Final Word On Delaware Lottery Decision

By the title of this entry I don't mean my final word. I'm referring to the very recent decision of the U.S. Court of Appeals for the Third Circuit, which decision most likely comprises the final word of the federal judiciary on Delaware's planned sports lottery. Here's the link to the court's opinion.

I've complained previously about the unnecessary haste with which this court decided to resolve this important legal issue. If this decision stands, as most likely it will, then it represents the permanent resolution of Delaware's status under the federal PASPA statute. It's an important issue, one of salience to Delaware's ability to take advantage of its unique status under federal law. That Delaware's federal exemption from PASPA should have been conclusively resolved, and resolved in a way apparently contrary to the spirit of the law and to Delaware's expressed sovereign interest in raising state revenue, is problematic. That this resolution was done in the hasty manner normally reserved for cases involving the potential loss of constitutional rights (abortion, free speeech) is even more troubling. No threat to life or liberty necessitated this action.

The court's opinion justified the rush to judgment as follows: "When a party seeks injunctive relief, the stakes are high, time is of the essence, and a straightforward legal question is properly presented to us, prudence dictates that we answer that question with dispatch." This statement may sound convincing, but it seriously misstates the law. It is simply not true that "when a party seeks injunctive relief" that that fact alone means the "stakes are high" and "time is of the essence." The plaintiff (here the professional sports leagues) has to prove that time is of the essence and quick judicial action is needed. The leagues tried to prove that the stakes were high and time was of the essence before the trial judge in this case, and failed to convince that judge to issue the injunction. No new proof of the need for haste was offered (or could be) to the appellate court; indeed, the appellate court specifically refused to address the issue of the potential of "irreparable harm" should the injunction stopping Delaware not be granted.

The fact of the matter was that there was no hurry. The NFL and the NCAA in particular, whose games are already subject to widespread and much-discussed betting action, would likely suffer no harm at all (never mind "irreparable" harm) should Delaware have been allowed to go forward with its lottery scheme. To imply that there would be harm and that Delaware's lottery plan required emergency judicial intervention seems doubtful, if not incorrect.

What we're left with is the claim that, because in the court's view no factual issues remained for resolution and because the legal issue was "straightforward," then the appellate court should proceed to conclusively resolve Delaware's statutory authority. This is not the law that the Supreme Court decision from which this authority is derived, the 1986 Thornburgh decision (about which I've written previously), expressly established. The Thornburgh decision did allow for final appellate resolution of a case on an emergency basis. But in a majority opinion (that collected only four votes) Thornburgh made clear that such an intervention "deviated from the stated norm" and that an appellate court should "ordinarily limit its review to abuse of discretion," and not to a resolution on the merits. The Supreme Court made plain that such intervention was justified in a "constitutional case" where "the unconstitutionality of the particular state action is clear." The Court also noted in Thornburgh that the appellate process in that particular case was benefitted by "an unusually complete factual and legal presentation from which to address the important constitutional issues at stake."

Obviously, no issue of constitutional rights, important or otherwise, was presented by Delaware's plan to expand its state lottery. No "unusually complete factual and legal presentation" was available, particularly considering that the entire case was litigated in a matter of weeks. Prudence did not "dictate" that the appellate court act with dispatch; it dictated the opposite. The claim that the stakes were high militated in favor of holding a trial on the merits, not rushing forward without one.

On the merits of the federal law, the appellate court limited Delaware to offering a lottery game "to the extent" it offered a game in 1976. Thus Delaware may offer parlay bets involving at least three games, and only on NFL games, because that is "the extent" to which Delaware offered bets in 1976. However, the court continued, Delaware's new game may differ from the 1976 game in "certain aspects," such as at what betting locations the game is offered. In short, the court held that Delaware may introduce changes to the game "as long as they do not effectuate a substantive change from the scheme that was conducted" in 1976.

This reasoning begs the question. The whole issue in the case was whether or not shifting from a three-game bet to a single game bet constitutes a "substantive change" from the 1976 game. For the court to tell Delaware that it may make non-substantive changes but not substantive changes tells Delaware nothing new. And when the appellate court holds, as a matter of law, that a change from a three-game bet to a single-game bet is a "substantive change," then the appellate court is resolving a factual issue, and is doing so without the benefit of a trial record.

Here's the factual issue: Is a three-game bet all that different (and different enough to be "substantive") from a single-game bet? The outcome of both bets involves a lot of luck; certainly the three-game bet involves more luck, but most sports gamblers would say that even winning a single-game bet against a point spread involves a lot of luck as well. Is the limited skill involved in a sports bet all that more prevalent in a single-game bet as opposed to a parlay? Is the greater degree of skill in a single-game bet enough of a difference to make the bet "substantively" different than that made in 1976? That's the issue the appeal presented. The issue presented cannot logically supply the rationale for the court's decision. Yet in the Third Circuit it did.

A trial on this point would have been very illuminating. Experts would have testified as to the mathematical differences between parlays and single-game bets; a trial judge would have marshaled and assessed the evidence in creating a record for appeal. Instead, the appellate court resolved the appeal on the merits because the court decided that there were no factual issues left in the case.

Assuming factual issues away doesn't make them go away, not really.