The regulation of any new economic activity should be of interest to New Jersey business owners, even if it does not directly affect their business. “Fantasy sports” has been both a popular pastime and a controversial topic lately. Many people participate in fantasy sports leagues organized among their friends, but businesses have also begun offering online fantasy sports competitions. This has led to concerns among lawmakers about whether they violate laws that regulate or prohibit sports betting. The Third Circuit Court of Appeals struck down a New Jersey law allowing sports betting, holding that it violates a 25-year-old federal statute. The U.S. Supreme Court has agreed to hear the state’s appeal in that case. At around the same time that the Supreme Court made that decision, the Governor of New Jersey signed a law authorizing and regulating fantasy sports, while maintaining that fantasy sports do not constitute “gambling” under state law.
In 1992, Congress enacted the Professional and Amateur Sports Protection Act (PASPA), codified at 28 U.S.C. § 3701 et seq. That law effectively prohibited sports betting throughout the country, except in several states, including Nevada and Delaware, which had already created sports lotteries. It prohibits gambling and related activities based on athletic competitions or on the performance of individual athletes. In addition to gambling by private individuals and entities, the statute prohibits governmental entities from “authoriz[ing] by law” any such gambling activities. Id. at § 3702(1).
New Jersey enacted a law in 2014 that repealed some of the state’s prohibitions on sports betting. See N.J. Rev. Stat. § 5:12A-7. In response, a group of sports organizations, consisting of the NCAA, NBA, NFL, NHL, and Major League Baseball, filed suit against the governor, other state officials, and several horse racing organizations. The plaintiffs alleged that the New Jersey law violated PASPA and was therefore invalid under the Supremacy Clause of the U.S. Constitution. A panel of the Third Circuit struck down the New Jersey law, and the full court affirmed this ruling after an en banc rehearing. NCAA, et al. v. N.J. Governor, et al., 799 F.3d 259 (3d Cir 2015); 832 F.3d 389 (3d Cir. 2016).