Leagues Move to Block NJ Sports Betting; Injunction Likely

As I predicted correctly (for the most part) over the weekend, the four major professional sports leagues and the NCAA responded on Monday to New Jersey's latest effort to bring legal sports betting to the Garden State. On Friday, New Jersey Governor Chris Christie signed legislation partially repealing the state-law prohibition against sports betting (but only for casinos and racetracks), thereby paving the way for deregulated (and legal) sports betting to commence on October 26th at Monmouth Park Racetrack. In a post on Saturday, I predicted that the leagues would fight back. And fight back they did. But, instead of moving for a preliminary injunction in the existing federal court action (which is what I predicted would occur), the leagues opted to file a brand new lawsuit in the same court. I suspect that the leagues went this route because the New Jersey Sports and Exposition Authority (the alleged owner of Monmouth Park Racetrack, where sports betting is slated to start this Sunday) was not a party to the prior lawsuit. Thus, a new lawsuit was needed to properly exercise jurisdiction over Monmouth Park Racetrack.

Accusing New Jersey of acting "in defiance of this Court's February 28, 2013 Order [permanently enjoining New Jersey officials from authorizing, licensing or regulating sports betting] and in clear violation of federal law," the leagues immediately take aim at the "label" used by New Jersey in describing the new law. The leagues assert that while the new law is "styled as a repeal," in reality, it "is nothing more than a de facto authorization of sports gambling," pointing to the fact that the repeal is limited to state-licensed casinos and state-licensed racetracks, which remain subject to extensive regulation by the State. Therefore, despite its facial "repeal" language, the leagues argue that the new law "is a blatant attempt to by the State to sponsor, operate, advertise, promote, license, and/or authorize sports gambling in Atlantic City casinos and New Jersey racetracks," in violation of PASPA. Alternatively, the leagues argue that even if the new law "is really nothing more than the 'repeal' that it purports to be," then it violates the New Jersey Constitution, which requires any gambling to be "specifically authorized" by the New Jersey Legislature. By definition, a "repeal" of a ban on sports wagering is not an "authorization" of same.

Even though the Complaint asks for an injunction, the leagues would still need to file a motion for a preliminary injunction in order to prevent Monmouth Park Racetrack from proceeding with its plans to offer sports betting on Sunday. A complaint, by itself, would not accomplish that in the short term. In federal court, defendants are given 21 days to answer a complaint. By the time Governor Christie and the other New Jersey defendants get around to responding to the complaint, sports betting will have already started at Monmouth Park and it may then be too late to put the genie back in the bottle. Therefore, the leagues would need to file a formal request for judicial intervention (which lawyers call a "motion") in order to put an immediate halt to those plans. Specifically, I expect the leagues to file an emergency motion for a temporary restraining order and/or preliminary injunction within the next day or two. The leagues will ask Judge Shipp (to whom both cases are assigned) to enter a temporary restraining order immediately and on an ex parte basis in order to prevent Monmouth Park from commencing its sports betting operation on Sunday. The temporary restraining order would essentially maintain the status quo (e.g., no sports betting in New Jersey) until such time as the court can conduct a hearing on the motion for preliminary injunction (which would probably be in mid-to-late November). I expect Judge Shipp to sign such an order later this week, which would prevent Monmouth Park from offering any sports betting, effective immediately.

The leagues would likely find Judge Shipp to be a very receptive audience since he previously ruled in their favor. Moreover, Judge Shipp made several rulings earlier in the case that are likely to influence any new ruling. For example, in his February 28, 2013 order granting summary judgment in favor of the leagues and permanently enjoining New Jersey from implementing its sports betting law, Judge Shipp held that the leagues would suffer "irreparable harm" in the form of a "reputational injury" through the unwanted association with gambling and from fans' negative perceptions that the outcomes of games may be rigged. In that same ruling, he also held that there was an "inadequate remedy at law" because New Jersey, by operation of the Eleventh Amendment, would not be liable for monetary damages. Judge Shipp also held that the entry of a permanent injunction against New Jersey would serve the "public interest." Each of these prior findings would bear directly on any new motion for preliminary injunction filed by the leagues since the same considerations are at play. Since Judge Shipp has already ruled in the leagues' favor on these issues, I would expect him to do so again. Thus, the leagues' entitlement to a preliminary injunction will likely come down to whether they can establish a "probability of success on the merits," since each of the other elements required for an injunction (e.g., irreparable harm, balancing of the harms, and the public interest) will almost assuredly be decided in the leagues' favor based on Judge Shipp's prior rulings.