Don't gamble away federalism

Thanks in part to all the other blockbuster cases currently before the Supreme Court, Christie v. NCAA has not gotten nearly as much attention as it deserves. The immediate issue at stake is an effort by the NCAA and several professional sports leagues (including the NBA, NFL, NHL, and Major League Baseball) to block New Jersey's partial legalization of sports betting under state law. But the case has important broader implications that go far beyond sports and gambling.

If the NCAA and its supporters (including the Trump administration) prevail, the result could seriously undermine constitutional federalism. The Supreme Court should tackle this assault on federalism before it gets anywhere near the endzone. Gambling away constitutional limits on federal power in order to suppress sports betting is a terrible bet indeed.

The NCAA and other sports leagues contend that New Jersey's 2012 and 2014 laws partly legalizing sports betting are illegal because they violate the federal Professional and Amateur Sports Protection Act (PASPA), which mandates that states may not "sponsor, operate, advertise, promote, license, or authorize by law or compact" sports betting. New Jersey's legalization law, the leagues contend, qualifies as "authorization." In effect, PASPA requires New Jersey to continue to ban sports betting under state law, at least to some extent.

This restriction on state power clashes with Tenth Amendment, which the Supreme Court has long interpreted as banning "commandeering" of the states, in cases such as Printz v. United States (1997) and New York v. United States (1992). The federal government cannot require state officials to help enforce federal law, or force state legislatures to enact any legislation. It logically follows that federal law cannot compel New Jersey to continue to ban sports betting under its state law, even if that activity remains illegal under federal law.

To get out of this conundrum, the Third Circuit court of appeals lower court decision in favor of the NCAA ruled that the New Jersey law goes beyond mere legalization of sports betting and qualifies as "affirmative authorization" of it, because it "selectively remove[s] a prohibition on sports wagering in a manner that permissively channels wagering activity to particular locations or operators." Because New Jersey's reform did not legalize all sports betting, but merely some of it, the federal government can forbid it without violating the prohibition on commandeering.

The obvious problem with this reasoning is that nearly all laws that legalize a previously banned activity still continue to regulate or restrict it in various ways. When formerly "dry" jurisdictions legalize alcohol sales, they often restrict it to particular enterprises and locations, continue to ban sales to minors, and so on. The same goes for state laws legalizing marijuana, among other examples. Under the approach advocated by the NCAA and endorsed by the Third Circuit, the federal government can forbid states to legalize virtually any previously banned activity unless the do so categorically without any remaining restrictions.

The Third Circuit tries to avoid this obvious implication of their reasoning by suggesting that "not all partial repeals are created equal. For instance, a state's partial repeal of a sports wagering ban to allow de minimis wagers between friends and family would not have nearly the type of authorizing effect that we find in the 2014 Law." But this distinction makes little sense. A "partial repeal" that "allow[s] de minimis wagers between friends and family" still has the effect of "permissively channel[ing] wagering activity to particular locations or operators"; in this case channeling it to small-scale betting pools run by groups of friends or family. That's exactly what the court objects to in the case of the New Jersey legalization law. Perhaps the answer is that "channeling" is permissible so long as only a few small "operators" are allowed to engage in the formerly banned activity. But, in that event, state legalization is still largely forbidden whenever Congress chooses to block it.

The Third Circuit and the NCAA also claim that forbidding the New Jersey legalization law does not qualify as commandeering because it does not force the state to take any action. This argument is also weak. Forcing the state to continue to ban sports betting (except, perhaps, if it legalizes it without any limitation) surely qualifies as forcing the state to act. In Printz v. United States, the Supreme Court struck down a federal law that required state officials to perform background checks on gun buyers. Surely that federal law would still have been commandeering if it "merely" prevented states from ending any background check policies that they already had in place.

The implications of this case go far beyond the issue of sports betting. If the NCAA and its allies win, the federal government will be able to enact laws preventing from legalizing almost any activity they previously banned, except perhaps in cases where they do so without leaving any regulatory restrictions in place at all. That will potentially constrain state experimentation on issues as varied drug legalization, licensing reform, gun control, land use restrictions, environmental policy, and many, many others. It will thereby endanger the interstate policy diversity that we need more than ever in a time of deep partisan and ideological polarization.

Some may wonder why state law legalization matters if the activity in question is still banned by federal law— as most sports betting currently is, except in Nevada. But, often, the federal government cannot effectively enforce a federal ban if states refuse to cooperate. The feds generally have far fewer law enforcement resources than states and localities.

Moreover, state experimentation can sometimes create political momentum that eventually forces the federal government to change its own policies. To take an obvious current example, state-level legalization of marijuana in many states has made it harder for the federal government to continue to enforce the federal ban, and has helped generate support for federal legalization.

As the Third Circuit decision notes, PASPA already includes exemptions for some state-authorized sports betting operations that were already in place when the law was enacted. If more states legalize sports betting, Congress could be incentivized to increase the number of exceptions and perhaps eventually get the federal government out of this field altogether.

The Supreme Court could end this attempt at commandeering by either striking down the relevant section of PASPA or interpreting it narrowly to avoid possible constitutional problems. In several recent cases, the Court has bent over backwards to avoid interpreting federal laws in ways that might render them unconstitutional. Here, it could do so by ruling that partial legalization of sports betting does not qualify as "licensing" or "authorization" forbidden by PASPA. I personally would prefer a straightforward ruling that this part of PASPA is unconstitutional. But either approach is far better than a ruling in favor of the NCAA.

It is often claimed that the Supreme Court's anti-commandeering jurisprudence has no basis in the text and original meaning of the Constitution. But, as legal scholar Michael Rappaport showed in an important article, these decisions ha a basis in the Founding-era understanding of the word "state," which implied a sovereign authority that the federal government could not undercut by seizing control over the state's government apparatus. Freedom from commandeering is an important element of state sovereignty and a valuable constraint on federal power.

The Constitution does not give the federal government the power to prevent states from legalizing previously banned activities under those states' own laws. The legal umpires at the Supreme Court should not let the NCAA and the federal government change the rules of the federalism game.

UPDATE: For those interested, the SCOTUSblog website has a helpful page devoted to this case, with extensive material related to it, including a symposium thoughtful contributions by legal scholars and others.