The Supreme Court cleared the way for a massive expansion of legal sports gambling in the U.S., ruling Monday that a federal law that had effectively limited betting mainly to Nevada is unconstitutional.
In a 6-3 decision, the justices said the 1992 law violated the sovereignty of other states to decide their own gambling policies.
One major effect of the law had been to constrain online sports betting. The industry predicted that the court ruling would unshackle internet gambling.
“Today’s Supreme Court ruling is welcome news to the millions of Americans who currently wager $150 billion illegally each year through offshore, black-market bookies,” said Jason Robins, CEO of DraftKings. “States are now free to allow their residents to place mobile sports bets with licensed, trusted companies based in the U.S. and that pay taxes here.”
A number of states are already eyeing the chance to get a piece of sports-betting action. New Jersey has pushed the issue with laws in 2012 and 2014.
Those state laws were challenged by the National Collegiate Athletic Association and the major pro leagues for baseball, football, basketball and hockey, which said the 1992 Professional and Amateur Sports Protection Act set strict limits on sports gambling.
Just Nevada, Oregon, Montana and Delaware were grandfathered under the law.
New Jersey, backed by roughly 20 other states, argued that the law was an unconstitutional federal “commandeering.”
Justice Samuel A. Alito Jr., writing for the court’s majority, agreed.
“The legislative powers granted to Congress are sizable, but they are not unlimited,” he wrote. “And conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the states.”
The 1992 law banned states from changing their laws to allow sports gambling and tried to ban people from participating in betting if they were in a state where it was illegal.
Justice Alito said both parts of the law must fall together.
He said Congress can outlaw sports gambling altogether but cannot pick and choose the states where it is allowed.
Justice Ruth Bader Ginsburg, writing a dissent joined fully by Justice Sonia Sotomayor and partly by Justice Stephen G. Breyer, said the court took a “wrecking ball” to the federal law when it could have issued a narrower ruling.
“When a statute reveals a constitutional flaw, the court ordinarily engages in a salvage rather than a demolition operation,” Justice Ginsburg wrote.
Geoff Freeman, president of the American Gaming Association, said the ruling is likely to be popular with a majority of Americans who want the federal ban lifted, according to a Washington Post survey.
“Some states are going to move in a matter of weeks,” Mr. Freeman predicted.
Make that a matter of hours in New Jersey, where lawmakers on Monday afternoon introduced legislation for taxes and regulations on sports betting.
Andrew Brandt, a law professor at Villanova University, counts 18 states that have introduced legislation to legalize gambling, and he expects more to follow.
He said the country’s sports leagues have sent mixed messages for months but are secretly happy to have lost the case. Now, he said, they can figure out ways to harness gamblers’ interest in their sports.
“The bottom line is that all commissioners and sports leagues know this: the fan engagement from gambling is (literally) gold. Question is how they leverage that,” Mr. Brandt tweeted.
Mr. Robins, the CEO of DraftKings, said states with legislatures still in session, such as Massachusetts where his company has headquarters, could legalize sports betting ahead of the National Football League’s season this year.
Massachusetts lawmakers have been contemplating whether to regulate online gambling, and they have formed a commission to study the issue.
“Our job is to be ready. No matter when it is, we will be ready as soon as the regulations and laws are in place,” said Mr. Robins.
Only Nevada allows legal wagers on the outcome of games. Of the other three states grandfathered under the 1992 federal law, Oregon later banned sports gambling and Delaware and Montana severely limited the types of bets.
Five states — Pennsylvania, New Jersey, Connecticut, West Virginia and Mississippi — have recently approved legislation to expand legal betting.
In 14 states, legislators have introduced bills that haven’t passed so far. Those are: Illinois, Michigan, New York, Iowa, Indiana, Rhode Island, California, Missouri, Kentucky, Maryland, Kansas, South Carolina, Oklahoma and Louisiana.
Many state legislatures have limited time in the summer and fall of election years or are not in session at all, limiting the immediate impact of Monday’s ruling. Some states have put up further barriers. Maryland, for example, would require a constitutional amendment and a popular referendum to allow sports betting, and the earliest that could happen is November 2020.
In addition, several states have granted Indian tribes exclusive or geographic rights to gambling businesses, usually for a share of the tax revenue. Any new facilities or sources of gambling revenue would have to comply with those treaties, which were not affected by the ruling.
Dan Etna, a sports lawyer at Herrick, Feinstein LLP, cautioned that the economics are far from being resolved.
“The industry has many interested parties — not all of which are aligned,” Mr. Etna said.
He said states will see sports betting as a new way to generate tax revenue, while the sports leagues will want fees built into states’ proposed legislation.
Former New Jersey Gov. Chris Christie, a Republican who left office in January, had driven the issue. He celebrated the ruling on Twitter.
“A great day for the rights of states and their people to make their own decisions. New Jersey citizens wanted sports gambling and the federal Gov’t had no right to tell them no,” Mr. Christie tweeted.