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NV Fantasy Sports Ruling Comes Amidst NJ's Betting Bid
Nevada's recent crackdown on fantasy sports operations could have a beneficial effect on New Jersey's latest bid to legalize sports betting, according to lawyers involved in the gaming industry.
The lawyers said the major sports leagues ' the National Football League, Major League Baseball, the National Basketball Association and the National Hockey League ' may find it more difficult to argue that sports betting should not be legalized when they themselves are now tied financially to DraftKings and FanDuel, which in October the Nevada Gaming Commission declared to be sports betting websites. The Nevada Gaming Commission ordered the two sites to halt operations in that state until they are licensed. According to media reports, the federal government has launched investigations and several states into whether DraftKings and FanDuel are engaged in unregulated sports betting, and whether employees used inside information for financial gain.
The day before Nevada's decision, the U.S. Court of Appeals for the Third Circuit granted reargument en banc in New Jersey's appeal of a ruling by a 2-1 panel that said the state's latest attempt to legalize sports betting runs afoul of the 1992 federal Professional and Amateur Sports Protection Act (PASPA), which bars states from authorizing sports betting.
Lawyers representing New Jersey may now have the ability to ask the full Third Circuit to consider how the country's four major professional sports leagues can argue that sports betting should remain illegal outside of a small number of venues when they are intertwined with DraftKings and FanDuel, gaming attorneys said. The NBA has a stake in FanDuel, and MLB, along with NFL team owners Robert K. Kraft of the New England Patriots and Jerry Jones of the Dallas Cowboys, have stakes in DraftKings.
One gaming lawyer who asked not to be identified because of his ties to the industry says that, of the challengers to New Jersey's sports betting bid, only the National Collegiate Athletic Association has not aligned itself with fantasy sports, which now has become a multibillion-dollar industry and which has remained unregulated because it and its backers have insisted that it is not, in fact, gambling.
“If I'm the state of New Jersey, I want the court to know that the leagues and owners are very involved with fantasy sports,” sys Nicholas Casiello Jr., the chair of the gaming practice group at the Atlantic City office of Fox Rothschild. Casiello said the argument may not be relevant to the legal issue of whether New Jersey is attempting an end-run around PASPA, “but I'd want the judges to be scratching their heads.”
Another gaming attorney, who also asked to not be identified because of his work in the industry, agrees that Nevada's decision will likely not play a role in the leagues' legal argument that New Jersey's efforts violate PASPA and that only Congress and the president can change that law. But, the lawyer says, it may be difficult now for the leagues to make that argument with a straight face. “The disingenuousness and hypocrisy of the sports leagues knows no bounds.”
The leagues' lead attorney, Paul Clement of Bancroft in Washington, DC, did not return a call, and spokespersons for the leagues also did not respond to requests for comment. A spokesperson for acting New Jersey attorney general John Hoffman declined to comment.
New Jersey is hoping that it will be allowed to engage in legalized sports gambling, largely in an effort to increase tax revenues and to invigorate Atlantic City's struggling casinos and horse-racing tracks around the state.
In her August 2015 opinion in National Collegiate Athletic Association v. Governor of the State of New Jersey, 799 F.3d 259 (3d Cir. 2015), Senior Circuit Judge Marjorie Rendell, writing for the majority, said PASPA prohibits states from “authorizing by law” statutes that permit sports betting. When the state enacted its latest statute last year, according to Senior Judge Rendell, officials said they were removing prohibitions on sports betting at casinos and racetracks.
Because the state still barred sports betting at other locations, that amounted to continued regulation of sports betting, which violates PASPA, the appellate majority found. “We agree that, had the 2014 law repealed all prohibitions on sports gambling, we would be hard-pressed to find any 'authorizing by law' in violation of PASPA. But that is not what happened here,” Rendell said.
Professional sports leagues in the past year decided to tie their fortunes to DraftKings and FanDuel, and continue to argue that those operations are not involved in sports betting because participants do not bet on the outcome of games themselves. But the Nevada Gaming Commission said the sites are, indeed, involved in sports betting, that because they involve “wagering on the collective performance of individuals performing in sporting events, under current law, regulation and approvals, in order to lawfully expose [such sites] for play within the state of Nevada, a person must possess a license to operate a sports pool issued by the Nevada Gaming Commission. Further, a licensed operator who offers [fantasy sports betting] must comply with all laws and regulations that apply to licensed sports pools.”
Michael Booth writes for the New Jersey Law Journal, an ALM sibling of Entertainment Law & Finance. He can be reached at [email protected].
Nevada's recent crackdown on fantasy sports operations could have a beneficial effect on New Jersey's latest bid to legalize sports betting, according to lawyers involved in the gaming industry.
The lawyers said the major sports leagues ' the National Football League, Major League Baseball, the National Basketball Association and the National Hockey League ' may find it more difficult to argue that sports betting should not be legalized when they themselves are now tied financially to DraftKings and FanDuel, which in October the Nevada Gaming Commission declared to be sports betting websites. The Nevada Gaming Commission ordered the two sites to halt operations in that state until they are licensed. According to media reports, the federal government has launched investigations and several states into whether DraftKings and FanDuel are engaged in unregulated sports betting, and whether employees used inside information for financial gain.
The day before Nevada's decision, the U.S. Court of Appeals for the Third Circuit granted reargument en banc in New Jersey's appeal of a ruling by a 2-1 panel that said the state's latest attempt to legalize sports betting runs afoul of the 1992 federal Professional and Amateur Sports Protection Act (PASPA), which bars states from authorizing sports betting.
Lawyers representing New Jersey may now have the ability to ask the full Third Circuit to consider how the country's four major professional sports leagues can argue that sports betting should remain illegal outside of a small number of venues when they are intertwined with DraftKings and FanDuel, gaming attorneys said. The NBA has a stake in FanDuel, and MLB, along with NFL team owners Robert K. Kraft of the New England Patriots and Jerry Jones of the Dallas Cowboys, have stakes in DraftKings.
One gaming lawyer who asked not to be identified because of his ties to the industry says that, of the challengers to New Jersey's sports betting bid, only the National Collegiate Athletic Association has not aligned itself with fantasy sports, which now has become a multibillion-dollar industry and which has remained unregulated because it and its backers have insisted that it is not, in fact, gambling.
“If I'm the state of New Jersey, I want the court to know that the leagues and owners are very involved with fantasy sports,” sys Nicholas Casiello Jr., the chair of the gaming practice group at the Atlantic City office of
Another gaming attorney, who also asked to not be identified because of his work in the industry, agrees that Nevada's decision will likely not play a role in the leagues' legal argument that New Jersey's efforts violate PASPA and that only Congress and the president can change that law. But, the lawyer says, it may be difficult now for the leagues to make that argument with a straight face. “The disingenuousness and hypocrisy of the sports leagues knows no bounds.”
The leagues' lead attorney, Paul Clement of Bancroft in Washington, DC, did not return a call, and spokespersons for the leagues also did not respond to requests for comment. A spokesperson for acting New Jersey attorney general John Hoffman declined to comment.
New Jersey is hoping that it will be allowed to engage in legalized sports gambling, largely in an effort to increase tax revenues and to invigorate Atlantic City's struggling casinos and horse-racing tracks around the state.
In her August 2015 opinion in
Because the state still barred sports betting at other locations, that amounted to continued regulation of sports betting, which violates PASPA, the appellate majority found. “We agree that, had the 2014 law repealed all prohibitions on sports gambling, we would be hard-pressed to find any 'authorizing by law' in violation of PASPA. But that is not what happened here,” Rendell said.
Professional sports leagues in the past year decided to tie their fortunes to DraftKings and FanDuel, and continue to argue that those operations are not involved in sports betting because participants do not bet on the outcome of games themselves. But the Nevada Gaming Commission said the sites are, indeed, involved in sports betting, that because they involve “wagering on the collective performance of individuals performing in sporting events, under current law, regulation and approvals, in order to lawfully expose [such sites] for play within the state of Nevada, a person must possess a license to operate a sports pool issued by the Nevada Gaming Commission. Further, a licensed operator who offers [fantasy sports betting] must comply with all laws and regulations that apply to licensed sports pools.”
Michael Booth writes for the New Jersey Law Journal, an ALM sibling of Entertainment Law & Finance. He can be reached at [email protected].
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