Legalized Sports Gambling: Leagues and States Roll the Dice

Predictably this front row is empty as if I’d call on anybody. We will have some time at the back end for you and your questions and your observations, so don’t lose heart about that. Our topic today is sports gambling, what’s going on, what will go on now that the Supreme Court has spoken. We have a panel, from a moderator’s point of view it’s a terrible panel. They’re all lawyers, so they may be very boring, I don’t know, lawyers tend to be boring. What’s interesting from your perspective since I assume that some of you are interested in sports, possibly interested in a sports career, these five people have integrated their legal education with sports, in highly successful ways. Derek, tell us about yourself. How’d you get to the sports end of the spectrum? – Really by accident, I had no desire necessarily to be in sports but I had a good friend who worked for the National Football League, and was leaving the league to go work for the Jaguars and called me up and said would you be interested in coming back to New York and working for the NFL and I said sure, and that’s how I ended up in the NFL. – You make it seem so obvious, who wouldn’t want to work for the NFL? – It was a great opportunity, at the time I was working for the NCAA what they call a boomerang employee. I worked for the NCAA as a young investigator, and then came back a number of years later, but sports is very much a profession about relationships and who you know. You have to be competent, but contacts are really important. – So now you’re with the NCAA. – That’s correct. – You’ve left out your tour with the FBI. – Yes, I began my career as a special agent with the FBI in New York, right after I graduated from law school, so I spent five years in the New York office here. – Well, you’re proof of the proposition that life is fortuitous. You move along, and who knows. Ari, how about you? – Yeah, my story’s not that different, really. I don’t wanna presume too much, but probably my law school days are the closest to where I am now on this panel. (laughter) So I worked at a firm in New York for a few years and wanted to get into something smaller, something a little more in line with the passions that I have, sports being one of them, and had connected with some people at FanDuel. It was an emerging industry, one that I’m sure you’re all aware has some significant legal touch points, so it was a very interesting company to get involved with. And just again, fortuitous. Right place, right time. – Rick. – Same general idea, although I think closer to what you started with Arthur in terms of marrying an existing interest in sports. I’m gonna open the sports page first pretty much every morning no matter what, with the happenstance of being a lawyer, after leaving law school, considering environmental law as something that I’d be interested in and also sports law. Was fortunate to work at a law firm in Washington, D.C. that represented the National Football League and the National Hockey League and did some work for those clients and got to meet people at other leagues. In 1993 moved and took a job at the NBA, and that’s 25 years ago, and I’m still there. – Do you actually read sports pages? Do you read the newspaper? – I said that for your benefit. I don’t really. (laughter) – He treats me as an old fogie. It’s funny, you read it first. – Yes. – I read it last. It’s like icing on the cake. I save it. You know I go past the obits and then I get to the sports page. – Got it. – Jodi. – So I’m on a panel here with a couple of old friends. I just want to mention. Derek and I were both employed by the NFL at the same time, worked together. And while I was at the NFL, Rick was one of our outside lawyers. My story is very similar to Rick’s. I started out at a firm. My exit strategy was to find a job in sports. I did, I moved onto the NFL. I spent 13 years there, and now I’m in academia, teaching among other things sports law both here and at Brooklyn Law School. – David. – Like everybody else it seems like you just fell into this. My background is that I was appointed by Governor Christie after being on his staff for a few years to work on Atlantic City reform efforts. For those who don’t know, in New Jersey, Atlantic City is the only area you can engage in casino gambling. Lo and behold, New Jersey decides to have a sports wagering law. We passed it through constitution. We have a law that gets promulgated by us in 2012. Requires regulations to be drafted by the Division of Gaming Enforcement which I am in charge of. I was very happy to do that, but I was hoping that the leagues might get an injunction long before I had to get that work done. They did not. – [Derek] Sorry. – I know. And we were days from starting legalized gambling under the first law when the injunction came in and therefore it’s NCAA versus Christie. I’m second, Rebuck. And the rest is history as we go through. – Okay. To bring everyone up to speed, our panel really begins, life in a sense begins with that decision last made by the Supreme Court.

What’s denominated NCAA I guess, Murphy. – [Jodi] Murphy. – It’s Murphy versus NCAA. In two or three minutes, state the case, Jodi. – So this is a case– – I’ve always wanted to do that to a law professor. (laughing) – Exactly. This is a case that David spent 10 years of his life litigating, so I almost feel that it’s something you might know a little bit more about than I do, but I just wanna point out because of a question a student asked me in my sports law class last week. I just want to make sure everybody knows that before PASPA was passed in 1992, my student asked me, “Well, so what was it like back then when all the states had gambling?” So that’s not what it was like. This is a country that for a hundred years for the most part, had no legalized sports wagering and very little legalized gambling. In fact the only state that had a full fledged sports book before the 1992 law and mostly since then was Nevada. And there were a handful of other states that used sports wagering as a basis for lotteries or other revenue generating activities. And PASPA was passed in 1992 largely as a result of lobbying by the sports leagues and the NCAA to protect the integrity of the game. And it basically said that states who currently had any form of sports wagering were grandfathered, every other state had one year to pass a sports wagering legislation and then you’re out of luck. There will be no legalized sports gambling in the United States other than in those jurisdictions. At the end of the day you had four jurisdictions that allowed some sort of wagering and a lot of states with, what I would call, buyer’s remorse or legislator’s remorse, like New Jersey, for example, that decided after the fact, after the deadlines had passed, gee, sports gambling would be a good, good way to revitalize Atlantic City. It would be good way to generate state revenues. We should be entitled to engage in this form of commerce because it’s traditionally been within the state’s police powers and there’s something about PAPSA that doesn’t fit the constitutional structure that regulates the balance of power between the states and the feds. So they brought this lawsuit. It took them up and down the federal courts three times to finally get to the Supreme Court and last year under a doctrine known as the Anti-Commandeering Doctrine, the Supreme Court decided PAPSA was, in fact, unconstitutional, head-to-toe. Opened up the floodgates for every state now to reconsider and perhaps finally introduce sports wagering. – Anti-commandeering. – Nice. Pound out. – Too new? – Yes. – Basically, under the 10th amendment, the court felled. The federal government could not commandeer, could not direct state legislation. And that’s the way the court read it with two dissents and one partial dissent. You were in the courtroom that day, weren’t you, Rick, I think I heard. – I was, along with others. – Yes. I mean, it’s one of those situations, those of you who are going to be litigators, you lose, you lose, you lose, district judge, panel of the third circuit, the third circuit en Banc. Basically, enforced this statute. – [Rick] Yeah.

– Supreme Court of the United States, basically six and a half to two and a half. – [Rick] Right. – Threw it out. – We have more judges than them, if you total them all up. If you add all of them over the course of five years, ultimately, we had more. Doesn’t matter. – Doesn’t matter. – When you lose at the end, it only matters, yeah, yeah. – Yeah. So the one anecdote I told earlier today was the interesting thing about the case, I was asked after the argument by someone who wasn’t there, what was discussed about sports gambling? And what the justices said about sports gambling. And the answer was, nothing. Because the entire argument was about a very abstruse doctrine of constitutional law called anti-commandeering, and there were three cases, or four, that have ever been cited by the Supreme Court that relate to anti-commandeering, one of which has to do with bearer bonds, and so my response was to the person who asked, I said, the justices said nothing about sports gambling, but if you wanna hear about bearer bonds, I can tell you all about that, because they talked a lot about bearer bonds. – Did you predict the result? – I predicted the result, it’s one of those ones where you can reasonably read where the justices were coming out, they were pretty, they telegraphed their views fairly directly, and so if I had placed a wager, I would have won. – Can I ask Rick something? – Yeah. – So the NBA was one of the defenders of PASPA, right? – Yes. – They were one of the parties that wanted to preserve a federal regime in which states could not legalize sports gambling. But about a year or so prior to this outcome, maybe it was two years, your commissioner took a very different stance. And yet you still pursued the case. I always wondered about that. – Well, I would say a couple things. First of all, we had been in the litigation for quite a while, as was stated, it went up and down several times, from the district court to the third circuit, and we didn’t feel like it was appropriate to drop out of a lawsuit at a later point. Secondly, our view was and remains that the way to deal with sports gambling is on a uniform, national basis through a federal law that regulates it so that, at least from the vantage point of our league, and I think other leagues, and maybe even the NCAA, that we’re focused on one set of rules and regulations and it can be the same everywhere.