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PAPSA Under Fire

By Jeffrey Standen

(This was cross-posted on my new blog, Gaming Law Memo.)

A state senator in New Jersey has filed a federal lawsuit to challenge the constitutionality of the Professional and Amateur Sports Protection Act. Here's a link. (Note the nutty professor quoted toward the end.)

PAPSA, signed into law in 1992, prohibits states or any person from offering or authorizing a lottery or other betting game based on the results of any competitive game in which amateur or professional athletes participate. Read literally (and statutes are meant to be read literally), PAPSA outlaws five-dollar bets at your local golf course. In practical effect, the law prohibits states from raising revenue by permitting Las Vegas-style sports books, or lottery games like the NFL parley lottery game Oregon recently discontinued. (Four states were implicitly exempted from PAPSA: Nevada, Montana, Oregon and Delaware.)

Will this litigation test the issue? I hope the Senator has the wherewithal to pursue the question through the appeals process. The trial litigation should be relatively inexpensive, since the legal question can probably be raised on a stipulated factual record, obviating the need for extensive discovery and fact-finding. I would imagine the district judge will issue an opinion on the question and hurry the case along to the appellate courts, the inevitable destination.

And what will the courts say? Is PAPSA unconstitutional? I'd rather try to pick a four-game parley on an NFL weekend than predict judicial results. But here are some thoughts:

1. One infirmity in the statute is that it treats states differently from each other; specifically, those four states mentioned above get special treatment. The argument is that the federal Congress has an obligation under the commerce clause to treat states equally. This theory was raised a few years ago in an article in the Virginia Law Review. I just don't see it, although I'm of course willing to be convinced. The commerce clause in the federal constitution does not explicitly require that the Congress deal with states uniformly. Since other clauses of the constitution do contain such an explicit requirement, its absence from the commerce power is telling. Congress' authority to regulate commerce is plenary; as long as the law is rational, it's good to go. I think this argument loses. (Take the points.)

2. I think the more interesting constitutional argument arises under the tenth amendment: that PAPSA violates the principles of federalism that the federal courts have come to recognize in the tenth amendment. Specifically, the tenth has been held to prohibit the federal government from forcing states to enact specific laws. What does PAPSA do if not compel states to prohibit sports betting games? Put it this way: if PAPSA were nationally uniform, then Nevada would have to change its laws to conform with the federal law. In this sense, a state (other than Nevada or one of the other exempted ones) in passing a lottery law must include a provision prohibiting games based on sports contests. So PAPSA in effect requires states to pass state laws to conform with federal law. This poses a substantial tenth amendment issue. (Give the points.)

New Jersey's governor has said, according to the link above, that he will wait for the federal law to be tested before backing any plans to institute sports bets. He should throw his support behind the proposal now, in order to ensure that the federal court finds that New Jersey is sufficiently serious about sports wagers to present a real conflict for the court to resolve with a declaratory remedy. I would hate to see this important test case fail for lack of justiciability.

Full post as published by The Sports Law Professor on March 26, 2009 (boomark / email).