Did New Jersey’s September 2014 sports-wagering directive remain effective after the Legislature repealed the Sports Wagering Act?

Status and plain-English summary

The Attorney General issued this combined law-enforcement directive and formal opinion on September 8, 2014. Its cover later stated: “Because New Jersey Senate Bill 2460, signed into law by the Governor on October 17, 2014, repeals the Sports Wagering Act in its entirety, Law Enforcement Directive 2014-1 and Formal Opinion 1-2014 are now moot and no longer effective.” That notation is the document's final status.

Before that repeal, the AG addressed whether casinos and racetracks could operate sports pools without state criminal or civil liability after a federal court had enjoined New Jersey's licensing regime. The directive interpreted the Sports Wagering Act as exempting those operators from criminal liability and directed law-enforcement and prosecution agencies not to arrest, charge or prosecute activity consistent with its terms. It excluded wagers on college events held in New Jersey or involving a New Jersey college team.

The accompanying formal opinion concluded that the Act's civil-liability exemption survived independently of the enjoined licensing provisions. It addressed civil enforcement by the State on that basis. Those conclusions described the AG's view under a statute the Legislature subsequently repealed; the official cover says the directive and opinion are no longer effective.

What this means for you

If you are researching a current sports-wagering question

Use this document only to understand the State's September 2014 position. The cover expressly withdraws its operative effect after repeal. Check current statutes, regulations and official guidance before acting on a present-day wagering question.

If you are studying the 2014 dispute

The opinion separated the Sports Wagering Act's licensing scheme from its asserted exemptions from criminal and civil liability. It reasoned from the Third Circuit's statement in N.C.A.A. v. Governor of the State of New Jersey, 730 F.3d 208 (3d Cir. 2013), that federal law did not require New Jersey to maintain its prohibition on sports wagering. The later cover notation records that repeal of the Act made this particular directive and opinion moot.

Common questions

Q: Did this directive remain in force after October 17, 2014?
A: No. The cover expressly says it became “moot and no longer effective” when the Governor signed the bill repealing the Sports Wagering Act.

Q: What did the directive tell police and prosecutors in September 2014?
A: It directed them not to arrest, charge or prosecute people operating sports pools at casinos or racetracks under the cited gambling offenses, so long as the activity met the directive's conditions, including its restriction on specified college sports wagering. That directive no longer has operative effect.

Q: Why did the AG discuss severability?
A: The AG argued that the Act's exemptions from criminal and civil liability could stand even though the federal court had blocked New Jersey's licensing provisions. That was an interpretation of the then-existing Act, which the official cover says was later repealed.

Q: Does this document state today's licensing requirements?
A: No. It was issued in September 2014 and then marked moot. Use current New Jersey law and official regulatory guidance for present-day requirements.

Source

• Official PDF: https://www.nj.gov/oag/oag/AG-Directive-Opinion-Sports-Wagering.pdf

Original opinion text

State of New Jersey
CHRIS CHRISTIE, Governor
KIM GUADAGNO, Lieutenant Governor
JOHN J. HOFFMAN, Acting Attorney General

OFFICE OF THE ATTORNEY GENERAL
DEPARTMENT OF LAW AND PUBLIC SAFETY
PO Box 080
TRENTON, NJ 08625-0080

LAW ENFORCEMENT DIRECTIVE 2014-1
FORMAL OPINION 1-2014

> Because New Jersey Senate Bill 2460, signed into law by the Governor on October 17, 2014, repeals the Sports Wagering Act in its entirety, Law Enforcement Directive 2014-1 and Formal Opinion 1-2014 are now moot and no longer effective.

TO:
Elie Honig, Director, New Jersey Division of Criminal Justice
All County Prosecutors
All Municipal Prosecutors
Joseph R. Fuentes, Superintendent, New Jersey State Police
All County Sheriffs
All Police Chief Executives
David L. Rebuck, Director, New Jersey Division of Gaming Enforcement
Frank Zanzuccki, Executive Director, New Jersey Racing Commission
Jeffrey S. Jacobson, Director, New Jersey Division of Law

FROM: John J. Hoffman, Acting Attorney General

SUBJECT:
Law Enforcement Directive to Ensure Uniform Enforcement of the Sports Wagering Act's Exemption from Criminal Liability for the Operation of Sports Pools by Casinos and Racetracks
Formal Opinion Addressing the Effects of Law Enforcement Directive 2014-1 on the Sports Wagering Act's Exemption from Civil Liability for the Operation of Sports Pools by Casinos and Racetracks

DATE: September 8, 2014

LAW ENFORCEMENT DIRECTIVE 2014-1

On November 8, 2011, the citizens of New Jersey voted overwhelmingly to amend the New Jersey Constitution to permit the Legislature to repeal prohibitions against the operation of sports pools by casinos and racetracks. Thereafter, Governor Christie signed the Sports Wagering Act, N.J.S.A. 5:12A-1 to -6, to effectuate the will of the people expressed in the constitutional referendum. That statute decriminalized the operation of sports pools by casinos and racetracks, and implemented an extensive licensing and regulatory regime. Those regulations are codified in N.J.A.C. 13:69N-1.1 et seq.

Certain sports leagues claimed that the State's implementation of the Sports Wagering Act violated the federal Professional and Amateur Sports Protection Act ("PASPA"), 28 U.S.C. 3701 et seq. They brought suit in federal court to enjoin the implementation of the Sports Wagering Act. Governor Christie and the other defendants argued that PASPA violated the federal constitution and therefore could not be enforced. The federal district court ruled in favor of the plaintiff sports leagues and, in accordance with PASPA, enjoined the State from licensing or authorizing sports wagering.

Governor Christie and the other defendants appealed to the United States Court of Appeals for the Third Circuit. In September 2013, that court upheld the constitutionality of PASPA on the basis that it does not require States to maintain existing laws and thus does "not prohibit New Jersey from repealing its ban on sports wagering." N.C.A.A. v. Governor of the State of New Jersey, 730 F.3d 208, 232 (3d Cir. 2013), cert. denied, 573 U.S. ___ (2014) (hereinafter "N.C.A.A. v. Governor" or "Third Circuit opinion"). In holding that New Jersey "may repeal its sports wagering ban," id. at 233, the Third Circuit accepted the positions of the plaintiffs in the case, who had argued that the statute was constitutional because "nothing in [PASPA] requires New Jersey to maintain or enforce its sports wagering prohibitions," and, indeed, that New Jersey's "repeal of its state-law prohibition on the authorization of sports wagering" itself was "in compliance with PASPA."

The specific issues addressed in this Law Enforcement Directive are whether, in light of N.C.A.A. v. Governor, casinos and racetracks would be committing a criminal offense under New Jersey law if they were to operate sports pools as part of their business activities.

The New Jersey Code of Criminal Justice (Title 2C) provides that when determining whether their conduct constitutes a criminal offense, persons may rely on "an official interpretation of the public officer or body charged by law with responsibility for the interpretation, administration or enforcement of the law defining the offense." N.J.S.A. 2C:2-4(c)(2). Pursuant to the Criminal Justice Act of 1970, N.J.S.A. 52:17B-97 et seq., the Attorney General serves as the State's chief law enforcement officer, and is required to ensure the uniform and efficient enforcement of the criminal law and administration of criminal justice.

For the following reasons, sports pools operated by casinos or racetracks continue to be exempted from criminal liability under New Jersey law so long as no wagering occurs on a college sport or athletic event that takes place in New Jersey or in which any New Jersey college team participates regardless of where the event takes place. See N.J. Const., art. 4, sec. 7, par. 2(E) and (F). Accordingly, no law enforcement or prosecution agency or officer shall, pursuant to N.J.S.A. 2C:37-1 to -9, make an arrest, file a complaint against, or prosecute any person involved in the operation of a sports pool by a casino or racetrack to the extent that such activity takes place consistent with this Law Enforcement Directive.

Title 2C expressly provides that "no conduct constitutes an offense unless the offense is defined by this code or another statute of this State." N.J.S.A. 2C:1-5. Criminal statutes establish the scope of criminal liability not only by defining the material elements of offenses, see N.J.S.A. 2C:1-13(h), (i), but also by creating exemptions or affirmative defenses. In the specific context of gambling, chapter 37 of Title 2C establishes a comprehensive suite of criminal offenses that generally prohibit all persons from promoting gambling or engaging in gambling activity, subject to certain exceptions. See, e.g., N.J.S.A. 2C:37-1(c); N.J.S.A. 2C:37-9.

The Sports Wagering Act, however, provides that "[i]n addition to casino games permitted pursuant to the provisions of P.L. 1977, c. 110 (C.5:12-1 et seq.) [the Casino Control Act], a casino may operate a sports pool…." N.J.S.A. 5:12A-2(a). It further provides that, "[i]n addition to the conduct of pari-mutuel wagering on horse races under regulation by the racing commission pursuant to chapter 5 of Title 5 of the Revised Statutes, a racetrack may operate a sports pool…." Id. In this manner, the Sports Wagering Act repealed the prohibition against the operation of sports pools by casinos and racetracks, thus exempting those activities from criminal prosecution under New Jersey law.

The Third Circuit made clear that it did "not read PASPA to prohibit New Jersey from repealing its ban on sports wagering." 730 F.3d at 232. The Court reached this conclusion based on the arguments of the sports leagues, which stated that "[n]owhere in its unambiguous text does PASPA order states to keep laws on their books," or "to keep existing laws in effect." The United States Department of Justice, which had intervened in the case to defend PASPA's constitutionality, joined in the leagues' arguments, stating that "nothing in the statute requires New Jersey to maintain or enforce its sports wagering prohibitions," and that "PASPA also allows a state to … modify or repeal its prohibitions." Summarizing and accepting those arguments, the Third Circuit noted that "no one contends that PASPA requires the states to enact any laws, and we have held that it does not require states to maintain existing laws." 730 F.3d at 235. Indeed, the United States Constitution clearly forbids Congress from requiring a State to criminalize conduct under state law. As the Third Circuit observed, "Congress 'lacks the power directly to compel the States to require or prohibit' acts which Congress itself may require or prohibit." Id. at 227 (quoting New York v. United States, 505 U.S. 144, 166 (1992)).

That federal courts have found the licensing regime of the Sports Wagering Act to be preempted by PASPA does not invalidate the Sports Wagering Act's repeal of prohibitions against the operation of sports pools by casinos and racetracks. Recognizing that the Sports Wagering Act might be challenged under PASPA, the Legislature included a "severability clause" in its statute:

> If any provision of this act, P.L. 2011, c. 231 (C.5:12A-1 et al.), or its application to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of this act which can be given effect without the invalid provision or application, and to this end the provisions of this act are severable. [N.J.S.A. 5:12-2(g)]

The Legislature therefore intended for the provisions of the statute that are not directly invalidated to continue in force and effect. Here, as the Third Circuit made clear, and as the sports leagues and the Department of Justice conceded, PASPA does not prohibit States from repealing state-law prohibitions on sports wagering. The Sports Wagering Act's repeal of prohibitions against sports wagering in casinos and racetracks can be given effect without licensing or otherwise authorizing by law sports wagering, as prohibited by the Third Circuit's decision, and, accordingly, must be given effect. N.J.S.A. 1:1-10.

For the foregoing reasons, it is the view of the Attorney General that, at least, the provisions of the Sports Wagering Act exempting casinos and racetracks from criminal liability for operating a sports pool — specifically, N.J.S.A. 5:12A-2(a), which states that "a casino may operate a sports pool" and that "a racetrack may operate a sports pool," in accordance with how those terms are defined in N.J.S.A. 5:12A-1 — remain in force and effect, and all law enforcement and prosecuting agencies in carrying out their duties under the laws of the State of New Jersey shall abide by that exemption.

FORMAL OPINION 1-2014

The issue also has arisen regarding what effect the above Law Enforcement Directive has on the civil proscriptions applicable to sports wagering. See N.J.S.A. 2A:40-1 to -9. It is the Attorney General's statutory role to "[a]ct as the sole legal advisor" of, and to "interpret all statutes and legal documents" governing, state agencies. N.J.S.A. 52:17A-4(e).

As explained in the above Law Enforcement Directive, the Sports Wagering Act provides that a casino or racetrack "may operate a sports pool." Accordingly, sports pools operated by casinos and racetracks are exempted from criminal liability so long as no wagering occurs on a college sport or athletic event that takes place in New Jersey or in which any New Jersey college team participates regardless of where the event takes place. For the same reason, sports pools operated by casinos and racetracks are exempted from the civil proscriptions of Title 2A, chapter 40, so long as no wagering occurs on a college sport or athletic event that takes place in New Jersey or in which any New Jersey college team participates regardless of where the event takes place. Accordingly, I hereby instruct that the Department of Law and Public Safety shall not object to or seek civilly to enjoin a sports pool operated by a casino or racetrack to the extent that it is conducted in a manner consistent with this Formal Opinion.

John J. Hoffman
Acting Attorney General
Dated: September 8, 2014

cc:
Christopher S. Porrino, Chief Counsel to the Governor
Lee Vartan, Executive Assistant Attorney General
Deborah R. Edwards, Counsel to the Attorney General