Nat'l Collegiate Athletic Ass'n v. Governor of N.J.

832 F.3d 389

National Collegiate Athletic Association, an unincorporated assoc iation; National Basketball Association, a joint venture; National Football League, an unincorporated association; National Hockey League, an unincorporated association; Office of the Commissioner of Baseball, an unincorporated association doing business as Major League Baseball

v.Governor of the State of New Jersey; David L. Rebuck, Director of the New Jersey Division of Gaming Enforcement and Assistant Attorney General of the State of New Jersey; Frank Zanzuccki, Executive Director of the New Jersey Racing Commission ; New Jersey Thoroughbred Horsemen's Association, Inc; New Jersey Sports & Exposition Authority

Stephen M. Sweeney, President of the New Jersey Senate; Vincent Prieto, Speaker of the New Jersey General Assembly (Intervenors in District Court), Appellants in 14-4568

Governor of New Jersey; David L. Rebuck; Frank Zanzuccki, Appellants in 14-4546

New Jersey Thoroughbred Horsemen's Association, Inc., Appellant in 14-4569

Nos. 14-4546

14-4568

14-4569

United States Court of Appeals, Third Circuit.

Argued on March 17, 2015 before Merits Panel

Court Ordered Rehearing En Banc on October 14, 2015

Argued En Banc on February 17, 2016

Opinion filed: August 9, 2016

Amended: August 11, 2016

John J. Hoffman, Esquire, Acting Attorney General of the State of New Jersey, Jeffrey S. Jacobson, Esquire, Stuart M. Feinblatt, Esquire, Peter M. Slocum, Esquire, Office of Attorney General of New Jersey, 25 Market Street, Trenton, NJ 08625, Matthew M. Hoffman, Esquire, Gibson Dunn, 333 South Grand Avenue, Los Angeles, CA 90071, Ashley E. Johnson, Esquire, Gibson Dunn, 2100 McKinney Avenue, Suite 1100, Dallas, TX 75201, Theodore B. Olson, Esquire (ARGUED), Matthew D. McGill, Esquire, Gibson Dunn, 1050 Connecticut Avenue, N.W., 9th Floor, Washington, DC 20036, Counsel for Appellants Governor of the State of New Jersey, David L. Rebuck, and Frank Zanzuccki.

Elliott M. Berman, Esquire, McElroy, Deutsch, Mulvaney & Carpenter, 100 Mulberry Street, Three Gateway Center, Newark, NJ 07102, Ronald J. Riccio, Esquire (ARGUED), Edward A. Hartnett, Esquire, McElroy, Deutsch, Mulvaney & Carpenter, 1300 Mount Kemble Avenue, P.O. Box 2075, Morristown, NJ 07962, Counsel for Appellant New Jersey Thoroughbred Horsemen's Association.

Michael R. Griffinger, Esquire, Thomas R. Valen, Esquire, Jennifer A. Hradil, Esquire, Gibbons P.C., One Gateway Center, Newark, New Jersey 07102, Counsel for Appellants Stephen M. Sweeney and Vincent Prieto.

Paul D. Clement, Esquire (ARGUED), Erin Murphy, Esquire, Bancroft PLLC, 1919 M Street, N.W., Suite 470, Washington, DC 20036, Jeffrey A. Mishkin, Esquire, Anthony J. Dreyer, Esquire, Skadden, Arps, Slate, Meagher, & Flom, 4 Times Square, New York, NY 10036, William J. O'shaughnessy, Esquire, Richard Hernandez, Esquire, McCarter & English, 100 Mulberry Street, Four Gateway Center, 14th Floor, Newark, NJ 07102, Counsel for Appellees National Collegiate Athletic Association; National Basketball Association; National Football League; National Hockey League; Office of the Commissioner of Baseball.

Joyce R. Branda, Esquire, Acting Assistant Attorney General, Civil Division, Paul J. Fishman, Esquire (ARGUED), United States Attorney of the District of New Jersey, Scott R. McIntosh, Esquire, Peter J. Phipps, Esquire, Attorneys, Civil Division, U.S. Department of Justice, P.O. Box 883, Washington, DC 20044, Counsel for Amicus United States of America.

Before: AMBRO, FUENTES, SMITH, FISHER, JORDAN, HARDIMAN, GREENAWAY JR., VANASKIE, KRAUSE, RESTREPO, RENDELL, and BARRY, Circuit Judges

OPINION

RENDELL, Circuit Judge:

The issue presented before the en banc court is whether SB 2460, which the New Jersey Legislature enacted in 2014 to partially repeal certain prohibitions on sports gambling (the “2014 Law”), violates federal law. 2014 N.J. Sess. Law Serv. Ch. 62, codified at N.J. Stat. Ann. §§ 5:12A-7 to - 9. The District Court held that the 2014 Law violates the Professional and Amateur Sports Protection Act (“PASPA”), 28 U.S.C. §§ 3701 -3704. A panel of this Court affirmed this ruling in a divided opinion which was subsequently vacated upon the grant of the Petition for Rehearing en banc. We now hold that the District Court correctly ruled that because PASPA, by its terms, prohibits states from authorizing by law sports gambling, and because the 2014 Law does exactly that, the 2014 Law violates federal law. We also hold that we correctly ruled in Christie I that PASPA does not commandeer the states in a way that runs afoul of the Constitution.

I. Background

Congress passed PASPA in 1992 to prohibit state-sanctioned sports gambling. PASPA provides:

It shall be unlawful for—

(1) a governmental entity to sponsor, operate, advertise, promote, license, or authorize by law or compact, or

(2) 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 ... 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 games.

28 U.S.C. § 3702 (emphasis added). PASPA defines “governmental entity” to include states and their political subdivisions. Id. § 3701(2). It includes a remedial provision that permits any sports league whose games are or will be the subject of sports gambling to bring an action to enjoin the gambling. Id. § 3703.

Congress included in PASPA exceptions for state-sponsored sports wagering in Nevada and sports lotteries in Oregon and Delaware, and also an exception for New Jersey but only if New Jersey were to enact a sports gambling scheme within one year of PASPA's enactment. Id. § 3704(a). New Jersey did not do so, and thus the PASPA exception expired. Notably, sports gambling was prohibited in New Jersey for many years by statute and by the New Jersey Constitution. See, e.g., N.J. Const. Art. IV § VII ¶ 2 ; N.J. Stat. Ann. § 2C:37–2 ; N.J. Stat. Ann. § 2A:40–1. In 2010, however, the New Jersey Legislature held public hearings on the advisability of allowing sports gambling. These hearings included testimony that sports gambling would generate revenues for New Jersey's struggling casinos and racetracks. In 2011, the Legislature held a referendum asking New Jersey voters whether sports gambling should be permitted, and sixty-four percent voted in favor of amending the New Jersey Constitution to permit sports gambling. The constitutional amendment provided:

It shall also be lawful for the Legislature to authorize by law wagering at casinos or gambling houses in Atlantic City on the results of any professional, college, or amateur sport or athletic event, except that wagering shall not be permitted on a college sport or athletic event that takes place in New Jersey or on a sport or athletic event in which any New Jersey college team participates regardless of where the event takes place....

N.J. Const. Art. IV, § VII, ¶ 2 (D). The amendment thus permitted the New Jersey Legislature to “authorize by law” sports “wagering at casinos or gambling houses in Atlantic City,” except that wagering was not permitted on New Jersey college teams or on any collegiate event occurring in New Jersey. An additional section of the amendment permitted the Legislature to “authorize by law” sports “wagering at current or former running and harness horse racetracks,” subject to the same restrictions regarding New Jersey college teams and collegiate events occurring in New Jersey. Id. ¶ 2(F).

After voters approved the sports-wagering constitutional amendment, the New Jersey Legislature enacted the Sports Wagering Act in 2012 (“2012 Law”), which provided for regulated sports wagering at New Jersey's casinos and racetracks. N.J. Stat. Ann. §§ 5:12A–1 et seq. (2012). The 2012 Law established a comprehensive regulatory scheme, requiring licenses for operators and individual employees, extensive documentation, minimum cash reserves, and Division of Gaming Enforcement access to security and surveillance systems.

Five sports leagues¹ sued to enjoin the 2012 Law as violative of PASPA.² The New Jersey Parties did not dispute that the 2012 Law violated PASPA, but urged instead that PASPA was unconstitutional under the anti-commandeering doctrine. The District Court held that PASPA was constitutional and enjoined implementation of the 2012 Law. The New Jersey Parties appealed, and we affirmed in National Collegiate Athletic Ass'n v. Governor of New Jersey , 730 F.3d 208 (3d Cir. 2013) (Christie I ).

In Christie I , we rejected the New Jersey Parties' argument that PASPA was unconstitutional by commandeering New Jersey's legislative process. In doing so, we stated that “[n]othing in [PASPA's] words requires that the states keep any law in place. All that is prohibited is the issuance of gambling ‘license [s]’ or the affirmative ‘authoriz[ation] by law ’ of gambling schemes.” Id. at 232 (alterations in original). The New Jersey Parties had urged that PASPA commandeered the state because it prohibited the repeal of New Jersey's prohibitions on sports gambling; they reasoned that repealing a statute barring an activity would be equivalent to authorizing the activity, and “authorizing” was not allowed by PASPA. We rejected that argument, observing that “PASPA speaks only of ‘authorizing by law ’ a sports gambling scheme,” and “[w]e [did] not see how having no law in place governing sports wagering is the same as authorizing it by law.” Id . (emphasis in original). We further emphasized that “the lack of an affirmative prohibition of an activity does not mean it is affirmatively authorized by law. The right to do that which is not prohibited derives not from the authority of the state but from the inherent rights of the people.” Id. (emphasis in original). In short, we concluded that the New Jersey Parties' argument rested on a “false equivalence between repeal...