Sport Lotteries: The Professional Sports Leagues Take on the State of Delaware, Again!

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Introduction and Background

The Professional and Amateur Sports Protection Act of 1992 (PASPA) prohibits state lotteries that employ a wagering scheme related to the outcome of sports contests (Professional and Amateur Sports Protection Act, 2010). Four states (Oregon, Nevada, Delaware, and Montana) which had operated sports betting schemes before the passage of PASPA were provided a limited exemption from PASPA. PASPA "grandfathered" gambling schemes in these states "to the extent that the scheme was conducted by that State" between 1976 and 1990. Following the passage of PASPA, only two states, Nevada and Oregon, still actively continued wagering on sporting events (Levinson, 2006).

However, the landscape of sports betting faced a radical change in March 2009 when the Governor of Delaware, Jack Markell, proposed legislation authorizing sports betting and table gaming at existing and future facilities in Delaware. Delaware intended to implement a sports betting scheme including wagers where winners would be determined based on the outcome of professional sporting events, including auto racing. Collegiate sporting events involving Delaware colleges or universities, and amateur or professional sporting events involving a Delaware team were excluded from the betting scheme. All of the major professional sport leagues as well as the NCAA opposed the implementation of Delaware's planned sports betting scheme and filed suit challenging Delaware's legislation.

Delaware's proposed sports betting scheme would have included single-game betting in addition to multi-game (parlay) betting (Office of the Comm'r of Baseball v. Markell, 2009). Delaware intended to commence its sports betting scheme on September 1, 2009, in time for the start of the upcoming NFL regular season. On July 24, 2009, the National Football League, the National Basketball Association, the National Hockey League, the Office of the Commissioner of Baseball, and the National Collegiate Athletic Association (collectively, leagues) filed a complaint alleging that elements of Delaware's proposed sports betting scheme violated PASPA. The leagues sought an injunction to prevent Delaware from implementing the sports lottery until the case had been decided on its merits. When the United States District Court denied the leagues' request for an injunction, the leagues pursued an expedited appeal to the United States Court of Appeals for the Third Circuit. The Third Circuit accepted jurisdiction over the appeal and addressed whether the language of PASPA permitted or prohibited Delaware's planned sports lottery scheme based upon Delaware's exemption under PASPA. The Third Circuit held that Delaware's sports betting schemes were a violation of PASPA (Office of the Comm'r of Baseball v. Markell, 2009).

PASPA & the Delaware Sports Lottery Scheme

PASPA prohibits any person or governmental entity from sponsoring, operating, advertising, or promoting: a lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly (through the use of geographical references or otherwise), on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games (Professional and Amateur Sports Protection Act, 2010). The statute contains four exceptions, only one of which was raised in this case. That exception provides PASPA's general prohibition against sports betting shall not apply to: "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" (Professional and Amateur Sports Protection Act, 2010).

The parties disagreed concerning the meaning of the phrase "to the extent that the scheme was conducted by the State" in this exception. …