Angelo Massagli – New Jersey Governor Chris Christie’s fight to legalize sports betting has found its way to the Supreme Court as the Court has granted certiorari for Christie v. National Collegiate Athletic Association. Governor Christie is specifically challenging the constitutionality of the congressional Professional and Amateur Sports Protection Act (PASPA). Christie argues that PASPA is an unconstitutional violation of the anti-commandeering doctrine and should be appealed in whole or in part. A Supreme Court decision in favor of Christie could find a country racing to get a piece of what is estimated to be a billion dollar industry.
The Lawsuit
Governor Christie is a long time proponent of legalized gambling, specifically as a tool to relieve a struggling Atlantic City. After receiving positive feedback from the citizens of New Jersey through a statewide referendum on the topic of legalizing sports gambling, Christie eventually repealed the state legislated prohibitions against it. The NCAA, along with the four major American sports leagues, immediately sued Christie claiming he violated PASPA by repealing state gambling prohibitions. Christie countered by arguing PASPA is unconstitutional citing the anti-commandeering doctrine. In short, the anti-commandeering doctrine states that it is an unconstitutional violation of the tenth amendment when the federal government directly compels a state to enact and enforce a federal regulatory program. Congress can only encourage states to voluntarily participate in the proposed policy or enforce the policy directly on individuals, but it cannot dictate policy to the states.
Christie argues that Congress has created a risk to federalism by way of forcing states to adhere to federal government policies and initiatives. In other words, the federal government should not have the power to prevent a state from simply repealing its own legislation. Furthermore, he argues that Congress raises issues of misplaced accountability. For example, if Atlantic City fails, New Jersey citizens will point to Christie as a part of the problem while in reality his efforts to save Atlantic City were handcuffed by Congress via PASPA. The American Gaming Association, in support of the state of New Jersey, argues PASPA interferes with states’ police powers and authority to regulate “matters of economic development and public morality.”
Potential for Economic Impact in a Legalized Gambling Regime
Aside from the potentially groundbreaking constitutional arguments of this case, one cannot ignore the economic potential of a legalized gambling regime. Sports gambling in the United States today, both legal and illegal, is a prevalent and lucrative industry. Geoff Freeman, the CEO and President of the American Gaming Association, was quoted in an article by SBNation saying he believes Americans spend $150 billion a year on sports gambling. NBA commissioner Adam Silver claimed that in 2014 there was at least $400 billion spent on sports wagers in America alone.
While the exempted legalized sports betting states like Nevada financially benefit from sports gambling, a portion of the $400 billion dollar pie is entirely untapped. States allowed to regulate sports gambling could stand to gain billions in tax revenue at the state and local level. The estimated tax revenue New Jersey stands to gain from sports gambling would make up one-seventh of its most recently proposed budget. Atlantic City specifically will experience a spike in tourism by giving the sports gambling demographic a new home.
Critics of legalized gambling take a “be careful what you wish for” approach. First, nationwide legalized gambling promotes competition, thus potentially diluting the benefits New Jersey seeks to gain. In the wake of the Supreme Court granting cert, states such as New York, Michigan, and South Carolina have introduced legislation that adopt new sports betting models. Therefore, by making gambling legal for all states, New Jersey may actually lose business to competing states. Critics also point to the classic bettors’ refrain, “the house always wins,” referring to the statistic disadvantage gamblers have to the “house” or the betting establishment. Gamblers are taxed by the state based on their winnings. If gamblers statistically lose more than they win, the projected revenue stream may not be as strong as estimated. Thus, the inevitable question arises, is it worth the cost?
Despite the concerns of the critics, the support for legalized sports gambling is very real. New Jersey stands to gain valuable tax revenue and create new jobs if a ruling in Christie’s favor allows the state to embrace this industry. The Supreme Court is scheduled to decide on the matter this December. Place your bets.
Note: For those interested in the potential constitutional impact of Christie v. National Collegiate Athletic Association, a great summation of potential outcomes can be found here.
