Sports Leagues Denied In Bid For Rehearing Of Ruling Favoring NJ Horsemen

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The case of the New Jersey thoroughbred horsemen suing five major sports organization for $150 mm — the sequel to the long-running and ultimately groundbreaking sports betting legalization saga — is heading into 2020 with no resolution.

The latest news is that on Friday, U.S. Third Circuit Court of Appeals Judge Marjorie Rendell informed the leagues that their goal of having an “en banc” rehearing of the case before the full complement of a dozen or so senior judges has been denied.

Rendell wrote that neither she nor Theodore McKee, the two judges who comprised a majority in the Sept. 24 verdict that vacated a U.S. District Court ruling, requested a full hearing with all of the court’s judges. Also, the other judges held no majority vote to hear the case, which was the other potential route to an en banc hearing.

So this news upholds the opinion by Rendell and McKee that remanded the case to Judge Michael Shipp, who has been ruling in favor of the leagues in both sagas dating back to 2012.

The NCAA, NFL, and their counterparts in baseball, basketball, and hockey could appeal the case to the U.S. Supreme Court, which takes only 1% or so of the cases appealed to it.

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So that’s very unlikely, although the high court rather famously agreed in 2017 to take the previous case of New Jersey seeking to allow sports betting by its state racetracks and Atlantic City casinos. It is that decision voiding the Professional and Amateur Sports Protection Act of 1992 that paved the way for this latest case.

Horsemen seek payouts both small and large

There are two levels of claims by the horsemen. The first is that because PASPA was voided, the $3.4 mm that the leagues put up as a bond in 2014 must be awarded to the horsemen. That continues to seem like a no-brainer, given the result of the case.

But there is another $147 mm at stake, because the bond amount only accounted for estimated economic loss to the horsemen for a few weeks before Shipp made his ruling.

Of course, the horsemen were unable to offer sports betting at Monmouth Park racetrack well beyond that short period in 2014. The first bets didn’t come at the track until mid-2018.

So should the leagues have to pay all that extra money because Shipp and then two Third Circuit judges erred in upholding the ban for those years?

Rendell’s opinion became almost metaphysical at times:

“The entire concept of ‘wrongfully enjoined’ envisions a look back from the ultimate conclusion of the case: Should the enjoined party have been permitted to do what it was prevented from doing? … There is no way that the answer to that question could be ‘no.’

“PASPA provided the only basis for enjoining [the horsemen]from conducting sports gambling, and the Supreme Court ultimately held that that law is unconstitutional. Therefore, [the horsemen]  had a right to conduct sports gambling all along.”

What’s next in this case?

Assuming the leagues don’t seek a settlement, the horsemen are liable to ask Shipp, whose decisions in these two sports betting cases have been overturned by appellate judges numerous times, for the right to seek unredacted versions of seven-year-old depositions by league commissioners and other executives.

The goal would be to show “bad faith” by the leagues in preventing New Jersey from offering sports betting while simultaneously: permitting franchises to operate in Las Vegas; holding regular-season games in a London stadium and other sports venues where betting has long been legal; and partnering with companies offering daily fantasy sports, which the horsemen insist is another form of gambling.

At the rate this case is going, either side is liable to appeal whatever Shipp decides next year. And who knows what will happen then? There were two versions of a New Jersey sports betting law that were rejected by Shipp. Both went to the Third Circuit, and both resulted in 2-1 verdicts.

The same thing happened in September when Rendell and McKee outvoted Judge David Porter on remanding the horsemen’s case back to Shipp to evaluate the amount of damages. Porter’s focus was on the fact that in 2014, Shipp simply applied the Third Circuit’s rulings at the time that New Jersey could not legally offer sports betting because of PASPA.

But that’s not really the point — which is that the horsemen suffered economic damage for four years based on an inaccurate acceptance of PASPA as a legitimate federal law.

And that point leads to that key question: How much do the leagues owe because of that four-year delay?

Finally, Ryan Rodenberg — a Florida State University associate professor and an expert on the New Jersey sports betting saga — offered intriguing food for thought regarding the five sports organizations.

“If there is dissension in their ranks, one or more of the sports leagues could try to settle the case individually to protect against another adverse court ruling down the road,” Rodenberg said.

The NFL and NCAA have been far more strident in the case over the years than the NBA, NHL, or MLB. Would any of the latter seek a quicker exit? Estimates on the NHL share of the Las Vegas betting pool, for example, have come out as low as 1%. If the leagues lose big, how much would be their responsibility?

Photo by Shutterstock.com

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John Brennan

John Brennan has covered NJ and NY sports business and gaming since 2002 and was a Pulitzer Prize Finalist in 2008, while reporting for The Bergen County Record.

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