NFL v. Delaware: Round II

All of the major professional sports leagues plus the NCAA today filed suit in federal court in Delaware. The "Leagues" as I'll call them are suing the state of Delaware (actually suing the governor, to avoid 11th Amendment complications) for its plan to offer sports wagers as part of its lottery as soon as this fall, just in time for that bettors' paradise known more commonly as the National Football League. (I received a copy of the complaint courtesy of Chad Millman of ESPN.) The complaint seeks preliminary and permanent injunctive relief on two theories: (1) that Delaware's plan to offer sports wagers offends the federal Professional and Amateur Sports Protection Act (PASPA) and (2) that the proposed wagering scheme violates Delaware's constitution.

Delaware is one of the few states that is explicitly authorized by PASPA to offer lottery games based on sports contests. PASPA "grandfathered" Delaware (and Oregon, Nevada and New Jersey) when it created the general federal prohibition on sports bets on the grounds that those states had at the time more or less existent sports lotteries. (I've written about challenges to PASPA here.) The plaintiff Leagues are not challenging Delaware's grandfathered status; indeed the Complaint implicitly concedes that Delaware could offer lottery games based on the outcomes of sports contests. What is new and different about Delaware's plan, and what has drawn the Leagues' ire, is that Delaware plans to offer "lotteries" based on the outcome of single games, either by picking the winner (a sides bet) or picking the over/under on the total score (a totals bet). Back in the mid-1970's, Delaware had offered only "parleys" in its brief foray into sports lotteries. A parley requires the bettor to pick the winners of several games in order to win a single bet.

This litigation could prove enormously important for the world of sports and the world of gambling (two worlds I tend to inhabit). My first-blush thoughts:

1. The Leagues' federal PASPA claim rests on a rather ambiguous phrase in the statute. In the section relevant to Delaware's grandfather status, PASPA states that its prohibitions are not to apply to a "lottery, sweepstakes, or other betting, gambling, or wagering scheme in operation in a State or other governmental entity, to the extent that the scheme was conducted by that State or other governmental entity at any time during the period beginning January 1, 1976, and ending August 31, 1990." The Leagues state that the phrase "to the extent" essentially limits the grandfathered states to offering (roughly) the same games that were actually offered at the time prior to or surrounding PASPA's passage. In other words, these states weren't grandfathered; rather, the particular games in those states were grandfathered.

2. This interpretation of PASPA, although certainly plausible, is nonetheless contestable, on three grounds. First, the phrase "to the extent" as a grammatical matter seems to refer to and is part of the clause describing the time period concerning which putatively any state could have qualified for the grandfather exception. States could be grandfathered to the extent (meaning "if," they offered games during that time period. The phrase does not seem to modify or qualify the types of games that are listed in the first clause; indeed, if it were meant as a delimitation on the first clause, it would be a clumsy way to do it. (Admittedly it's a clumsy phrase no matter how you view it.) Second, the only states to which this entire clause could apply are Oregon and Delaware. No other state had offered such games in the relevant time period, and New Jersey and Nevada have their own grandfather clauses in PASPA. Oregon and Delaware at the time offered only parley wagers. If the PASPA legislature wanted to limit Oregon and Delaware to parley wagers only, then why did the statute list "lottery, sweepstakes, or other betting, gambling, or wagering schemes" to describe the scope of Oregon's and Delaware's exception? Either these words are surplusage or they describe the exception. If it's the latter, then it seems Delaware has a pretty good argument to make.

3. Third, even assuming the Leagues are correct and that PASPA's "to the extent" limits Delaware to the betting games it offered back in the 1970's, the question is whether or not parley bets are really all that different from single-game bets. Here is, quite literally, the multi-million dollar question. If Delaware has permission to offer bets on the winner of three games, may it also offer bets on the winner of one game?

4. Before I suggest how the court will answer, we should look briefly at the Leagues' state law claim because it raises a similar question. The issue here is one seen in lots of gaming cases throughout U.S. history. Basically, Delaware (like most states) has a clause in its state constitution (original version) that prohibits gambling in all its forms. Like most states, Delaware sometime back in its history amended its constitution to permit state-run lotteries. Like most states, after the passage of the "lottery exception," Delaware's state legislature commenced to push the limits of the exception by offering to the public all kinds of betting games that bear scant resemblance to the common conception of a traditional state lottery, with its weekly drawings of winning numbers and such. Although the judicial outcomes are decidedly a mixed bag, for the most part the states succeeded. A "lottery," courts have held, doesn't have to include spinning balls and winning numbers and smiling television hosts. A lottery is a game where the player provides (1) consideration for a (2) chance at a (3) prize. Many games apart from the traditional lottery fit this legal definition. As did Delaware's old sports parley game. You see, we've been down this road before, in Round I.

5. In 1977, the NFL sued Delaware (I suspect the NFL has it in for Delaware; Wilmington will not be awarded a football franchise anytime soon) on the grounds that Delaware's parley sports lottery did not fit within the Delaware's constitutional lottery exception. The key issue in that case, which will be the key issue in the new litigation, is whether or not the sports bet is at bottom a "game of chance." Remember, to constitute a lottery, the game must be one of chance. (The other two elements, consideration and prize, will undoubtedly be conceded.) In the 1977 decision, Delaware won. The federal court decided that in a parley bet, although some measure of skill was obviously involved, chance was the "dominant factor" in deciding the outcome of the bet. Picking the winner (against the spread) of three or more contests was predominately a manner of chance, not skill.

[6. Interestingly, before signing the new scheme into law, Delaware's governor recently asked the Delaware Supreme Court for an advisory opinion on whether or not a single-game bet fell outside this "game of chance" rule from the 1977 federal court decision. Helpfully, the supreme court conceded that this was a good question that it would presently decline to answer. Now, with this new federal lawsuit, the federal judge might well decide to certify this exact question, which involves state law, right back to the very same state supreme court. Usually certified questions are treated more seriously than requests for advisory opinions from the attorney general, so this time the Delaware court will make a decision.]

7. Not afraid of tough questions (and with a little less riding on my decision), I'll attempt an answer. I think the Leagues will win the state law claim and that Delaware will win the federal law claim. A split decision. The champions will have to fight again in Round III.

8. On the federal PASPA claim, I think the Leagues will be hard-pressed to convince a judge to read the ambiguous "to the extent" language as constituting a complete, permanent ban on Delaware's offering any sports wager other than the parley games it offered in 1975. This reading seems to put too much weight on words that do not make the ban explicit, particularly when explicitness would have been so easy to accomplish as a linguistic matter. (Of course, the federal Congress could, in response to such a decision, amend PASPA to make this ban more explicit, and presumably if it did so the Leagues might win in the next battle, Round III.)

9. On the state constitutional law claim, here I think the smart money will be put on the Leagues. Delaware won this fight in Round I (the 1977 litigation), with the court finding that the parley bet comprised a game of chance and therefore fit within Delaware's lottery exception. But if some sports bets are indeed games of chance, then logically some other sports bets must not fit the bill. Some bets must be games of skill. Is winning a bet on a single game predominately a matter of luck or skill? (Depends on if you're talking to the winner or loser.) Certainly winning this single-game bet involves more skill than does a parley bet. Trying to pick winners against point spreads for three or more contests is the quitessential crap shoot. (Actually, I'd have a much better chance shooting craps.) For a single game, fewer breaks have to fall in one direction. Reduced opportunities for luck necessarily means enhanced opportunities for skill.

10. Of course, just like the Leagues could induce the Congress to amend PASPA should Delaware prevail on the federal claim, so could Delaware induce its voters to amend the state constitution should the Leagues prevail on the state law claim. And we'd be off to Round III.