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FEATURED ARTICLE
04/09
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US
Federal sports betting Act:
Constitutional challenge
The Interactive Media Entertainment
& Gaming Association (IMEGA),
New Jersey’s Senator, Raymond
Lesniak and a number of
horseracing-related associations in
New Jersey recently filed a
complaint in a US district court
claiming that the federal
Professional and Amateur Sports
Protection Act (PASPA) violates the
US Constitution. Linda J. Shorey,
Dennis M.P. Ehling, Robert A.
Lawton and Anthony R. Holtzman,
of K&L Gates LLP, explain the
PASPA and examine the complaint
challenging it.
On 23 March, the Interactive
Media Entertainment & Gaming
Association (IMEGA), various
New Jersey horseracing-related
associations (collectively
‘Association Plaintiffs’) and New
Jersey State Senator Raymond
Lesniak, filed a complaint in the
US District Court for the District
of New Jersey asserting that the
federal Professional and Amateur
Sports Protection Act (PASPA),
enacted in 1992, violates the US
Constitution. The Plaintiffs’ goal is
to return control over the legality
of sports wagering in a state to the
state.
This article provides a brief
explanation of the PASPA and a
brief examination of the complaint
challenging it.
PASPA
Purpose
PASPA’s legislative history reveals
that it was perceived as necessary
to thwart the spread of stateauthorized sports gambling
because:
‘Sports gambling is a national
problem. The harms it inflicts are
felt beyond the borders of those
States that sanction it. The moral
erosion it produces cannot be
06
limited geographically. Once a
State legalizes sports gambling, it
will be extremely difficult for other
States to resist the lure. The current
pressures in such places as New
Jersey and Florida to institute
casino-style sports gambling
illustrate the point. Without
Federal legislation, sports gambling
is likely to spread on a piecemeal
basis and ultimately develop an
irreversible momentum1’.
The harms of sports wagering
were felt to override the value it
would provide to states as a
potential revenue source because:
‘The answer to State budgetary
problems should not be to increase
the number of lottery players or
sports bettors, regardless of the
worthiness of the cause. The
committee believes the risk to the
reputation of one of our Nation’s
most popular pastimes,
professional and amateur sporting
events, is not worth it2’.
It was also thought that legalizing
sports wagering would not reduce
illegal sports wagering but instead
‘would likely draw new recruits to
illegal gambling3’.
Operative provisions and effect
The PASPA makes it unlawful for:
‘a governmental entity to
sponsor, operate, advertise,
promote, license, or authorize by
law or compact; or
a person to sponsor, operate,
advertise, or promote, pursuant to
the law or compact of a
governmental entity, a lottery,
sweepstakes, or other betting,
gambling, or wagering scheme
based, directly or indirectly
(through the use of geographical
references or otherwise), on one or
more competitive games in which
amateur or professional athletes
participate, or are intended to
participate, or on one or more
performances of such athletes in
such games4’.
Excepted from Section 3702’s
prohibitions are:
‘A lottery, sweepstakes, or other
betting, gambling, or wagering
scheme in operation in a State or
other governmental entity, to the
extent that the scheme was
conducted by that State or other
governmental entity at any time
during the period beginning 1
January 1976 and ending 31
August 1990;
a lottery, sweepstakes, or other
betting, gambling, or wagering
scheme in operation in a State or
other governmental entity where
both:
such scheme was authorized by
a statute as in effect on 2 October
1991; and
a scheme described in section
3702 (other than one based on
parimutuel animal racing or jaialai games) actually was conducted
in that State or other governmental
entity at any time during the
period beginning 1 September
1989 and ending 2 October 1991,
pursuant to the law of that State or
other governmental entity;
a betting, gambling, or wagering
scheme, other than a lottery
described in paragraph 1,
conducted exclusively in casinos
located in a municipality, but only
to the extent that:
such scheme or a similar
scheme was authorized, not later
than one year after the effective
date of this chapter [effective 1
January 1993], to be operated in
that municipality; and
any commercial casino gaming
scheme was in operation in such
municipality throughout the 10year period ending on such
effective date pursuant to a
comprehensive system of State
regulation authorized by that
State’s constitution and applicable
solely to such municipality; or
parimutuel animal racing or jaialai games5’.
In sum, PASPA makes it illegal for
a state to permit sports wagering,
world online gambling april 2009
US
other than parimutuel wagering on
animal racing (e.g., horse and
greyhound) or jai-alai games,
unless such state-authorized sports
wagering had been done prior to
or was being done when PASPA
was enacted or, was authorized
within one year after PASPA’s
effective date - 1 January 1993.
Only four states had authorized
sports wagering at the time of
PASPA’s enactment - Nevada,
Delaware, Montana, and Oregon6.
No state authorized sports
wagering during the year following
PASPA’s effective date.
The complaint
Constitutional claims
Plaintiffs challenge the
constitutionality of PASPA on nine
counts of:
violation of the Commerce
Clause, US Const. art. I, §8, cl. 3;
violation of equal protection
under US Const. amend XIV;
void for vagueness under US
Const. amend. V and XIV;
violation of US Const. amend X
(‘The powers not delegated to the
United States by the Constitution,
nor prohibited by it to the states,
are reserved to the states,
respectively, or to the people’.);
violation of US Const. amend
XI (‘the judicial power of the
United States shall not be
construed to extend to any suit in
law or equity, commenced or
prosecuted against one of the
United States by Citizens of
another State, or by Citizens or
Subjects of any Foreign State’);
violation of Senator Lesniak’s
rights of assembly, association,
speech, and privacy under US
Const. amend I;
violation of procedural due
process under US Const. amend
IV, V, and XIV (not asserted by
Senator Lesniak);
violation of substantive due
process under US Const. amend
IV, V, and XIV (not asserted by
world online gambling april 2009
The regulation
of betting and
wagering has
historically
been
considered the
province of the
states under
their inherent
police power a power not
provided to
Congress by
the US
Constitution
Senator Lesniak); and
violation of rights of privacy
under the US Const. of IMEGA
and its members.
A number of these challenges are
related to potential problems with
PASPA raised when the proposed
legislation was considered by the
Senate Committee on the Judiciary.
Specifically related to the challenge
in Count 4 and 5 (based on US
Const. amend. X and XI) were the
National Conference of State
Legislators’ opposition on
federalism grounds and the view of
the Committee minority that
PASPA would be ‘a substantial
intrusion into States’ rights and
would restrict the fundamental
right of States to raise revenue to
fund critical State programs7.’
States’ rights always come into
play when federal legislation
addressing betting and wagering is
at issue. The regulation of betting
and wagering has historically been
considered the province of the
states under their inherent police
power - a power not provided to
Congress by the US Constitution.
See, for example, Posadas de
Puerto Rico Assocs. v. Tourism Co.
of Puerto Rico8, (state regulation of
gambling is justified by substantial
state interest in citizens’ quality of
life, including their health, safety,
and welfare). Congress can regulate
betting and wagering if it does so
pursuant to its power to regulate
interstate commerce. An example
of this type of regulation is the
federal Wire Act9, which focuses on
interstate wire transmissions that
concern betting and wagering.
Potential impediment
Plaintiffs’ standing to bring some,
if not all, of the constitutional
challenges is likely to be contested.
At a minimum, to establish
standing to bring the challenges in
federal court, plaintiffs must show:
they have suffered an injury in
fact that is concrete and
particularized, which means
affecting plaintiffs in a personal
and individual way, and actual or
imminent, as opposed to
hypothetical or conjectural;
their injury can be traced to the
challenged action; and
their injury is likely to be
redressed by a favorable decision.
In Lujan v Defenders of Wildlife10,
there are no allegations in the
complaint that PASPA has been
used, or threatened to be used, to
enjoin the activities of any of the
Association Plaintiffs or their
members.
New Jersey, if it enacted
legislation authorizing some form
of sports wagering, would be better
positioned to withstand a standing
challenge directed to the counts
raising violations of the Tenth and
the Eleventh Amendments.
Linda J. Shorey Partner
Dennis M.P. Ehling Partner
Robert A. Lawton Associate
Anthony R. Holtzman Associate
K& L Gates LLP
linda.shorey@klgates.com
dennis.ehling@klgates.com
robert.lawton@klgates.com
anthony.holtzman@klgates.com
1. S. Rep. 102-248, 1992 U.S.C.C.A.N.
3553, 3556.
2. Id. at 3558.
3. Id.
4. 28 U.S.C. §3702.
5. 28 U.S.C. §3704(a).
6. Currently, only Nevada authorizes and
regulates sports books. Montana
authorizes limited sports wagering, such
as pools on gerbil races. Oregon and
Delaware discontinued their operation of
sports lotteries after PASPA’s enactment,
but Delaware is considering whether to
re-establish a sports lottery.
7. S. Rep. 102-248, 1992 U.S.C.C.A.N.
at 3558, 3562.
8. 478 US 328, 341 (1986).
9. 18 U.S.C. §1084.
10. 504 US 555, 560-61 (1992).
07
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