improve considerably, especially if the SG also questions the constitutionality of PASPA or asserts that the New Jersey partial repealer does not violate the federal law. It is worth noting that nearly three years ago, then-Solicitor General Verrilli submitted a brief to the Supreme Court in which he asserted that New Jersey is free to repeal its sports betting laws “in whole or in part’ without violating PASPA. While the DOJ tried to wiggle out of this statement during the Third Circuit oral argument earlier this year, the Supreme Court’s invitation presents an opening for the new SG to ‘double-down’ on that prior statement by making it an unequivocal view. Trump will have the ability to name a solicitor general who espouses this view.  If Donald Trump feels strongly enough that sports betting should be legal and expanded nationally, he now has three immediate vehicles for accomplishing this: (1) his SG appointment; (2) his Attorney General appointment; and (3) his Supreme Court nominee. All three appointments could have significant ramifications for sports betting: the Solicitor General, in recommending that cert be granted; the Attorney General, in electing not to bring PASPA actions against state governments that legalize betting on sporting events not involving the five major sports leagues and the current plaintiffs in the case; and the new SCOTUS Justice, who could be one of the four ‘cert’ votes, thereby enhancing the prospects for review, and then ultimately siding with New Jersey on the merits. If Donald Trump is truly ‘dialed’ in on this issue, he might just have the ability to influence the sports betting legalization debate in ways that were not even contemplated until now.

Sunday, January 15, 2017
 
Decision Day on New Jersey Sports Betting: What Are The Chances?


On Tuesday at 9:30 am (EST), the United States Supreme Court will issue its "Orders List" announcing the fate of the various petitions which the Court considered at its weekly conference on Friday. (A link to the court website page containing the weekly orders can be found here). For proponents of New Jersey's years-long effort to legalize sports betting, Tuesday is the moment of truth, as the fate of the State's two petitions (one filed by Governor Christie and several other state officials, and the other filed by the New Jersey Thoroughbred Horsemen's Association) will likely become known, since those two were among the approximately 132(!) petitions that were on the slate for Friday's conference. If New Jersey's petitions are granted--and the odds are stacked heavily against it since the Supreme Court grants review in fewer than 2% of cases (although that number is skewed by the abundance of petitions filed by unrepresented parties, prisoners, and the vast array of litigants who truly have no shot at obtaining certiorari review)--it could be a key turning point in the ongoing debate to legalize sports betting. If review is granted, it would mean that four out of eight Justices (the ninth seat has been vacant since the death of Antonin Scalia) voted to hear the case since the Supreme Court usually follows the so-called "Rule of Four" in deciding whether to grant certiorari review. The case would then proceed to additional merits briefing (i.e., new briefs) plus an oral argument during the current Supreme Court term (which ends in June).

Despite the long odds, I believe that New Jersey has a much stronger chance at securing certiorari review than in 2014, when the Supreme Court declined to hear the Christie I case. The "cert-worthiness" of the New Jersey sports betting case actually has little to do with the policy arguments surrounding sports betting, and more to do with constitutional law principles. In both cases, New Jersey challenged the constitutionality of PASPA, arguing that it violates principles of federalism, and, in particular, the Tenth Amendment “anti-commandeering” doctrine, which forbids the federal government from commanding the states to implement federal laws or policies that would interfere with state sovereignty. In this vein, New Jersey argued that PASPA unconstitutionally commandeers the States in two ways: (1) through its “negative command” prohibiting a State from enacting any law authorizing or licensing sports betting, and (2) through its implicit “affirmative command” requiring a State to maintain existing (but unwanted) sports betting prohibitions under state law. 

Where the two cases differ is in how the commandeering argument was applied. In the Christie I case, New Jersey’s anti-commandeering argument was directed to PASPA’s “negative command” forbidding states from licensing or authorizing sports wagering. That was always an uphill battle given the Supreme Court precedent limiting the anti-commandeering doctrine to cases where the federal government requires states to engage in some type of “affirmative activity,” such as taking title to radioactive waste (as in the New York case) or performing background checks on prospective handgun purchasers (as in the Printz case). But this time around, New Jersey’s commandeering argument addresses the flip-side of PASPA: its “affirmative requirement” compelling states to prohibit sports wagering (which would prevent them from repealing their sports betting laws). This view of PASPA fits more neatly into the Supreme Court’s commandeering jurisprudence, and, as such, New Jersey’s prospects for Supreme Court review are arguably enhanced.


The Third Circuit's "bait and switch" on the availability of a "partial repeal" may also enhance the cert-worthiness of Christie II. In the Christie I case, the Third Circuit majority rejected New Jersey’s argument that “repealing” a statute barring sports betting would be equivalent to “authorizing” the activity (which would be barred by PASPA). The majority explained that it would be a “false equivalence” to consider a “repeal” to be the same as an “authoriz[ation] by law” because, following a repeal of prohibitions, “[t]he right to do that which is not prohibited derives not from the authority of the state but from the inherent rights of the people.” “In short,” the majority concluded, New Jersey’s attempt to read into PASPA a requirement that the states must “affirmatively keep a ban on sports gambling on their books” rests on a “false equivalence” between “repeal” and “authorized” and reads the term “by law” out of the federal statute, “ignoring the fundamental canon that, as between two statutory constructions, we ought to prefer one that does not raise a series of constitutional problems.”

But to save PASPA from any commandeering defect, the Christie I majority gave PASPA a “savings interpretation” that would afford states considerable leeway in crafting their own policy on sports betting, including by “repealing” any existing laws. The majority explained that PASPA’s “straightforward prohibition” on state-sponsored sports betting can be recast as providing states with “two choices” that “leave much room for states to make their own policy.” “On the one hand,” the majority declared, “a state may repeal its sports wagering ban, a move that will result in the expenditure of no resources or effort by any state official.” “On the other hand,” the majority continued, “a state may choose to keep a complete ban on sports wagering, but it is 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.” (emphasis added). The majority acknowledged that “these are not easy choices,” noting that Congress “may have suspected that most states would choose to keep an actual prohibition on sports gambling on the books, rather than rather than permit the activity to go unregulated.” “But the fact that Congress gave the states a hard or tempting choice does not mean that they were given no choice at all, or that the choices are otherwise unconstitutional,” the majority reasoned.

Relying upon the Third Circuit’s majority opinion—which left it to a 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”—and taking the Solicitor General at his word that a State may repeal its sports wagering ban “in part,” New Jersey enacted a partial repeal law on October 17, 2014 (the “2014 Law”). The 2014 Law partially repealed all state laws and regulations prohibiting sports wagering, but only in certain circumstances. Specifically, the 2014 Law repealed provisions of New Jersey law governing criminal penalties for gambling, civil penalties for gambling, and other provisions governing wagering at casinos and racetracks, as well as “any rules and regulations that may require or authorize any State agency to license, authorize, permit, or otherwise take action to allow any person” to engage in sports wagering. 

But in Christie II, the Third Circuit disavowed its prior declaration that a "repeal" of sports betting prohibitions would not violate PASPA. It rejected New Jersey’s argument—based on the “false equivalence” language in the Christie I opinion—that a “repeal” removing sports betting prohibitions is not an “affirmative authorization.” Recall that in Christie I, the majority explained that states had two choices under PASPA: maintaining sports betting prohibitions or repealing them. The Christie II majority receded from that earlier statement, declaring that “[t]o the extent that in Christie I we took the position that a repeal cannot constitute an authorization, we now reject that reasoning." The majority characterized its discussion in Christie I of states having “two choices” as mere “dicta” (meaning not essential to the court’s decision).

The Christie II majority's about-face on the availability of a "partial repeal"--and its refusal to pinpoint the line of demarcation at which a permissible partial repeal becomes an impermissible "authorization"--heightens the State's chances for securing certiorari review in my view. As highlighted by the New Jersey petitions (and the amicus briefs), the Third Circuit's new interpretation of PASPA presents a much greater threat to state sovereignty (a key federalism notion) than the Christie I decision because it can be seen as preventing a state from repealing its own laws (with myriad examples highlighted in the State's petitions), and, further, leaves the state without any meaningful (or identifiable) choices. Remember that to "save" PASPA from a commandeering defect, the Christie I majority emphasized that states were afforded a "choice" under PASPA: to maintain their state law prohibitions against sports betting or to repeal them. The Christie II decision all but eviscerates this choice.

The dissenting opinion of Judge Thomas Vanaskie highlights this "flip-flop" by the Third Circuit majority. Judge Vanaskie criticized as “untenable” the majority’s “shifting line approach” to a state’s exercise of its sovereign authority. Judge Vanaskie observed that after Christie I, a state like New Jersey “at least [had] the choice” of either: (1) “repealing, in whole or in part, existing bans on gambling on sporting events,” or (2) “keep[ing] a complete ban on sports gambling.” Such a choice, he explained, was essential to upholding PASPA’s constitutionality in Christie I. By contrast, he wrote, the majority’s decision in Christie II “does not leave a state ‘much room’ at all.” Following Christie II, states “must maintain an anti-sports wagering scheme” by “leav[ing] gambling prohibitions on the books to regulate their citizens.” Judge Vanaskie opined that this essentially “leaves the States with no choice,” adding that “[t]he anti-commandeering doctrine, essential to protect State sovereignty, prohibits Congress from compelling States to prohibit such private activity.”

Judge Vanaskie was also unpersuaded by the majority’s assertion that some partial repeal options “may pass muster” (such as the example involving small wagers between friends and family), noting that the majority “does not explain why all partial repeals are not created equal or explain what distinguishes the 2014 Law from those partial repeals that pass muster.” As Judge Vanaskie explained, “[t]he bedrock principle of federalism that Congress may not compel the States to require or prohibit certain activities cannot be evaded by the false assertion that PASPA affords the States some undefined options when it comes to sports wagering.” Contending that the majority opinion “excised” the distinction between a “repeal” and an “authorization,” Judge Vanaskie declared that it is “clear” that no repeal of any kind will evade PASPA’s command that no State “shall . . . authorize by law sports gambling.” Such commands, Judge Vanaskie concluded, “are fundamentally incompatible with our constitutional system of dual sovereignty.”

Judge Vanaskie's dissenting opinion--and the petitions filed by the New Jersey parties (backed by amicus briefs filed by five states, two conservative think-tanks, the America Gaming Association, and Sports Law Blog contributor Professor Ryan Rodenberg)--highlight the key federalism concerns at the core of Christie II. As the recent filings point out, the Third Circuit's "shifting line" approach to state repeal laws in Christie II presents a much greater threat to state sovereignty (in potentially a wide array of policy-making initiatives going beyond sports betting) than Christie I ever did. Will this be enough to push Christie II over the SCOTUS "cert-worthy" line? Tune in on Tuesday to find out.

Thursday, January 12, 2017
 
The Battle of New York (DFS) is Back On!

The recent enactment of New York's Interactive Fantasy Sports Law supposedly settled the long-simmering debate over the legality of daily fantasy sports ("DFS") in New York. But a new lawsuit could potentially reignite that debate. In October, a quartet of New York residents--backed by the anti-gambling group aptly named "Stop Predatory Gambling"--filed a lawsuit in Albany County Supreme Court challenging the New York DFS Law on constitutional grounds. The thrust of the lawsuit is that the New York Legislature and Governor Andrew Cuomo impermissibly expanded gambling in New York in violation of Article I, Section 9 of the New York State Constitution. In short, Article I, Section 9 prohibits all forms of gambling unless specifically exempted through a constitutional amendment. It reflects New York's longstanding (but apparently elastic) public policy against gambling. In order to amend the New York Constitution to allow any new form of gambling, two successive sessions of state legislative approval are required, followed by a voter referendum. In short, the plaintiffs asserted that the Legislature exceeded its powers in passing the DFS law without a voter referendum, which is a time-consuming process that would take at least two years to accomplish. The lawsuit seeks to invalidate the new DFS law on that basis, and thereby force the issue to a voter referendum. The downside risk to the fantasy sports industry is that if the plaintiffs prevail (and there is a decent chance that they will), it could shelve fantasy sports in New York until at least 2019, if not longer.

Although filed in October to great fanfare (and a press conference by the lawyers!), the lawsuit had been dormant for the past three months while the New York Attorney General's Office (which ironically is defending the state here) requested and received several extensions of time to respond to the complaint. On January 11th, the AG's Office finally responded by filing a motion to dismiss the complaint. (A copy of the memorandum of law can be found here). A hearing on the motion is scheduled for March 24th in Albany. The plaintiffs will likely file a detailed response to the motion before the end of February, and, quite possibly, could also move for summary judgment since purely legal issues are involved that would probably not require any significant fact-finding.

The crux of the AG's motion is that the Legislature enjoys considerable discretion to determine what is--and what is not--"gambling" in New York. The AG's motion asserts that the New York Legislature has "latitude to determine what conduct constitutes (and does not constitute) impermissible gambling in New York," and that such determination "is ultimately a policy choice that lies within the province of the Legislature to address." I believe that this argument might be flawed. While the Legislature can certainly enact “appropriate laws” in furtherance of the constitutional prohibition against gambling as a valid exercise of its police power, see Harris v. Econ. Opportunity Comm’n of Nassau Cty., 171 A.D.2d 223, 227, 575 N.Y.S.2d 672, 674-75 (2d Dep’t 1991), holding modified by Dalton v. Pataki, 11 A.D.2d 62, 780 N.Y.S.2d 47 (2d Dep’t 2004), it is another thing entirely to legalize a game or contest that has been determined by New York’s highest-ranking law enforcement official (and preliminary by one lower court) to constitute illegal gambling under New York’s Penal Law,  thereby expanding legal gambling in New York State without a constitutional amendment. In other words, while the Legislature can certainly expand the definition of “gambling” to bring a game, device or contest within the statutory prohibition, that does not, a fortiori, mean that the legislature is also free to expand legal gambling outside of the mandatory constitutional amendment process.

In my opinion, the entire lawsuit rises or falls on this argument. If the Attorney General is wrong (and I believe that he may be), it could shelve fantasy sports in New York for at least two years while the constitutional referendum process plays out. Were that scenario to play out in this fashion, legislators (and DFS lobbyists) might ultimately come to regret choosing the most expedient, albeit risky, path to legalization over fidelity and adherence to the state constitution.

The most surprising aspect of the AG Office's motion, however, was its abject failure to explain (or even address) any of the AG's prior statements--advanced in court papers before Justice Mendez--that daily fantasy sports contests constituted impermissible gambling in violation of New York Penal Law Section 225.00 and Article I of the New York State Constitution. Think about it. The same AG who forcefully argued that DFS is illegal gambling under the state constitution is now advancing the diametrically opposite position that such contests do not run afoul of the constitution. That is a tricky balancing act. At the very least, the AG should have addressed his prior statements and explained why they do not apply anymore. His failure to tackle this issue leaves him (and the industry) exposed on the plaintiff's reply beef. Expect  the plaintiffs' lawyer to exploit this omission in his opposition papers filed later next month. Having the AG--who once took the position that DFS is "gambling'--act as the "defender" of the new DFS law presents a troubling optic for the industry, and, potentially, for the court. For this reason, I would have expected DraftKings and FanDuel (the real parties in interest) to intervene in the lawsuit and present their own arguments unencumbered by any prior inconsistent statements. To date, however, the two companies have not filed a motion to intervene, leaving the fate of New York's fantasy sports law in the conflicted hands of the New York Attorney General. From the plaintiffs' perspective, this may be the best possible scenario.

This lawsuit will likely play out over several years, and could ultimately be decided by New York's highest court--the New York Court of Appeal. But at first blush, it would appear that the plaintiffs have a strong case based on the arguments advanced (or not advanced) by the New York Attorney General. A decision on the AG's motion to dismiss--and potentially on the plaintiff's motion for summary judgment (if one is filed)--is expected by the late Spring, several weeks after the March 24th oral argument. Regardless of who prevails in the lower court, expect an immediate appeal. While this case may have been dormant for several months, it will become active throughout 2017 and could dictate the future of fantasy sports in New York, By no means is it a slam dunk for the State.

If you would like a deeper dive on these issues, I previewed the lawsuit here back in June, several months before it was actually filed.




 
What's New in Sports Law for 2017

Happy New Year, friends.

2016 was an exciting year in sports law.  We saw the Supreme Court reject cert in O'Bannon v. NCAA, more legal posturing over the NFL discipline rules, new collective bargaining agreements in MLB and the NBA, and law school graduate, Theo Epstein, lead the Chicago Cubs to a World Series championship.

2017 figures to be just as exciting.  Over at FORBES, I have posted two articles that may help us to think about the sports law issues that lie ahead in 2017.
First, here is  my discussion of what I consider to be the top 5 sports law stories to watch in 2017.
 Also, for readers who are particularly interested in fantasy sports law issues, here is my top 5 stories to watch, particularly on fantasy sports and the law.
May the new year bring health and happiness to you, your families, and the entire sports law community.

Friday, December 30, 2016
 
Conduct Detrimental: The Sports Law Podcast

As 2016 winds down, I want to call your attention to a new sports law podcast created by co-hosts Daniel Wallach and Daniel Werly--Conduct Detrimental. Noted sports lawyers, Wallach is a well known contributor here at The Sports Law Blog and Werly is a friend of the SLB and the man behind The White Bronco, another wonderful blog discussing current sports law issues.

 Conduct Detrimental: The Sports Law Podcast” is the creation of the two Dans, who address the latest legal controversies on and off the field. I encourage you to join the two Dans for a hard-hitting look at the legal battles that are shaping professional and collegiate sports. From Deflategate to daily fantasy sports, this first-of-a-kind podcast breaks down the latest court cases and features exclusive interviews with an array of industry-leading guests.

Full disclosure, I was a recent guest on this podcast as Dan, Dan, and I discussed the collision between amateurism and commercialism in college sports. Other recent podcasts include the NFL’s handling of domestic violence cases, Deflategate (of course), and the Derrick Rose civil trial. Recent guests have also included Diana Moskovitz, A.J. Perez, and Julia Marsh . Upcoming episodes will feature sports law stalwarts: Tulane Law School and our own Gabe Feldman, Paul Anderson from Marquette Law School, and Ian Gunn, another fellow Tulane Law School alum and contributor at Sports Esquires--yet another sports law blog.

The bottom line is that I encourage you to download Conduct Detrimental podcasts either at iTunes or The White Bronco. For information on future episodes, follow Conduct Detrimental on Twitter at @ConductPod.

Enjoy the podcasts and Happy New Year to all!


Sunday, December 04, 2016
 
Question for NFL fans (especially those with officiating experience)

I am a week late to this question about the end of last week's Ravens-Bengals game. Quick reminder: The Ravens lined up to punt from their own 22, with 11 seconds left. The punter took the snap and danced around with the ball, while his teammates committed multiple, blatant holds. The punter finally step out of bounds in the back of the end zone for a safety after time expired. The officials called the holding fouls and awarded the Bengals two points on the safety, but declared the game over, invoking the rule that a half cannot be extended on an offensive hold.

Here's my question: Rule 4, § 8, art. 2(g), on extending a half after time expires, states "if a safety results from a foul during the last play of a half, the score counts. A safety kick is made if requested by the receives."

So why wasn't that rule invoked to give the Bengals a chance at a free kick (which, trailing by 5, they would have had to return for a touchdown to win). Why wasn't that rule applicable here?

Monday, November 28, 2016
 
Sizing Up Mississippi as the Next Likely PASPA Challenger

Recent speculation has started to center on Mississippi being the next state that will step up to the plate to challenge the federal ban on state-sponsored sports betting. Over the weekend, the Mississippi Sun Herald published an editorial titled "States should control sports betting," which supported Mississippi Attorney General Jim Hood's decision to sign on to an amicus brief filed by five states (West Virginia, Wisconsin, Louisiana, Arizona, and Mississippi) backing New Jersey's efforts to challenge the constitutionality of the Professional and Amateur Sports Protection Act ("PASPA"). New Jersey is asking the U.S. Supreme Court to review a recent federal appeals court decision blocking New Jersey from implementing a state law that would have permitted sports betting to take place at the State's casinos and racetracks. New Jersey, backed by the amici states and several other groups (including the American Gaming Association), argues that PASPA violates the Tenth Amendment's anti-commandeering principle by requiring states to maintain unwanted state-law  prohibitions against sports betting and by preventing states from repealing their own laws on sports betting (even in part). Mississippi's backing of New Jersey's efforts came several seeks after Mississippi's newly-appointed Commissioner of Revenue, Herb Frierson, introduced a list of tax reform suggestions that were highlighted by his statement that legalized sports betting could bring an additional $100 million into the state's coffers annually. These recent events have served to heighten speculation that Mississippi will be the next state to challenge PASPA in court.

Such speculation is well-founded. But it is far from a recent development. Over the past year, I have frequently touted Mississippi as the state most likely to take the baton from New Jersey. In a recent Deadspin piece titled "How To Legalize Sports Betting," I identified Mississippi as the "state to watch" on the PASPA front. I wrote that a number of states loomed as potential PASPA challengers, but that "Mississippi, in particular, is worth watching. With 28 commercial casinos, but declining gaming revenues, the Magnolia State may represent the perfect storm for a successful PASPA challenge." I highlighted the fact that the Fifth Circuit (which covers Mississippi) is among the most conservative federal appeals courts in the country, and, as such, might be more receptive to a states' rights argument for overturning PASPA. And during my appearances at gaming conferences (including the Southern Gaming Summit in Biloxi, Mississippi), and, of course, on Twitter (see here and here), I have pointed to Mississippi as the state most likely to challenge PASPA next. There are many reasons for my belief. Suffice it to say that Mississippi's path to sports betting legalization has been at least several years in the making. As far back as March 2014, the Mississippi State Legislature commissioned a task force to study the possibility of legalizing online gaming and sports betting. The state task force produced a report in December 2014 which summarized the New Jersey sports betting litigation and posited that if New Jersey were to succeed in court, "Mississippi (and other states) may be able to fall in line and take similar action." However, the task report cautioned that it "would seem prudent to take a wait and see approach at this point." Shortly thereafter, a Mississippi lawmaker, Chuck Espy (a former Democratic member of the state House of Representatives), introduced a bill (HB 806) that would have permitted the state's casinos to offer sports betting as soon as the Mississippi Gaming Commission determined that it became "permissible under federal law." Unfortunately, HB 806 never got out of committee, and has not been re-introduced.

But, perhaps, most importantly, Mississippi's longstanding interest in legalized sports betting is based on urgent financial considerations. In that regard, it shares many characteristics with New Jersey. Like New Jersey, Mississippi's once-thriving gaming industry has suffered a steep and steady decline in gross revenues over the past decade, and, much like New Jersey, it has experienced its share of casino closures too (e.g., Harrah's Tunica Casino). To put it in perspective, in 2008, Mississippi's casino industry generated approximately $2.7 billion in gross gaming revenues. Since 2008, however, Mississippi's casino gross gaming revenues have steadily declined each year, reaching a nadir of approximately $2.068 billion in gross revenues in 2014, a drop-off of more than twenty percent (20%) from just six years earlier (although it should be noted that gaming revenues have inched up slightly over the last two years, but still far off of the 2008-09 levels). The effects of such a decline are far-reaching: the state collects less tax revenues ($250 million in 2015, as contrasted with nearly $312 million in 2009), and Mississippi's tourism industry, which is so heavily dependent on its casino industry, suffers as well. If sports betting were to become legal in Mississippi, this downward trend would obviously be reversed. This more than anything else explains the state's renewed interest in sports betting.

But even going beyond financial reasons and the potential forum advantages of the Fifth Circuit, Mississippi may possess an important strategic advantage in any prospective PASPA lawsuit: it is one of only a handful of states to have legalized fantasy sports. The recent state measures to legalize fantasy sports may provide state challengers with a creative new argument for toppling PASPA. While PASPA is commonly understood to prohibit “state-authorized” betting or wagering schemes on the outcomes of professional and amateur sporting events, it also prohibits state-authorized betting or wagering schemes that are based “on one or more performances of athletes in such games.” This language arguably encompasses state legislation authorizing daily fantasy sports contests, which are tied to the “performances” of athletes. A plausible argument can be made that the sports leagues are “selectively enforcing” PASPA by opposing state efforts to legalize traditional sports betting, as in the case of New Jersey, but taking no action against those states which have authorized fantasy sports contests (which presumably also violates PASPA). Such an argument could serve to undermine the leagues’ assertion in future cases that they would be “irreparably harmed” by expanded legal sports betting when they have neither suffered nor asserted any such harm from other supposed violations of PASPA. Since the leagues would need to demonstrate irreparable harm in order to obtain a preliminary injunction (as that is one of the essential elements that must be proven), the ability of future state challengers to rebut that element through evidence of the leagues’ selective enforcement of PASPA could be the key to avoiding a preliminary injunction in the early stages of a case. This would be a significant development, as it could enable a state challenger to offer sports betting throughout the pendency of a case, including any and all appeals, without having to wait for the final resolution of the lawsuit on the merits. While such an argument is not guaranteed to succeed, it provides another possible tool in a state’s legal arsenal to topple PAPSA.

Each of these factors points to Mississippi being the next state most likely to challenge PASPA in court. In my view, it's a matter of when, not if. 

-- Daniel Wallach


Saturday, November 26, 2016
 
Nevada's eSports Betting Scheme Not a Gamble Under PASPA

The inevitable partnership between eSports and the U.S. casino industry cleared another major hurdle earlier this month when the Nevada Gaming Control Board—the state agency which oversees the regulation and licensing of Nevada’s gaming industry—approved William Hill's and the Downtown Grand Hotel & Casino's application for a license to accept wagers on eSports tournaments, starting with the League of Legends Tournament at IEM Oakland. This represents the first time that wagering on eSports has been legally offered in the United States, and, given the trajectory of eSports, it certainly won’t be the last (especially in Nevada, where sports betting is legal and unencumbered by the Professional and Amateur Sports Protection Act [“PASPA”], the federal law which prevents states from licensing or authorizing sports wagering schemes).

Nevada is uniquely positioned to become the eSports betting capital of the United States, largely due to PASPA. Although PASPA prohibits States from authorizing or licensing betting or wagering schemes based, directly or indirectly, on one or more “competitive games” in which “amateur or professional athletes” participate, it also contains several exemptions from its application, the most important of which are two “grandfathering” provisions (28 U.S.C. §§ 3704(a)(1)-(2)) which preserve preexisting sports wagering schemes in Nevada, Delaware, Oregon, Montana, and “possibly a few other states.” (Senate Report 102-248, 102nd Cong., 1st Sess. 4, reprinted in 1992 U.S.C.C.A.N. 3553). But of the four states presently known to qualify for either of the exemptions, only Nevada has the ability to expand its sports betting offerings without limitation by virtue of § 3704(a)(2), whereas Delaware, Oregon and Montana can only offer those sports betting schemes that were actually in effect between 1976 and 1990 by virtue of § 3704(a)(1). Thus, even if it is determined that a video gamer is an “amateur or professional athlete” for purposes of triggering PASPA’s application, Nevada would still be entitled to offer eSports wagering by virtue of its unlimited exemption under § 3704(a)(2).

There is considerable confusion about the parameters of PASPA’s grandfathering provisions. A review of the statutory language and legislative history should clear that up. Paragraph (1) of subsection 3704(a) expressly provides that PASPA does not apply to any lottery, sweepstakes, or other betting, gambling, or wagering scheme in operation in a State or other governmental entity “to the extent” that such scheme was actually conducted by that State or other governmental entity” between January 1, 1976 and August 31, 1990. (28 U.S.C. § 3704(a)(1)). This “grandfathering” clause was intended to permit states like Delaware, Oregon and Montana to continue the limited “sports lotteries” that they had previously conducted (National Collegiate Athletic Ass’n, Inc. v. Christie, 730 F.3d 208, 216 (3d Cir. 2013)). The § 3704(a)(1) exemption, however, is limited to those sports wagering schemes that were in existence between January 1, 1976 and August 31, 1990, but only “to the extent” that they were actually conducted during that timeframe. This is the principal reason why Delaware, Oregon and Montana—while recognized as being “grandfathered” under PASPA—are nonetheless prohibited from authorizing single-game sports betting. Delaware and Oregon operated only “sports lotteries” (involving multi-game parlay bets) prior to August 31, 1990, whereas Montana operated a sports betting pool (known as “Montana Sports Action”) where the winner was determined by the performance of individual football players in games or professional stock car drivers in races. The exemption under § 3704(a)(1) preserved these sports lotteries and sports pools, but did not allow for any expansion beyond that. (Senate Report, at 10 [“paragraph (1)[a] does not intend to allow for the expansion of sports lotteries into head-to-head betting.”]).

The State of Delaware tested the limits of this exemption in 2009 when it attempted to expand its sports lottery (which had been limited to multi-game parlay bets on NFL teams) to include point-spread bets and “over/under” bets on major professional and college sporting events. In Office of the Commissioner of Baseball v. Markell, 579 F.3d 293 (3d Cir. 2009), the United States Court of Appeals for the Third Circuit held that Delaware’s proposed lottery expansion violated PASPA, as the exemption provided under § 3704(a)(1) for preexisting sports wagering schemes only applied “to the extent” that such schemes were actually conducted between January 1, 1976 and August 31, 1990. (Id. at 304). The Third Circuit explained that, “whatever the breadth of the lottery authorized by Delaware state law in 1976, PASPA requires us to determine ‘the extent’– or degree – to which such lottery was conducted.” (Id. at 309) (italics in original). The Third Circuit found that the only form of legal sports wagering “conducted” by Delaware between 1976 and 1990 involved multi-game parlay bets on NFL teams. Accordingly, the Court held that Delaware was barred from offering single-game sports betting since it had not conducted such wagering during § 3704(a)(1)'s relevant statutory timeframe. As a result of the Markell decision, Delaware’s version of legal sports betting remains limited to multi-game parlays involving only NFL teams.

The second relevant “grandfathering” exemption—paragraph (2) of subsection 3704(a)—provides that the PASPA prohibition does not apply to a lottery, sweepstakes, or other betting, gambling, or wagering scheme in operation in a state or other governmental entity where both (A) such scheme was authorized by a statute in effect as of October 2, 1991, and (B) such scheme actually was conducted in that state or other governmental entity during the period beginning September 1, 1989 and ending August 31, 1990, pursuant to the law of that state or other governmental entity. This “grandfathering” provision was intended to release Nevada from PASPA’s clutches. (See Christie I, 730 F.3d at 216). Under subparagraph (2), single-game wagering on sporting events was permitted to continue in Nevada because it was actually conducted in Nevada between September 1, 1989 and August 31, 1990 pursuant to Nevada state law. (Senate Report, at 10). PASPA’s legislative history reveals that the reason for the unique treatment of Nevada was to protect Nevada’s economy, although political considerations were also a factor. (138 Cong. Rec. S7274 & 7278 (daily ed. June 2, 1992) (statement of Sen. Hatch) (Congress had “no choice” but to grandfather in the four states in order to “resolve the problems surrounding getting an important bill like this through. . . . Compromise is frequently necessary around here, of course, in order to enact legislation.”). The Senate Judiciary Committee explained that it had no “desire to threaten the economy of Nevada, which over many decades has come to depend on legalized private gambling, including sports gambling, as an essential industry, or to prohibit lawful sports gambling schemes in other States that were in operation when the legislation was introduced.” (Id. at 8).

A key distinction between the two “grandfathering” provisions is that § 3704(a)(2) does not “freeze in time” the sports betting schemes that qualify for that exemption. This is in marked contrast to the paragraph (1) exemption, which, by virtue of the “to the extent” limiting language, prevents qualifying states from expanding their sports betting offerings beyond those actually conducted between 1976 and 1990. This is underscored by the Senate Report’s express acknowledgement that Nevada will be able to expand its sports betting options under the paragraph (2) exemption. The Senate Report clarifies that “[p]aragraph (2) is not intended to prevent Nevada from expanding its sports betting schemes into other sports so long as it was authorized by state law prior to the enactment of [PASPA].” (Id.). It also makes clear that “sports gambling covered by paragraph (2) can be conducted in any part of the state in any facility in that state, whether such facility is currently in existence.” (Id.). This explains why Nevada has been able to more than double the number of licensed sports books in the state since the 1992 enactment of PASPA. More importantly, it also explains why Nevada can offer eSports wagering, whereas Delaware, Montana Oregon and other states may not (barring, of course, a successful argument that PASPA does not apply to eSports competitions). Because it is the only state that is presently known to qualify for the § 3704(a)(2) exemption, Nevada will likely be able to monopolize the growing eSports wagering market until such time as PASPA is amended or repealed.

-- Daniel Wallach




Sunday, November 20, 2016
 
Doctor Doctor: Mr. M.D.

Bioethics issues have played and will continue to play an increasing role in Sports Law. And they have become front and center with the case of Chris Bosh of the Miami Heat.

For the last two seasons, Bosh has missed considerable playing time as a result of his susceptibility to blood clots in his legs. In one instance, a clot traveled to his lungs causing a pulmonary embolism, a blockage in one of the lung’s arteries, a dangerous and sometimes fatal condition. Bosh ended up in the hospital for nine days, losing 30 pounds and missing the last 30 games of the 2014-15 season

Patients susceptible to blood clots are treated with blood thinning medications such as Xarelto, an anticoagulant. In fact, Bosh appeared in a commercial for the drug touting its ability to help his condition. In the ad, which opens with the ten-time all-star nailing a 3-pointer, Bosh says: “When I was sidelined with blood clots in my lungs, it was serious. Fortunately, my doctor had a game plan.” That doctor, of course, is not one employed by the Miami Heat, but his personal physician in whom he has placed his trust to not just keep him alive but to keep him on the court so he can earn the remaining $76,000,000 on his contract.

Drugs such as Xarelto don’t actually thin the blood. Instead, they slow the chemical process the body uses to clot the blood in the event of an injury like a cut or bruise. For that reason, the main risk of such products is excessive bleeding in the event of such an injury, particularly internal bleeding which can cause heart attacks and strokes. The package insert for Xarelto actually advises the user to “avoid activities that may increase your risk of bleeding or injury.” Obviously, professional basketball would be included in just such an activity.

Therein lies the rub for the Miami Heat who have advised Bosh that he has failed the team physical according to the team’s doctors. Bosh and his doctors claim he is fit to suit up. They say athletes in other sports have had similar clotting problems and have managed the condition, principally by flushing the system of anticoagulants before competing. Professional basketball, however, is sometimes a three game a week affair and anticoagulants are usually prescribed for daily use not an on-again-off-again routine.

What is the right course from a bioethics standpoint? Team doctors certainly have conflicting loyalties. Do they look out for the best interests of the team—which is petrified of any player dying on the court traumatizing the fans—or the interests of the player?

Let’s leave aside the team’s obligations under the Americans with Disabilities Act, which prohibits employment discrimination on the basis of a medical condition like Bosh’s.

The best approach, it seems to me, is to allow the player to make his own medical decisions along with his personal physicians. Teams have the right to consult with those physicians to ensure they are competent and justified in their opinions and treatment decisions, but they should defer to those whose only interest is in the player’s well-being.