Local attorney weighs in on the future of sports betting in Michigan

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by Cynthia Price
Legal News

As the Supreme Court of the United States is poised to make a decision that may (or may not) open up sports betting to all of the individual states, it appears that the wise money would be on Michigan taking advantage of the opportunity.

Setting up the required regulatory scheme would be complicated for each state, and the states would have to have the political will to pass laws that support such betting, but attorney Michael Huff of Mika Meyers says, cautiously, “I do think that Michigan might be one that would.”

Though Huff’s practice focuses on business law, including mergers and acquisitions, commercial financial transactions, and general corporate law, with a minor focus on real estate law, he does have a few clients who are athletes. He is active in the Sports Lawyers Association as well as being a member of the ACES (Arts, Communications, Entertainment and Sports) Section of the State Bar of Michigan.

Huff says that at the time there was increased discussion about the status of daily fantasy sports (with five and potentially more state attorneys general calling it illegal within their states), he began to educate himself on sports betting, with Mika Meyers’ blessing.

To state it briefly, daily fantasy sports industry operates legally because it is considered a game of skill versus being a game of chance. The Unlawful Internet Gambling Enforcement Act of 2006 specifically mentions daily fantasy sports games as allowed under the law.

Part of the reason Mika Meyers found Huff a good choice to gain such expertise is that he had previously worked as a law clerk for the U.S. Olympics Committee, in 2011, while attending University of Michigan Law School. He also successfully represented a paralympic athlete in arbitration over the athlete potentially getting cut from the 2012 U.S. Paralympics Team while he was a solo practitioner.

Huff, a magna cum laude graduate of Albion College, joined Mika Meyers in 2015 as an associate, after working at a Farmington Hills firm.

Huff explains that, regarding SCOTUS and sports betting, the crux of the matter is whether provisions in the Professional and Amateur Sports Protection Act (PASPA) violate the anti-commandeering doctrine.

Christie (as in, New Jersey governor Chris) v. National College Athletic Association (NCAA) concerns actions the state of New Jersey took based on a 2011 state referendum in which 64 percent of voters approved a constitutional amendment allowing the gambling.

In response, the state legislature passed a comprehensive regulatory scheme in 2012. Had New Jersey done so within one year of PASPA’s 1992 enactment, there would have been no problem; the state joined Nevada’s sports betting, and sports lotteries in Oregon, Montana and Delaware as exceptions in PASPA, but only if New Jersey’s legislative follow-up occurred within that year.

Five sports leagues sued to enjoin the process, which is also explicitly allowed under PASPA. After the district court ruled in the leagues’ favor, the New Jersey legislature proceeded to repeal all of the acts governing licensing of casinos and sporting events, which in effect tacitly authorized the sports wagering.

New Jersey claims that it has the right to do so because the provisions in PASPA violate the anti-commandeering doctrine.

As Huff has written, the anti-commandeering doctrine “is a body of law that has developed pursuant to the 10th Amendment which suggests the federal government cannot compel the states to enact laws or create regulations or enforcement mechanisms necessary to implement federal statutes or regulatory programs.”

Justice Sandra Day O’Connor used the term “commandeer” in an opinion issued right around the time of PASPA in New York v. United States. That case involved a provision in a federal radioactive waste scheme that the Supreme Court deemed impermissibly coercive.

As Huff points out, the fact that the Supreme Court even agreed to hear Christie v. NCAA is a sign that they may be asking their own questions about the constitutionality of PASPA.

After listening to oral arguments, which took place Dec. 4, Huff commented, “The Supreme Court seemed very interested in this anti-commandeering issue. The lower courts didn’t consider it much, but to be fair, it’s what New Jersey’s attorneys have argued the whole time.” New Jersey argues that, as it stands, PASPA requires it to maintain a certain regulatory scheme, in this case to regulate sports gambling, by prohibiting its ability to modify or repeal it.

The respondents, which include the NCAA and the major professional sports leagues, and the United States government in an amicus curiae brief, argue that PASPA only prohibits the states from making laws or administrative schemes which authorize sports gambling, and that the federal government is permitted to regulate gambling under the commerce clause.

“It’s fun because all of this is presented in the guise of sports law but it’s really all constitutional law,” Huff comments.

He lays out three possible scenarios regarding the Supreme Court decision, and what they might mean for sports betting in Michigan.

The first is that SCOTUS simply declares PASPA to be unconstitutional.  In that case, outside of the above-mentioned Unlawful Internet Gambling Enforcement Act’s regulation of online gambling and possibly other exceptions, development of regulatory schemes would fall to the states.

The second possibility is that the Supreme Court will find that PASPA itself is constitutional, but that it does not preclude New Jersey’s repeal. Huff feels that this might engender a situation similar to the current marijuana laws: sports betting would be illegal under federal law, but allowed in some of the states. He predicts that “a significant amount of uncertainty would enter the marketplace.”

The final scenario is that SCOTUS could rule that PASPA is legal and New Jersey’s actions were illegal. In that case, only an act of Congress could make sports betting legal.

Though Huff and other Supreme Court-watchers feel that the third scenario is unlikely given the questions the justices asked in oral argument, he acknowledges that it’s difficult to read the court. “The justices are not always telegraphing their thoughts during oral argument. Sometimes they’re asking questions they really have not answered yet. It’s always a little dangerous to read too much into the questions,” he comments.

If state sports gambling is allowed, Michigan will have to change its laws. Gambling is illegal under the Michigan Penal Code, with certain exceptions; the Detroit casinos are regulated through the Michigan Gaming Control and Revenue Act, and Native American casinos by the federal Indian Gaming Regulatory Act and by compacts between the tribes and the state.

Though it seems more likely with the current state legislature than it has in the past, it may still be politically difficult to authorize sports gambling in Michigan. However, State Representative Robert Kosowski has previously introduced a bill to permit casinos to conduct sports betting. Michigan is one of 15 states that had such legislation introduced recently, pending sports betting becoming legal.

There would be additional regulatory hurdles if existing casinos were designated as the places to wager on sports, since some owners of the Detroit casinos have ties to sports team ownership.

Sports betting is a $1.5 billion business nationally, and in Michigan much of the activity takes place in Canada, which provides an incentive to bring that business back to the state.

Opposition would come not only from community groups concerned about gambling addiction and other negative behaviors, but also to one degree or another from the sports leagues, as in the Christie case. Huff points out that in particular the unpaid athletes of the amateur leagues would be vulnerable to adjusting their performance for a price resulting from gamblers’ pressures.

These considerations may be balanced by the increased exposure for sports, as legalization is likely to result in greater interest in sports. There are also the advantages of increased revenues for the state and for the places where the betting takes place.

It will be several months before the U.S. Supreme Court makes its decision, but in Michigan, the parties for and against are already engaged.

 
 

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