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The End of the Road For New Jersey’s Sports Betting Solution

By Will Green

It was an inauspicious scene Wednesday inside the William J. Green Federal Building, an area of official Third Circuit legal proceedings whose dedication thankfully has no relation to the author of this piece. After the beating around of renowned litigator and regrettably coiffed Ted Olson like a pinata by an en banc panel of 12 sardonic federal appellate court justices, the writer wishes more than just his middle initial separated him from the legacy of the bench where New Jersey’s sports wagering dream likely suffered a lethal quantity of cuts—the amount felt as if it was in the symbolically pestering thousands — and then was left to bleed out gradually between now and sometime in early summer, when a ruling comes down.

Former U.S. Solicitors General and litigant adversaries in the Third Circuit’s New Jersey sports wagering en banc hearing, Paul Clement and Ted Olson

What broke out in Philadelphia was no normal Third Circuit proceeding. It was a war of semantics between two heavyweights, two former U.S. Solicitors General, both of whom have logged significant minutes in front of the Supreme Court, never mind this circuit business. The heavy breathing and accelerated pulses of the esquires in attendance made it clear that, to the legal community, watching these two spar in person is akin to an NFL fan going to a public park and stumbling on a seven-man scrimmage with Peyton Manning and Tom Brady captaining either side.

The air was abuzz with palpable sweat and the jittery energy that accompanies high stakes. Necks strained to see what mostly amounted up at their respective tables to be the back of Olson’s and his nemesis Paul Clement’s heads. The former sported sort of a sideways duck-flap that appeared to have been neglected entirely, while the latter was Bryl-ed down, two decades younger and very K Street, which not coincidentally is just three letters away from Georgetown Law School where he teaches.

Flacks enlisted those in attendance to read their sports gambling studies, as if anyone present needed convincing of their findings. Anticipatory law students, crammed obligingly into the worst seats in the house along the back rows, tittered conspiratorially to one another. Gadflies and opportunists approached the bench to take photos with the litigators before the trial began. One lawyer breathlessly live-tweeted the entire ordeal using just two fingers, making constant, stentorian percussions, like a mouse hammering into a wall, earning the silent disapproval of a 300-pound bailiff.

Philadelphia’s James A. Byrne Courthouse, adjoined with the William J. Green Federal Building, where the Third Circuit Court of Appeals hearing took place

A local reporter–who in spite of his own industry’s autophagy has been employed for three decades at the same inky daily–lent unsolicited insight to the extramarital statuses of more than one justice. A row of conspicuous, round individuals in pinstripe suits who looked as if they had stepped out of central casting for the role of “Mob Attorney No. 3” sat in the back of the room and said nothing to one another or anyone else the entire time. Clement spoke on behalf of the four major sports leagues and the NCAA, which abhor the idea of state-sanctioned, unregulated, single-game sports betting. At one point, when he unflatteringly referred to the largest legal sports book operator in the United States, the CEO of the company merely shifted his posture a feat seats away in the gallery and smiled with his palms out like a father does at a rambunctious child, as if to say, “well, at least we’re part of the discussion!”

This was round three or four, depending on where you pick up the timeline, of the herculean effort by an individual state to take a wire cutter and some duct tape to the Supremacy Clause and tip toe around federal law: specifically, a nasty string of words dating back to 1992 called the Professional and Amateur Sports Protection Act, that gave any state that wanted to 12 months to opt into its framework and legalize sports betting. Only Nevada, Montana, Oregon and Delaware opted in. The other 46 either snoozed at the wheel, or, in New Jersey’s sorry case, Democrat U.S. Senator Bill Bradley (who also architected PASPA to begin with) wielded power in Trenton during an election year to stall the votes needed to opt in, and more or less bled out the clock. We all know which one of the four states that did opt in went whole hog. Despite his best efforts, the author is assured one can engage in no more true, single-game sports wagering in Montana or Oregon than they can legal heroin.

Knowing he has to do something about this once and for all, Olson—New Jersey chief counsel, former gay marriage crusader and George W. Bush appointee — spoke kindly and avuncular, and as smart people reminded me unprompted, with undeniable brilliance, hanging his hopes and really the wagering hopes of an entire country, on the 10th Amendment.

But we’re getting ahead of ourselves. All we’re really supposed to be asking at this point is what we’ve already been asking for 24 years after a small but devoted clan of degenerates woke up and realized most everyone had missed the boat: Will Americans be able to bet legally on single-game sports anywhere outside of Nevada state lines?

We still don’t know the answer, but it doesn’t look good.

New Jersey state senator Ray Lesniak, left, fighting for the rights of bears, next to a bear-proof garbage can occupied by an inflatable Chris Christie doll

A kind-hearted, flamboyant opportunist with a gravelly voice named Ray Lesniak disagrees. He is also a New Jersey state senator and, along with the state’s governor, Chris Christie, the reason why this whole boondoggle exists. In true New Jersey fashion, the two are both sworn enemies and unlikely allies. Christie did not appear at the trial. Perhaps he was too busy cleaning off the scythe that he disemboweled GOP establishment candidate Marco Rubio with at a recent debate just hours before he pulled the rip cord on his own White House aspirations.

Lesniak, on the other hand, wouldn’t have missed this show for the world. He was one of those fans queueing to get a selfie with the litigators. Afterward, he demonstrated enthusiastically to the author, some 40 years his junior, how to use Facebook on a mobile device. He showed the author photos of endangered animals he’d helped pass legislation to help save, before uploading a photo of himself and a mid-blink Olson with the self-satisfied zeal of a Penn sorority girl mid-date party. Then, addressing a row of reporters: “What would you fellas write about if it wasn’t for me, huh?”

Sen. Lesniak posing with Olson prior to oral arguments Wednesday

Well, possibly a law that stood up in Federal court. To the senator’s credit, we were supposed to be writing about a coherent effort to get rid of the Federal law that’s making things so difficult in the first place, instead of a PR-driven attempt from the state level to circumvent that law and resuscitate the limp, wet corpse of Atlantic City. In 2009, Lesniak sued to undo PASPA. Christie decided not to intervene in the efforts because the legal hurdles were too steep. A judge threw out the suit in 2011 saying that Lesniak was putting the cart before the horse because, as the Bergen County Record notes, there needed to be a conflicting law permitting gambling in the state in the first place.

And so New Jersey overwhelmingly passed a bill that allowed sports wagering, even though it had no chance of actually being put into effect in the shadow of PASPA. A message was being sent, though, much like the one other states including neighboring Pennsylvania are finally getting around to sending here in 2016. A group fueled by economic desperation, a pre-ingrained betting culture, a history with the mafia, a penchant for free will and a healthy amount of sleaze was banding together to say, “this is a socio-economic activity we should have the right to engage in, costs be damned.” Sports books flocked like moths to the light, trumpeting the ethics of bringing the multi-billion dollar world of illegal sports betting into the open, regulating it and making it safe (and also getting a nice chunk of new business).

Christie signed the 2012 bill into law and blustered that if anyone wanted to stop him they could just go ahead and try. The leagues stopped him eight months later. Round one of the Federal lawsuits wrapped up in 2013, almost exactly three years prior to Wednesday’s hearing, with a District Court judge siding with the leagues. And efforts by New Jersey’s U.S. Senators and Representatives to advance new sports betting legislation in D.C. died an anonymous death in committee. This would establish the beginning of a pattern: New Jersey makes a move to circuitously allow for sports betting, then the leagues, led by the draconian efforts of the NFL and NCAA, fire back with money, righteousness, hypocrisy and Federal law on their side, and win. In 2013, the same Third Circuit court upheld the District Court ruling 2–1.

New Jersey Gov. Chris Christie rearing up to throw a two-seam fastball

Lesniak authored a 2014 law that seized on wording in that Third Circuit ruling that conceded it was OK for the state to simply repeal existing sports gambling laws. It just couldn’t demarcate and license specific sports books, nor point to them with a big red arrow so that every Jimmy and Tony and Ricco could make their way to them before Eagles games. This 2014 law, also easily passed, was what was being disputed in the court room Wednesday. It got hashed out first in 2015, when the same Third Circuit ruled 2–1 again against it.

But a squinting, grey-haired justice named Julio Fuentes did a strange thing. He ruled against New Jersey in 2013, and then ruled for New Jersey last year when the Third Circuit heard New Jersey’s case again. He wasn’t convinced a partial repeal of its gaming laws resulted in the full-on authorization that PASPA outlawed and that his fellow panelists, the wife of former Pennsylvania Governor Ed Rendell, and the sister of Donald Trump, believed it did. Fuentes’ flip-flop is almost surely why the case was heard in an exceedingly rare (< 1% of all appeals) en banc panel, which included 12 judges from the circuit, with one, the Trump sister, joining via Skype audio, and another presiding digitally, floating in front of those assembled on a television screen from an undisclosed location.

New Jersey’s best shot at the trial wasn’t the tired semantic argument that repealing betting laws was not the same thing as authorizing sports betting. Instead, Olson was at his best when he relied on the anti-commandeering issue at play: If the state is not being allowed to simply repeal its laws, then it has to keep those laws on the books. If it has to keep those laws on the books, then it has to enforce them. And if it has to enforce laws it doesn’t want, then that’s the federal government commandeering a state to use its resources, like police forces or gaming authorities, against its own will. And that constitutes a clear 10th Amendment violation.

This argument seemed to gain traction with a minority of the 12, including Justices Krause, Jordan and to an extent Ambro, who served as a sort of master of ceremonies for the proceedings. He deftly interjected with occasional jokes to lighten the mood (when an attorney for the co-defendant New Jersey Thoroughbred Horseman’s Association argued after Olson and said the law would not result in “the wild west of sports betting,” Ambro quick rejoined, “the wild east, then?” to much laughter).

From left to right: Hillary Clinton, Third Circuit judge Judge Marjorie O. Rendell, former Pennsylvania Governor Ed Rendell

Ambro’s comedic relief was too late to save New Jersey’s hide, though. Simply put, it was not Theodore Olson’s finest arguing hour. He seemed to trip over his own deliberate manner of speaking, and was repeatedly cut off by judges in mid-response to a question asked by a preceding judge. Justice Fisher, a Bush II appointee, got particularly chippy, wearing a shit-giving grin during an insistent line of skeptical questioning about how allowing for betting isn’t authorizing betting. Justice Hardiman was a wolf in sheep’s clothing, his calm demeanor and sidelong glances masking a similar approach to Fisher. And Rendell, a Clinton darling and a dead ringer from 60 feet back for the actress Jean Smart, pursed her lips and narrowed her eyes most of the time Olson talked as if she was in the process of tasting something sour.

The leagues’ best shot, which has been successful over the past several years, is emphasizing that no matter how New Jersey finesses the words of its law, no matter how brilliantly Olson obfuscates, that the result of the state’s law is a de facto sanctioned activity that federal law prohibits, and therefore it’s implicitly authorizing gambling even if it doesn’t say it is. The judges bought this argument in previous trials and bought it again Wednesday. Rendell looked when Clement spoke as would a cat being appropriately petted. The smile of Fisher, Clement’s fellow Hoya, took on a less biting mien. Even friendly Fuentes wrote in his first 2013 ruling against New Jersey that, “It is not our place to usurp Congress’ role simply because PASPA may have become an unpopular law.”

One might’ve suggested that Olson counter with the idea that those present weren’t there to discuss whether New Jersey’s law disrupts the intent of PASPA, but rather, disrupts the letter of PASPA. But he did not.

Judge Thomas H. Hardiman

Another alarm-bell weakness of Clement’s argument exposed record new levels of NFL-driven hypocrisy. A Hardiman question at the end of Clement’s allotted time might have been the most important of the entire hearing: If two friends wagered on sports privately between one another, would that violate PASPA? Not only did Clement say it would not, but he added unprompted that the state could decriminalize wagering between those two acquaintances at a threshold of under $1,000. This differed from remarks he made in the previous Third Circuit trial, in which his limit was $100. Few said anything about this after the hearing, but legislators would be wise to latch on to this in any further anti-PASPA efforts going forward, and attempt to ascertain what the moral difference is between two friends putting a dime on the Broncos to win the Super Bowl versus one friend doing the same thing at a casino. To that end, Clement mentioned earlier in the morning’s proceedings that PASPA doesn’t want to prohibit friendly side bets. It just wants to prohibit commercial wagering: As if PASPA was some strange anti-business advocate picketing outside a Chamber of Commerce, and not a vehicle for Nevada to chokehold its monopoly and for the leagues to prevent everyone else from profiting legally off of their entertainment product.

Clement did do an excellent job of seizing on the downfall of the 2014 Lesniak law: Demarcating specifically that betting may take place at certain racetracks. Even the most ardent degenerates can see that the state knows it’s trying to authorize sports betting, and that it just doesn’t want to call it that. It’s bigger downfall is engaging in a seven-year war over semantics instead of continuing on the highly difficult but highly important path it started on: getting PASPA amended or repealed. (Similarly to New Jersey’s lawyers, lawyers in the daily fantasy sports space have raked in millions arguing over what proportion of chance (51%? 24%? 99%?) their games constitute, and what proportion of luck their games constitute, as if luck is precisely quantifiable to a room full of former high school polemics champions whose entire profession is based on presenting the most convenient version of the truth). That’s because, after seven years and millions of dollars spent litigating, nothing has changed. New Jersey is out of appeals, out of Third Circuit goodwill, and after a decisive ruling in this comes down some time in the summer of 2016 against the state, it will have almost no shot of being heard by the U.S. Supreme Court.

After the trial, Lesniak posted up outside the doors and welcomed a group of reporters toward him with open arms. He telegraphed this entire thing—this entire Federal solution, this final solution, the one the NBA has already called for — all the way back in 2009, but took the long way home instead of sticking with the more difficult but more direct route.

“I think we’re headed to federal regulation, and that’s O.K.,” he said. “Any state that wants wagering can have it. New Jersey is happy with that. There’s plenty of action to go around.”

The sports wagering hopes of those around the country resting on New Jersey’s shoulders isn’t exaggeration. While any ruling for New Jersey would affect New Jersey in name, a Third Circuit decision would create a binding precedent for its other states, Pennsylvania and Delaware, which would likely seize the moment and pass the lucrative sports betting bills that both states have in the works. If three states then offered legal sports betting, after Nevada got done cleaning up the excrement around its ankles it would find itself in a 49 against 1 war, with other cash-poor states in the less sententious jurisdictions of the country being too tempted not to follow suit. Pennsylvania also recently passed a resolution more or less advocating for PASPA’s abolishment. Just one state doing this is harmless, in the sense that a deranged homeless man yelling on the street by himself is harmless. But if 49 homeless men did it en masse in a crowded area where everyone’s watching, people would go berserk. Something would have to be done.

And indeed, that is the very problem. Something must be done or else everything in America’s deeply flawed, hypocritical, criminalized sports wagering construct will remain the same.

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