Patrick Berry, The Levison Group
There’s a place in the world for a gambler
There’s a burden that only he can bear
There’s a place in the world for a gambler
— Dan Fogelberg (1974)
America has always been a country of gamblers. Games of chance were originally brought over to the American colonies with the first settlers (though not the Puritan ones). The settlers were a bold, pioneering bunch — a people inclined toward risky endeavors, like gambling. Though attitudes varied from colony to colony, gambling was rampant throughout many early American settlements. It became so prevalent in some places that English investors began to worry that it was leading to a mentality of idleness and vice, thus threatening the colonies’ self-sufficiency and profitability (as well as the Englishmen’s investments).
But, like Americans, the English liked to gamble, so they decided the ills created by gambling could be cured by … more gambling. English financiers, such as the Virginia Company of London, started holding lotteries in the 1600s to raise extra cash for their colony enterprises. Lottery proceeds were used to establish or expand numerous universities in the 18th and 19th centuries. Lest you thought gambling’s prevalence at institutions of higher learning was a new phenomenon, Yale’s Connecticut Hall, which was completed in 1752, was funded in large part by lottery proceeds (funds for the project also came from the sale of a French ship captured by a privateer, a similarly noble money making endeavor).
The past 150 years has witnessed the stratospheric rise of a particular subset of gambling in America: sports betting. Betting has been strongly associated with America’s other classic pastime, baseball, since nearly the sport’s inception. An 1894 Washington Post article contained the following anecdote about the Chicago Colts’ (a predecessor to the Cubs) manager Cap Anson: “Uncle Anson has already started making wagers on the position the Chicago Colts will have in the race for the National League Pennant next year. He put up $100 a few days ago that his team would finish higher up in the race than the Pittsburgh Pirates.” The Colts edged out the Pirates that year by two games, so his bet was a winning one. Anson – a horribly bigoted man who led the ultimately successful charge to ban black players from baseball – soon had his luck run out, though, when the team’s performance declined in the years that followed and the Colts refused to renew his contract. In the end, the house always wins.
Despite the pervasiveness of gambling in America since its founding, the law has often looked unfavorably upon games of chance, particularly sports betting. A federal law currently makes sports betting illegal in all but four states: Nevada, Delaware, Oregon and Montana. Despite the formal prohibition, though, a robust black market for sports betting exists (by some accounts, the largest such black market in the world). Online betting firms, neighborhood pubs, office pools, and organized crime syndicates are all in on the act. While an estimated $4 billion in bets are placed on sports legally in Las Vegas every year, as much 95 times that amount ($380 billion) is wagered illegally every year in this country. I’m not sure if that $380 billion estimate includes the five bucks I threw into my office’s NCAA tournament bracket pool last year, though, so the real number may be a few dollars higher.
Not everyone participating in this illegal market has been able to fly under the radar, though, and several high profile betting scandals have rocked the sports and gambling world in the past 100 years. First, there was the 1919 “Black Sox” scandal, in which eight members of the Chicago White Sox were paid by a professional gambler to “fix” (intentionally lose) the World Series against the Cincinnati Reds. All eight players were banned from professional baseball for life, and the incident left a stain on the game for decades to come. Similarly, Pete Rose, who was Major League Baseball’s all-time hits leader, was banned from the game for life when it was discovered that, during his time managing the Cincinnati Reds, he was placing wagers on baseball games (including Reds games), totaling between $2,000 and $10,000 per day at times. More recently, Tim Donaghy, a referee in the National Basketball Association, was discovered to have placed a substantial amount of bets on basketball games from 2005 - 2007. Donaghy was ultimately sentenced to 15 months in federal prison for his sins. These and other scandals resulted in significant public backlash against the sports gambling industry.
It appears, though, that the national sentiment towards sports betting is now moving towards broader acceptance, particularly among state legislators who want a piece of that $380 billion (plus my $5 office pool entry fee) pie. Coinciding with the rise of popular online sports betting platforms, such as DraftKings and FanDuel, public sentiment is also becoming more favorable. The shift in public opinion has culminated in a U.S. Supreme court case in which the High Court will consider whether to overturn the federal prohibition on sports betting, thereby having the potential to fundamentally reshape the sports betting landscape in this country.
In Christie v. NCAA, the state of New Jersey (along with its embattled governor, Chris Christie, who has made some dubious political bets of his own in his career) argues that the federal anti-gambling law violates the U.S. Constitution’s “anti-commandeering” doctrine because the law doesn’t technically ban gambling; rather, it actually prohibits states from creating their own laws that regulate sports gambling within the state. This, New Jersey argues, violates the 10th Amendment by putting the burden of gambling enforcement on the states, thereby “conscripting” the states into enforcing a federal mandate. By telling states, like New Jersey, that they can’t institute a lawful gambling regime, the federal government effectively creates a ban without taking on the burden and allocating the resources to actually enforce a federal law, something the 10th Amendment seeks to prevent. The anti-commandeering doctrine can be traced back to James Madison, who argued in the Federalist papers that states shouldn’t have to be active participants in the enforcement of federal laws.
Based on the recent oral arguments in this case, the Justices appear likely to strike down the federal law, possibly in time for next year’s March Madness NCAA tournament (get your brackets ready). Clients often ask lawyers to predict the outcomes of their cases. Lawyers generally resist those requests, or we at least hedge our forecasts, as there are myriad unknown factors which could influence a court’s decision that are out of our control: jury biases, uncertainty in the law, performance of key witnesses, and even whether the decision is made before or after lunch. Nevertheless, if I were a betting man, I’d put my money on Christie on this one. The odds I’m currently offering are 8 to 5.
—————
© 2017 Under Analysis, LLC. Under Analysis is a nationally syndicated column of the Levison Group. Contact Under Analysis by e-mail at comments@levisongroup.com.
