Is Sports Betting Legal Now? Understanding Murphy v. NCAA

The Supreme Court of the United States decided Murphy v. NCAA today, and the headlines suggest that the opinion has rendered sports betting legal nationwide. The reality is a little more complicated than that.

Murphy. To understand Murphy, one must understand the federal Professional and Amateur Sports Protection Act (PAPSA), 28 U.S.C. § 3701 et seq. PAPSA was enacted in 1992. It provides in part that no state may “sponsor, operate, advertise, promote, license, or authorize . . . a . . . betting, gambling, or wagering scheme based, directly or indirectly . . . on one or more competitive games in which amateur or professional athletes participate.” 28 U.S.C. § 3702. In other words, while it is not a federal crime to bet on sports, it is unlawful for a state to “authorize” sports betting. And if a state does so anyhow, the federal government or certain sports associations may seek an injunction. 28 U.S.C. § 3702. The law was drafted to exclude states in which sports betting was already allowed, such as Nevada. See 28 U.S.C. § 3704.

Since PAPSA was adopted, several states have decided that they would like to allow sports betting, in part because taxing sports betting is a potential source of revenue. One of those states is New Jersey. Murphy is, in essence, a lawsuit by New Jersey challenging the constitutionality of PAPSA.

New Jersey’s argument is that while perhaps the federal government could regulate or prohibit sports gambling directly, it can’t tell the states that they need to forbid sports gambling. Doing so, New Jersey contends, is a violation of the anticommandeering principle of Printz v. United States, 521 U.S. 898 (1997) (ruling that the federal government couldn’t compel local law enforcement agencies to conduct background checks that were required by the federal Brady Handgun Violence Prevention Act), which is rooted in the Tenth Amendment to the Constitution.

The federal government’s response is that PAPSA isn’t an affirmative command to the states to do something, like the command to conduct background checks in Printz. To the contrary, it prohibits the states from doing something — specifically, it bars them from reversing their prohibitions on sports betting.

The Supreme Court sided with New Jersey, rejecting the distinction between ordering a state to do something and ordering a state not to do something, and stating:

[PAPSA] violates the anticommandeering rule. That provision unequivocally dictates what a state legislature may and may not do. . . . [S]tate legislatures are put under the direct control of Congress. It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine.

The immediate effect of Murphy. New Jersey is excited and is making plans to implement legal sports betting, perhaps in time for football season this fall. Some estimates suggest that a majority of states would like to allow sports betting and to capture a portion of the $100 billion or more that is wagered each year outside of legal channels. But before you start eyeing betting lines and pulling together some cash, consider the following.

The federal government could make sports betting illegal. I haven’t seen much discussion of this point, but the Court strongly suggested that Congress could prohibit sports betting:

The legalization of sports gambling requires an important policy choice, but the choice is not ours to make. Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own.

I suppose that Congress’s power under the Commerce Clause would support such a prohibition, and there may be other pertinent provisions in the Constitution as well. Still, while Congress could act, I doubt that it will. The opposition of the major sports leagues to legal sports betting has begin to soften. More importantly, the Washington Post reports here that a majority of Americans now support legal sports betting.

Sports betting remains illegal in North Carolina. While a national ban on sports betting may be unlikely, it is worth remembering that G.S. 14-292 makes it a crime in North Carolina to bet on “any game of chance.” And while sports themselves are not necessarily games of chance, the courts have ruled that the law applies to betting on sports, as the betting is fundamentally a chance activity. State v. Brown, 221 N.C. 301 (1942) (holding that betting on horse racing is gambling).

In short, the invalidation of PAPSA opens the door to a change in North Carolina law, but unless and until the General Assembly actually changes the law, sports betting remains illegal. ESPN categorizes North Carolina as a state with no current movement towards legalizing sports betting. But the Charlotte Observer predicts that “most [states eventually] will allow [sports betting], in part because everyone else will be doing it, but also because it’s harder to build a moral case against gambling when you already offer a state-sanctioned form of it with a lottery.”

Conclusion. It wouldn’t surprise me to see North Carolina allow sports betting in the future. If West Virginia allows it — as it apparently plans to do — Virginia may allow it in order to prevent activity and revenue from moving to West Virginia. At that point, we might see a repeat of the debate about the lottery, in which the clinching argument was “you might not like the lottery, but people will go to Virginia to buy lottery tickets whether you like it or not, and we might as well capture that revenue for our schools.”

As always, stay tuned for further developments.