Broader Implications of the Supreme Court's Sports Gambling Decision

Commentators are right to suggest that Murphy v. NCAA will help sanctuary cities, but wrong to claim it is like to undermine federal laws restricting state taxes.


Monday's Supreme Court decision striking down the federal Professional and Amateur Sports Protection Act, which prohibited state laws that "authorize" sports gambling, has generated a lot of commentary arguing that it has important implications for other areas of law. Legal scholar Garrett Epps and Slate commentator Mark Joseph Stern see Murphy v. NCAA as a boost for sanctuary cities battling the Trump administration's attempts to force them to assist federal efforts to deport undocumented immigrants. Their positive reaction is part of a more general trend under which many liberals have taken a more favorable view of constitutional federalism in the Trump era. It isn't every day that Stern praises a decision written by conservative Justice Samuel Alito as a "fantastic opinion" that "shows federalism can be good for liberals." I too have argued that Murphy is good news for sanctuary cities. But Epps' analysis, especially, makes the case in greater detail.

Prominent legal scholars Brian Galle (Georgetown) and Daniel Hemel (University of Chicago) are far less enthusiastic. They worry that the logic of Murphy requires invalidation of a variety of federal laws restricting state taxes. Their concerns are to a large extent shared by Michael Dorf of Cornell.

Epps and Stern are largely correct, though Murphy boosts sanctuary cities far more on some issue than others. By contrast, the Galle-Hemel interpretation of Murphy strikes me as unsound.

I. How Murphy Helps Sanctuary Cities

The sanctuary cities cases currently ongoing in lower federal courts involve a wide range of different issues. Some of them are far removed from Murphy, most notably some of the issues raised by the Justice Department's lawsuit against California, which challenges California's laws requiring inspections of immigrant detention facilities and restricting employer cooperation with ICE raids. Other issues raised in the sanctuary cases are much more closely linked to Murphy's focus on federal "commandeering" of state and local governments, which is barred by the Tenth Amendment, as interpreted by the Court in Murphy and previous cases. Most notably, both the California lawsuit and several cases brought by cities involve challenges to the constitutionality of 8 USC Section 1373, a federal law that bars states and localities from instructing their employees to withhold information from federal immigration enforcement officials about "the citizenship or immigration status, lawful or unlawful, of any individual."

Like PASPA, Section 1373 is an attempt to circumvent the anti-commandeering rule's strictures against federal mandates coercing states into helping to enforce federal law or enact a state law. Instead of directly ordering states to ban sports gambling, PASPA forbids states from legalizing it in ways that "sponsor, operate, advertise, promote, license, or authorize" the activity under state law. But the Supreme Court saw through this subterfuge and struck down PASPA, because it violates the anti-commandeering rule "put[ting] state legislatures under the control of Congress" and issu[es] "direct orders to state legislatures." Section 1373 suffers from much the same flaw. Instead of directly ordering states and localities to divulge information to federal officials, it merely bars them from issuing orders to their subordinates forbidding such disclosure. But the practical effect is much the same. Like PASPA, Section 1373 qualifies as an "order" to state and local officials, and—like PASPA—it undermines states' control over their governmental machinery and partially transfers it to the federal government. States and localities are prevented from directing their law enforcement officials to pursue state and local priorities rather than assist federal immigration enforcers. As Epps puts it, "the federal government can't order the states to dance to its tune; according to Murphy, it can't tell the states they may not decide not to dance to the federal tune either. No double-negative tricks now!" That rule undercuts Section 1373 in much the same way as it doomed PASPA. Hemel also argues that Murphy strengthens the case against Section 1373.

In my view, Section 1373 was unconstitutional even under pre-Murphy Supreme Court precedent. But the issue is a difficult one that has divided lower courts. Murphy could help resolve the division in favor of the view that Section 1373 should be invalidated.

Murphy is not directly relevant to the main issue at stake in several sanctuary cases: whether the Trump administration may attach conditions to federal grants to states and localities that were not specifically authorized by Congress, and that in some instance implicate a wide range of federal funds that have little or no connection to immigration enforcement. But it still helps the sanctuary jurisdictions indirectly, by emphasizing the Supreme Court's commitment to enforcing limits on federal coercion of states and localities. The sanctuary cities have already won a long string of victories on these issues, so they may not need much additional assistance from the Supreme Court. But Murphy still can help at the margin.

II. Why Murphy Probably Doesn't Threaten Federal Laws Restricting State Taxes

While Murphy is likely to give a boost to sanctuary cities, I doubt that it will undermine federal laws restricting state taxes. The Galle-Hemel argument that it does threaten them focuses on language in the majority opinion emphasizing "that Congress cannot issue direct orders to state legislatures, " that it "may not order a state legislature to refrain from enacting a law," and that it does not matter whether the federal restriction in question "commanded 'affirmative' action as opposed to imposing a prohibition." Taken in isolation, this language might indeed threaten federal preemption of state taxes. A federal law restricting state taxes is a kind of "order" to state legislature, one that imposes a "prohibition" on them. But this language is qualified by Justice Alito's discussion of the difference between commandeering (which is forbidden) and federal preemption of state laws that conflict with federal laws (which is not). Alito is careful to explain that what distinguishes the latter from the former is that preemption involves situations where "Congress enacts a law that imposes restrictions or confers rights on private actors; a state law confers rights or imposes restrictions that conflict with the federal law; and therefore the federal law takes precedence and the state law is preempted." That contrasts with the "authorization" provision of PASPA, which—as Alito notes—does not create any rights or restrictions for private actors, but simply issues orders to state governments.

Federal laws restricting state taxes fall squarely within Alito's explanation of preemption. They "confer" on private actors the right to be free of state taxes of some particular type. In most cases, they also operate in tandem with federal laws that "impose restrictions" on those very same actors, by subjecting them to federal taxation. They are thus very similar to federal laws that regulate some private activity, while simultaneously forbidding states from imposing regulations that go beyond the federal ones. Alito gives the example of "federal registration provisions [that] not only impose federal registration obligations on aliens but also confer a federal right to be free from any other registration requirements." Federal laws that tax a particular type of private income or activity while barring states from taxing it further work much the same way. This reasoning also undercuts Brian Galle's claim that Murphy threatens federal restrictions on state regulation, as well as state taxation.

More generally, federal restrictions on state taxes—like federal restrictions on state regulations—do not undermine state control over the machinery and resources of state and local government. Unlike PASPA and Section 1373, they do not commandeer states and localities to use their resources for federal purposes that state governments oppose.

Hemel claims that "any law that says 'states cannot authorize X' can be redescribed as a law that says 'private actors are prohibited from doing X notwithstanding any state law that authorizes them,'" and thus suggests that reasoning like the above would justify PASPA, as well. But a federal law banning state "authorization" of private activity actually is not equivalent to a federal law banning those activities directly. As all sides in the Murphy litigation conceded, a state law that completely removed all restrictions on sports gambling would not have violated PASPA. A violation only existed because New Jersey's legalization statute restricted sports gambling in various ways, such as by confining it to particular locations. By contrast, categorical state legalization would not immunize sports gambling from a federal law that directly prohibited such activity.

If the Murphy ruling on commandeering really did doom federal restrictions on state taxes, I highly doubt it would have gotten the support of seven justices, ranging from conservatives like Clarence Thomas and Neil Gorsuch to liberals like Elena Kagan and Stephen Breyer. It is theoretically possible that all the justices accidentally endorsed such a conclusion without really meaning to do so. But the majority opinion's analysis of preemption likely forestalls any such unintended consequences.

The ultimate impact of Murphy will only become evident over time, as lower courts try to apply it and the Supreme Court (possibly) elaborates on it in future cases. But for the moment, I think it is far more likely to help sanctuary cities than to doom federal laws restricting state taxes.

UPDATE: NYU law professor Rick Hills has an insightful post in which he criticizes Daniel Hemel's argument along lines somewhat similar to my own critique. He also argues that Murphy may not undermine 8 USC Section 1373 because "[t]o the extent that [state and local] employees can assert section 1373 as a federal defense against state or local disciplinary action, section 1373 would seem to qualify as a federally conferred right falling squarely within Murphy's exception for preemption that incidentally sets aside state law."

I am skeptical that Section 1373 qualifies as a federal preemption statute that "confers rights on private actors" under Justice Alito's opinion. Section 1373 applies to state and local government employees acting in their official capacity. They are the very opposite of private actors. If Section 1373 does qualify as a conferral of individual rights and is thereby exempt from the anti-commandeering principle, the federal government would have the power to almost totally destroy state and local government control over their employees, simply by "conferring" on the latter exemptions from having to obey their superiors' instructions. I highly doubt that the Supreme Court majority meant to gut the anti-commandeering principle in this way. Certainly not in the very same opinion where they reiterated its importance as a fundamental principle of American federalism.

I am also not entirely convinced by Rick's argument that PASPA could have avoided unconstitutionality simply by creating "cause of action against a private party for engaging in some federally forbidden activity accompanied by a preemption clause barring any state law from authorizing that which federal law forbids." If "authorization" just means making an activity (in some cases) legal under state law, despite that activity being barred by federal law, forbidding such "authorization" it would still trigger the anti-commandeering rule, in my view. Certainly, that rule would be violated by a federal statute that straightforwardly ordered state governments to criminalize, say, marijuana possession, under their state laws, merely because such possession is a violation of federal law. Murphy makes clear that federal laws preventing state legalization of previously barred activities should be treated the same way as federal laws compelling states to ban the same activities in the first place.

UPDATE #2: Daniel Hemel responds to this post and Rick Hills' critique of his argument here. He asks the following hypothetical question:

Let's say that Congress passes a law that's essentially the reverse of PASPA (we'll call it APSAP). All APSAP says is that "no state shall pass any law regulating sports gambling"; it does not establish any federal regulatory regime for sports gambling. Would APSAP be constitutionally valid under Murphy?

I think not. Conceivably, APSAP could be rewritten to say that "everyone has a right to engage in sports gambling notwithstanding any state law to the contrary," and in that respect it might be interpreted as a law enacted by Congress that "confers rights on private actors." But the hypothetical APSAP says nothing about private actors, and it applies to private actors only insofar as it regulates state actors. The question under Murphy is whether APSAP is "best read" as a law "that regulates private actors." I leave it to the reader, but my own view is that APSAP would not so qualify.

I think this hypothetical law would indeed be permissible under Murphy. It's a law that "confers rights on private actors" because it gives them the right to be free of regulation of sports gambling. If, as Alito notes in his opinion, Congress is allowed to regulate activity X and then forbid state regulations that regulate X beyond what the federal regulations require, then it is also free to conclude that the level of federal regulation of that activity should be zero, and that states also can't regulate beyond that ceiling. The power to set a regulatory ceiling that applies to both federal and state regulation includes the power to set that ceiling at zero. It's true that APSAP does not explicitly mention private actors. But it clearly does give "confer rights" on them, and Justice Alito's opinion emphasizes that "it is a mistake to be confused by the way in which a preemption provision is phrased." And, if "APSAP" is permissible under Murphy, the same goes for the various real-world tax preemption laws Hemel lists. Obviously, this analysis presumes that the federal government has the power to regulate in-state sports gambling in the first place. If it does not, APSAP (like PASPA), would be unconstitutional, but not because it amounts to commandeering.

Hemel also suggests that federal preemption of tax laws should be abolished based on the three rationales for the anti-commandeering rule that Alito enumerates in his opinion: reducing states' ability to counter federal power, weakening political accountability, and making it harder for states to raise revenue for their operations. But just because commandeering should be banned for such reasons does not mean that every exercise of federal power that has similar effects must be banned. Other policies that have those effects may have greater countervailing benefits, and be more essential to the exercise of legitimate federal power. As discussed above, the real bottom line here is that federal preemption of state taxes, unlike commandeering, does not amount to a federal takeover of the machinery of state government.

UPDATE #3: Hemel responds still further here. His main point is that the laws Alito describes as valid preemption are ones that impose at least some federal regulation on on private parties, whereas tax preemption laws often do not. I think this argument ignores the fact that Alito emphasizes that a preemption law can "confer benefits" on private individuals, as well as impose burdens on them. A law that confers the benefit of zero taxation (or zero regulation) surely qualifies as such.

He also suggests that law preempting state taxes qualifies as a "federal takeover of the machinery of state government" because states that violate it must pay a refund to taxpayers. I don't think this argument works. By that standard, any law that requires states to compensate victims for violation (or in this case, return funds to taxpayers that were improperly seized) would be commandeering. Requiring compensation for violations is very different than requiring states to keep a law on the books or to help enforce federal law against private parties. The same goes for requiring return of private assets or funds that were illegally taken by the state government.

NEXT: Correcting Simkovic on the Scalia Law School

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  1. Federal laws restricting state taxes […] “confer” on private actors the right to be free of state taxes of some particular type.

    and, we are told, that is why they do not violate the principles of federalism. Does that mean the anti-sanctuary city legislation would be constitutional if it were phrased so as to grant state employees the right to be free of state regulations that prevent them from informing the feds about individuals’ immigration status?

    1. State employees doing their work are not private actors (as the article mentions). Their duties are specified by the state and restricted by their state and fed constitutions.

      This is supposed to be an allowable carrot and stick situation anyway. Let’s hold our breath for Congress to clearly specify large amounts to withhold to really clamp down on it!

      1. They’re private actors when they’re not on the clock. And the California law presumes to mandate that non-governmental employees equally clam up.

  2. But doesn’t this mean a clever congress can still effectively kill state legalization of sports gambling or marijuanna by passing a bill granting all citizens/companies an affirmative right to be free of state taxes on marijuana or gambling proceeds.

    I mean it would be very hard to convince any state to allow sports gambling establishments or marijuana dispensaries if not only could the states not recoup any extra expenses such establishments might impose on the state (greater police resources) but they couldn’t even collect income tax on the profits from those activities either. One could imagine that one could even extend the tax exemptions punitively in even more clever way.

    Surely robust federalism can’t allow the federal government to pull the two faced trick of trying to ban an activity outright and then granting citizens the right to do it free of state taxes so it costs too much for states to legalize.

  3. As for sanctuary cities or even states wouldn’t your interpretation allow congress to pass a law declaring illegal immigrants to be free of all state taxes (income, wage, property etc..) forcing sanctuary cities to make the hard choice between letting people who openly declare themselves to state/city authorities be illegal immigrants to avoid all taxes or bite the bullet and report them to the feds.

    The power to tax might be the power to destroy but the power to ban taxation surely has that power as well.

    1. Given the willingness of “sanctuary” jurisdictions to release known violent criminals, rather than see them deported, I wouldn’t wager that they’d blink at such consequences.

  4. I’m struck by Gerdes’ comment regarding federal taxation, because I believe taxation is a critical component of the sanctuary city argument.Taxes may be — but are not necessarily — monetary.

    Are state and local government employees subject to federal tax? Are state and local government employees subject to be called to serve on federal juries? Of course they are! State and local government employees are also subject to all other obligations — all other taxes — incumbent upon citizens of our nation. Likewise, state and local government employees, like all other citizens, must be afforded federal protection in many circumstances: absent such protection, a state or local government could merely order the nullification of all federal law.

    To paraphrase ancient writing, no provision of the Constitution was intended to interdict enforcement of those duties which individuals owe to the state, such as services in the army, militia, on the jury, etc. The great purpose in view was liberty under the protection of effective government, not the destruction of the latter by depriving it of essential powers.

    Every employee of every sanctuary city/state owes to me, a fellow citizen, the duty of protecting our national borders as we have defined them: I, through my elected representatives, both can punish those who fail in that duty and can protect those who make the attempt.

  5. I think it’s a bit of a stretch to characterize it as “commandeering” when the federal government acts against a state prohibiting people, including but not limited to its own employees, cooperating with federal law enforcement, even on their own time or property.

    “Commandeering” must involve requiring some action. Not merely prohibiting the state from punishing people for aiding the federal government in their private capacities.

  6. How would CA’s law work if ICE came in with a lawfully issued warrant/subpoena for information? Employees would be in a Catch-22 between violating CA State law and being in contempt of court.

    I’m also a bit interested in the potential 14th amendment violation by CA doing this. It’s pretty obvious they’re doing this to only shield non-citizens in an attempt to pre-empt federal law. Citizens receive no such protection.

    Although a chunk of this could be resolved if it were clearly established what areas the Federal government has coverage of and what areas the State has coverage of (10th amendment anyone?) and that just becuase one of the two has not passed a law on something does not mean the other gets to.

    1. “How would CA’s law work if ICE came in with a lawfully issued warrant/subpoena for information? ”

      IIRC, it permits them to comply with the warrant, but requires them to alert employees so that any illegals have a chance to escape.

      1. Then I can see that violating a gag order or interfering with a federal investigation. It’ll be interesting to watch when that happens.

        1. I’m curious about the Constitutionality of those gag orders. I’d love to know what Prof. Volokh has to say.

  7. But why doesn’t the hypothetical APSAP “confer benefits” (of unrestricted gambling) on private citizens? These distinctions are a large amount of malleable semantics.

  8. It is evident that Prof Somin has lost it. Seriously, arguing that a State can make/enforce laws (immigration) that the Constitution makes clear can only be made by Congress?

    1. Where did that get argued. It’s just that the feds are free to enforce whatever immigration laws Congress has, but they aren’t owed any assistance whatsoever from the states.

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