Op-Ed | Can We Finally Get a Pass on PASPA?

27 March 2009
On March 23, the Interactive Media Entertainment & Gaming Association (Imega) filed a lawsuit in Federal District Court in Newark, N.J. The complaint? That the Professional and Amateur Sports Protection Act violates the constitutional rights of states and individuals alike. They have been joined by the thoroughbred and standardbred (trotters) associations of New Jersey, along with State Senator Lesniak. All the plaintiffs deserve the highest praise for their courage and resourcefulness -- not least because it’s an uphill fight.

Their central point -- that the act, known as PASPA, is completely and thoroughly unconstitutional -- is simply not in doubt. In the first place it is a federal intrusion into matters reserved for the states, and so violates the 10th Amendment. It violates the Commerce Clause and the Equal Protection Clause by placing unequal and arbitrary burdens on interstate commerce: Delaware, Montana, Nevada and Oregon all had “grandfather” waivers to carry on with their sportsbooks and sports-related betting. Everybody else, the Indian tribes included, was out of luck. Not because these four states were more moral or capable than the rest, but because it was clear they would fight for the revenue. This was, simply, the path of least resistance.

There is also the constitutional guarantee of due process and fair notice. Simply put, if the authorities wish to forbid a certain action, the thou-shalt-not must be stated in such terms that an ordinary, reasonable person can understand what must not be done. Also, as applicable, where, when, how, and with whom it must not be done. In this way everyone has a fair and open chance to avoid offense. To do otherwise (as when PASPA omits any definition of such terms as “game” “wagering: sports” or “racing”) violates the Fifth Amendment and exercises a forbidden "chilling effect" on free speech rights under the First Amendment.

The case ought to be a strong one. But whether Imega and friends will carry their point is another matter altogether. For in truth they are not arguing a matter of law, but shouting into the wind of superstition and prejudice -- a thankless task at any time, often futile and sometimes dangerous. Whether it squares with the Constitution or not, the working reality for the gaming industry, online and off, is that there is no such thing as a right to gamble. Even the Supreme Court, in the Edge Broadcasting case (see note 1), said that “Gambling implicates no constitutionally protected right; rather, it falls into a category of 'vice' activity that could be, and frequently has been, banned altogether." Which means that gambling has always been an ideal cheap target for politicians on the make, and for the vested interests who know how to use those politicians.

What is being exploited here is the inherent contradiction, the love-hate relationship between American sports and gambling. On the one hand, American society believes that: a) Sports are inherently virtuous because they provide healthy exercise and instill teamwork, competition, fair play and the quest for excellence in the youth of the nation, and b) Gambling is inherently evil, especially when calculating bookies corrupt the purity of Sport by paying once-virtuous athletes to throw games, shave points and dope horses. Therefore sports needs to be protected from gambling.

On the other hand, today’s sports powerhouses -- N.F.L., N.B.A., N.C.A.A. and so on -- owe much of their growth to the popularity that came from betting on them. Even President Obama has his pick for March Madness. And if he isn’t actually betting, tens of millions of Americans are. Almost $400 billion is bet in this country annually, mostly on sports and mostly illegally.

But, like the politicians, Big Sports finds that slamming gambling, I-gaming in particular, is a great distraction from genuine problems. Football players torturing their fighting dogs or getting shot at strip clubs? Baseball players shooting steroids until their bats grow muscles, too? Is it all becoming just about the money? Never mind, one good public slap at Wicked Gambling and all’s well.

PASPA, which became law in 1992, was just such a pious publicity stunt. Forbidding any other states or tribes to legalize sports bets, it was claimed, addressed a “national problem” of such scope that there was “a compelling reason for federal legislation” -- just what was providing the compulsion was never explained. Ironically, the foremost opponent of PASPA’s becoming law was . . . the United States Department of Justice!

In 1992, under the Clinton administration, the Justice Department's position was that PASPA amounted to a completely unjustified intrusion on states’ rights and the balance of power under the Constitution, inasmuch as it authorized the pro and amateur sports leagues themselves to bring civil actions against states that attempt to license sports betting. As the Imega suit also noted, this violates the state-sovereignty provisions of the 11th Amendment: States cannot be sued without their consent.

What did PASPA actually accomplish? Not much.

Sports betting per se was not stopped -- there is hardly an office building in the country, courthouses included, that hasn’t got its football and basketball pools, and people continue to bet online, UIGEA or no. Because they are forbidden from bringing sports bets under their supervision, the states can neither protect their residents from unscrupulous operators nor benefit from the revenue it might bring in. Even Nevada’s vaunted sports-bet monopoly is mostly illusory. You still have to be physically in Nevada to bet. (A handicapper I know in Vegas told me that about $8 billion was bet on the 2008 Super Bowl -- of which less than $300 million was bet with the legal Nevada books. The rest went digital, and went elsewhere.) And if sports is being corrupted by a wave of money, the money that’s doing the corrupting comes not from gambling cartels but from the incredibly lucrative advertising that surrounds sports today: promotions, endorsements, prime time spots and so on.

In sum:

The case against PASPA is (or ought to be) a legally compelling one. But the plaintiffs will have to overcome a great deal. There is the inertia of a law that’s been around since 1992. There is the tenacious shibboleth that gambling is wicked, so whoever helps it or fails to punish it is evil too. There is the vested interest of entrenched monopolies, both legal and economic, associated with gambling and with sport itself.

As with iMEGA’s other efforts, it seems like a forlorn hope, playing against a stacked deck. But we must remember the important thing here is not the chances of success of any one particular case or appeal. Even if individual cases fail, each effort helps to highlight the absurdity and unfairness of laws like PASPA and the UIGEA. Each one leaves a trace of legal reasoning for the next one to build upon, and each time the work is a little easier. Bit by bit, a stalactite of liberty, reason and legal precedent pierces the darkness, until one day the results of a “landmark case” will be announced, in the same way musicians become an “overnight success” after ten or twenty years. When that final result will be, no one can tell. Reclaiming liberty is often a very slow process. But if we are patient, and watch carefully, we may finally see the passing of PASPA.

Note 1: United States v. Edge Broadcasting Co., 509 U.S. 418, 113 S.Ct. 2696, (1993).

Mr. Owens is a lawyer in Sacramento, Calif., specializing in Internet gambling law. Released in 2005, he coauthored "Internet Gaming Law" with Professor I. Nelson Rose, America's senior authority on gambling.