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Supreme Court ruling opens the door for legalized sports betting nationwide

Supreme Court ruling opens the door for legalized sports betting nationwide
Fans place bets ahead of the running of the Black-Eyed Susan horse race at Pimlico race course in Baltimore. (Patrick Semansky / Associated Press)

The Supreme Court on Monday cleared the way for an explosion in legalized sports betting across the nation, striking down a federal law that told states they may not allow wagering on professional and college games.

Invoking the principle of states' rights, the justices, by a 6-3 vote, said the Constitution protects the independence of the states and denies Congress "the power to issue direct orders" to them.

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The ruling in favor of New Jersey has the potential to transform how Americans bet on sports. Gaming industry experts estimate that $150 billion a year is spent on sports betting but only about 3% is wagered legally, mostly in Las Vegas.

Gaming experts predict most states, including California, will move toward legalizing sports betting, eager for a new source of revenue. And the major pro-sports leagues — including the NFL, NBA, NHL and Major League Baseball, which have opposed wagering — are expected to negotiate for a share of that revenue.

Monday's opinion may also prove significant on an entirely different front. It bolsters California and other states that are battling the Trump administration over immigration, "sanctuary cities" and recreational marijuana. At issue in these disputes is whether California and liberal-leaning states may refuse to cooperate with federal efforts to enforce federal laws on immigration or marijuana.

In upholding New Jersey's bid to offer sports betting, the court, led by its conservatives, gave a powerful endorsement to the "anti-commandeering" principle. The Constitution "did not abolish the sovereign powers of the states," said Justice Samuel A. Alito Jr., writing for the majority. "Even where Congress has the authority under the Constitution to pass laws requiring or prohibiting certain acts," he said, it may not commandeer the states "by directly compelling them to enact or enforce a federal regulatory program."

A key factor in the gaming case was that the federal law did not make sports betting a federal crime, but instead directed states not to authorize such wagers.

Currently only Nevada offers legalized betting on sports, thanks to a grandfather provision in the Professional and Amateur Sports Protection Act of 1992.

New Jersey wanted to offer sports betting at its race tracks and its troubled Atlantic City casinos, and its lawyers argued that the federal government could not stand in the state's way. When Congress passed the 1992 law, it did not say federal agents would police sports betting. Instead, it said states may not "sponsor" or "authorize" such gaming.

New Jersey's first attempted in 2012 to circumvent the federal law by passing legislation that explicitly permitted sports betting. It was struck down by federal judges, and the Supreme Court declined to hear the matter.

Four years ago, the New Jersey legislature tried again with a different law that merely repealed its previous restrictions on the placing of sports wagers at race tracks and casinos.

The U.S. 3rd Circuit Court of Appeals in Philadelphia struck down this measure, too. The Supreme Court this time agreed to hear an appeal and upheld New Jersey's states' rights claim.

"Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own," said Alito, a New Jersey native, in Murphy vs. NCAA.

Joining Alito, Chief Justice John G. Roberts Jr. and Justices Anthony M. Kennedy, Clarence Thomas, Elena Kagan and Neil M. Gorsuch agreed that the 10th Amendment shields states from being required to enforce a federal law.

Monday's ruling does not legalize sports betting in other states, but it permits states to follow New Jersey's lead.

In dissent, Justice Ruth Bader Ginsburg said the court had erred by using a "wrecking ball" to destroy the 1992 federal law. "Congress permissibly exercised its authority to regulate commerce by instructing the states and private parties to refrain from operating sports-gambling schemes," she wrote. Justice Sonia Sotomayor agreed, and Justice Stephen G. Breyer agreed in part with her dissent.

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The American Gaming Assn. called the decision "a victory for the millions of Americans who seek to bet on sports in a safe and regulated manner. Today's ruling makes it possible for states and sovereign tribes to give Americans what they want: an open, transparent and responsible market for sports betting."

Leaders of pro leagues reacted with caution and suggested Congress craft a law for the nation.

"The NFL's long-standing and unwavering commitment to protecting the integrity of our game remains absolute. Congress has long recognized the potential harms posed by sports betting to the integrity of sporting contests and the public confidence in these events. Given that history, we intend to call on Congress again, this time to enact a core regulatory framework for legalized sports betting," the football league said in a statement.

NBA Commissioner Adam Silver agreed. "We remain in favor of a federal framework that would provide a uniform approach to sports gambling in states that choose to permit it, but we will remain active in ongoing discussions with state legislatures," he said.

Tony Clark, executive director of the Major League Baseball Players Assn., called the decision "monumental, with far-reaching implications for baseball players and the game we love." In its statement, Major League Baseball said its "most important priority is protecting the integrity of our games. We will continue to support legislation that creates air-tight coordination and partnerships between the state, casino operators and the governing bodies in sport toward that goal."

The breadth of the Supreme Court's decision surprised some who had followed the case.

Chuck Baker, a sports industry lawyer for the legal firm O'Melveny, said the decision "turned the world of sports gambling into not only the Wild Wild West, but the Wild Wild North, South and East as well. That's because the decision didn't just allow New Jersey to go forward with sports betting. Instead the court struck down the entire federal framework prohibiting legalized gambling in sports." He said Connecticut, Pennsylvania, New York, West Virginia and Mississippi have already enacted laws to get ready for legalized sports gambling.

In California, voters may get to decide whether the state will license sports betting.

Assemblyman Adam Gray (D-Merced) said Monday he would pursue a state constitutional amendment on the issue. "The decision by the Supreme Court affirms that the choice to legalize sports wagering is one for the states to make for themselves. The ball is in our court," Gray said in a statement. "The voters of California will now have to make a decision whether or not to authorize sports wagering."

Gray introduced a bill last year to put the question on the ballot. It needs a two-thirds approval from the Legislature. Then, it would need a simple majority vote in November.

Since 2012, Gray and other legislators have tried four times to allow sports betting in the state, but none of the bills reached the governor's desk.

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Sen. Bill Dodd (D-Napa), who chairs the Senate committee overseeing gambling laws, said Monday he is open to legalization but will "closely scrutinize" any proposals. "There may be a good deal of benefit to be able to regulate and tax something that is already going on anyway," Dodd said.

Although some Native American tribes in California have been wary in the past of internet gambling proposals as potential competition, the initial response Monday was positive from Mark Macarro, chairman of the Pechanga Band of Luiseño Indians, which operates a casino in Temecula.

"We view sports betting as a potential amenity that would complement our numerous offerings," Macarro said. "Now that the court has ruled, we look forward to engaging in a conversation with fellow tribal leaders, policymakers, and industry stakeholders to see if there is a path forward for sports betting in California."

Steve Stallings, chairman of the California Nations Indian Gaming Assn., which represents 35 tribal governments, urged caution.

"We would advise the state to move slowly and cautiously and examine all angles as it relates to sports betting," Stallings said. "We also want to make very clear that California voters have, on numerous occasions, confirmed the exclusive right of California tribal governments to operate casino-style games. Legalization of sports betting should not become a back-door way to infringe upon that exclusivity."

Times Staff Writer Patrick McGreevy in Sacramento contributed to this story.

On Twitter: DavidGSavage

UPDATES:

2:25 p.m.: This article was updated with reaction from sports leagues and California lawmakers.

10:55 a.m.: This article was updated throughout with additional reaction and analysis.

8:20 a.m.: This article was updated with additional details about the decision.

This article was originally published at 7:15 a.m.

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