New Jersey, leagues return to court

New Jersey and the major U.S. sports leagues returned to federal appeals court Tuesday for the latest round of a longwinded legal saga that will have a major impact on the future of sports betting in America.

The argument is centered on what is allowed under a 23-year-old federal statute that prohibits state-sponsored sports betting for the most part in 49 states.

New Jersey is fighting to bring Las Vegas-style sports betting to its ailing casinos and racetracks. The leagues say, in doing so, the state is violating the Professional and Amateur Sports Protection Act of 1992.

The leagues have won every step of the way during a courtroom battle that's dragged on for nearly three years. Legal sources, who have been following the case closely, make the leagues the favorites, but believe this is New Jersey's best shot.

On Tuesday, in a packed Philadelphia courtroom, the two sides squared off in the Third Court of Appeals for the second time in the last 16 months.

Both sides were represented by former U.S. Solicitor Generals. Ted Olson, New Jersey's lead attorney, says the state's recent sports betting legislation, signed by Christie in September, complies with PASPA.

Paul Clement, representing the sports leagues, disagrees and says what New Jersey is attempting equals a de facto authorization of sports betting, something strictly prohibited by PASPA.

Olson and Clement made their cases to three-judge panel, consisting of Maryanne Trump Barry, the sister of Donald Trump, Marjorie Rendell, the wife of ex-Pennsylvania Governor Ed Rendell, and Julio Fuentes, who ruled in favor of the sports leagues over New Jersey in November 2013 in what's now being referred to as Christie I.

In its November 2013 opinion, the Third Circuit wrote that New Jersey was allowed to repeal its sports betting prohibitions in whole or in part and would not be in violation of PASPA.

Michael Griffinger, an attorney representing the New Jersey Legislature, said Tuesday the state's latest legislation, the 2014 Sports Wagering Law, was crafted directly from that opinion. In a moment of levity, Griffinger quoted Dr. Seuss's "Horton Hears a Who," and said, "I meant what I said and I said what I meant. We followed your guidance 100 percent."

Olson said the Sports Wagering Law was not an authorization, but a partial repeal of the state's prohibitions with restrictions. No one under 21 would be allowed to bet; No action would be taken on games involving state colleges, and the betting must take place at the state's casinos and racetracks.

Clement disagrees and said New Jersey's partial repeal is a de facto authorization of sports betting, strictly prohibited by PASPA.

"I don't think all partial repeals are equal," Clement told the judges Tuesday. "I think a partial repeal that keeps the vast, vast majority of the prohibition in place and then selects not just the favorite venues, but then also tries to dictate who can engage in sports gambling and what games they're going to be able to bet, at that point, that little tiny, tiny hole in the donut is still a product of the state law."

Sponsored by NBA Hall of Famer and U.S. Senator Bill Bradley from New Jersey, PASPA makes it unlawful for a government entity to operate, advertise, promote, license or authorize by law sports betting.

The controversial statute has survived multiple challenges. In Christie I, Olson argued that PASPA violated the Tenth Amendment because it commandeered New Jersey to maintain the federal prohibition on sports betting. But in ruling against the state in November 2013, the Third Circuit wrote PASPA did not violate the Tenth Amendment, because it allows New Jersey to repeal its prohibition on sports betting in whole or in part.

The Department of Justice backed that opinion in a legal brief, when New Jersey asked the Supreme Court to take a look at their case. The Supreme Court declined to take the case, and the state moved in another direction.

On Tuesday, the judges repeatedly questioned Olson on the meaning of 'authorize' as it is used in PASPA, pressing on whether a partial repeal that restricts sports betting to certain locations is in fact an authorization.

They pushed at Clement to define how far the state would need to go with its repeal to be compliant with PASPA. Neither Olson or Clement had definitive answers.

"Look at the [judges] faces, it appeared to me they were [asking the leagues], 'what else can they do?' " New Jersey State Sen. Raymond Lesniak said.

The judges complimented both sides for a well-argued case and concluded the hour-long oral arguments. A decision is expected by June.

Lesniak, who has spearheaded the sports betting fight, was in attendance and came away feeling confident.

"If we get a favorable decision, book your Atlantic City rooms for football season immediately," Lesniak said.

Daniel Wallach, a federal court litigator for Becker & Poliakoff, was one of the many legal minds in attendance. He said after hearing the arguments that he could make a compelling case for both sides.

"After hearing oral arguments in a case that I have no skin in the game, I can almost always predict who's going to win," Wallach said. "But not in this case. I still make the leagues the favorites, but I don't think New Jersey hurt its cause."

As the case plays out, two professional sports leagues, the NBA and Major League Baseball, have changed their public stance on legalizing sports betting. NBA commissioner Adam Silver has called on Congress to create a federal framework that will allow states to regulate sports betting.

MLB commissioner Rob Manfred also has said publicly that federal regulation could be the most appropriate way to regulate what has exploded into an industry worth hundreds of billions of dollars.