A majority of the Supreme Court seemed ready Monday to allow New Jersey to proceed with its plan to legalize sports betting at casinos and racetracks, a move that could open a rush among states to grab a share of what is now billions of dollars in illegal gambling.
Several justices suggested that they agreed with New Jersey's argument that a federal prohibition from 1992 barring states from authorizing sports betting is flawed because the law forces states to keep in place a betting ban that their residents no longer favor.
"So the citizens of the state of New Jersey are bound to obey a law that the state doesn't want but that the federal government compels the state to have," said Justice Anthony M. Kennedy. He said that would seem to violate the constitutional prohibition on what is called "commandeering."
New Jersey for years has tried to breathe new life into its troubled casinos and racetracks by authorizing sports betting at the facilities. As of now, the Professional and Amateur Sports Protection Act (PASPA) allows live betting on sports events only in Nevada facilities, while a handful of other states have sports lotteries.
Outgoing New Jersey Gov. Chris Christie (R) has been one of the leaders of the effort to authorize sports betting in his state, and he watched Monday's oral arguments from the front row as he sat with other lawyers being sworn in to the Supreme Court Bar.
The case is a high-stakes clash between states that want a piece of the action — New Jersey is supported by 18 other states — and the NCAA, the National Football League, Major League Baseball and other professional sports leagues. They contend that the federal ban is necessary to protect the integrity of their games.
The underground sports betting economy in the United States is estimated to be worth at least $150 billion a year.
"Betting on sports is taking place all over the United States," veteran Supreme Court practitioner Theodore B. Olson, representing New Jersey, told the court. "Five percent of it is legal in Nevada. The rest of it is illegal. New Jersey decided we are going to look at it."
Several justices repeatedly questioned Olson about why PASPA was improper, since the federal government has regulatory power over interstate commerce and Congress was taking a clear stance against betting on sports.
"Mr. Olson, isn't that what the government does whenever it preempts state laws?" Justice Ruth Bader Ginsburg asked. "It says, 'You can't regulate.' "
Justices Sonia Sotomayor and Elena Kagan were also protective of the federal government's prerogatives to preempt state regulatory power in the face of a federal statute that covers the subject.
"The federal government is saying to the states, 'You can't do something' — so that sounds to me the language of preemption," Kagan said. "All the time the federal government takes some kind of action, passes a law and then says to the states, 'You know what, we've got this; you can't do anything.' "
But the court's other liberal justice, Stephen G. Breyer, seemed to agree with Olson that the problem with the law was that Congress was not imposing its own regulatory control on sports betting, it was just requiring states to keep in place their prohibitions. If Congress is telling states how they must legislate, Breyer said, "it is the state and not the person who becomes the subject of a federal law."
Olson quickly agreed: "I wish I had said that myself, Justice Breyer."
Lower courts have not been nearly so supportive of the argument.
New Jersey voters in 2011 approved a referendum to allow sports betting. Christie signed a law authorizing it and dared the federal government to "try to stop us."
Courts did. They said New Jersey's law violated a section of PASPA that forbids states to license and authorize sports betting. The Supreme Court decided not to review that ruling.
New Jersey tried a different tactic, taking advantage of a passing comment from the U.S. Court of Appeals for the 3rd Circuit. While the state could not authorize sports betting, the court said, nothing in the federal law prevented the state from repealing statutes that imposed criminal penalties on the practice. So New Jersey tried that, but lower courts said the state's intention was the same prohibited activity.
Paul D. Clement, representing the NCAA and the sports leagues, said the Supreme Court should affirm that decision.
PASPA's wording might be unusual, Clement acknowledged, but its intent was clear: Congress "did not want there to be sports gambling schemes operating in interstate commerce."
Since 46 states at the time prohibited sports betting, he said, Congress built on that system.
Deputy Solicitor General Jeffrey B. Wall, representing the federal government, said Congress made enforcement of the law a matter of discretion for the attorney general and the sports leagues. "That's far less invasive of state sovereignty," he said.
But Chief Justice John G. Roberts Jr. was among those skeptical of such arguments. "It goes to the fundamental powers and prerogatives of a state to sort of function their own government," he said.
Justices Samuel A. Alito Jr. and Neil M. Gorsuch also questioned how the law forces state officials to retain bans they do not want. Justice Clarence Thomas did not ask questions but in the past has been strongly supportive of federalism.
A broad ruling for New Jersey could have consequences for other ways the federal government tries to push policy preferences on states, including on issues such as immigration, gun control and sanctuary cities. But the justices did not engage on those questions.
The case is Christie v. NCAA, et al.