IN THE SUPREME COURT OF THE UNITED STATES. March 2011

Transcription

1 Docket No IN THE SUPREME COURT OF THE UNITED STATES March 2011 DEUCE McCALLISTER, Governor of the State of Tulania; RONALD HUGHES, Director of the Tulania State Lottery Office, Petitioner, -versus- MAJOR LEAGUE BASEBALL; NATIONAL BASKETBALL ASSOCIATION; NATIONAL FOOTBALL LEAGUE; NATIONAL HOCKEY LEAGUE; MAJOR LEAGUE SOCCER; NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, Respondent. On Writ of Certiorari to the United States Court of Appeals for The Fourteenth Circuit BRIEF FOR THE RESPONDENT Team 32

2 QUESTIONS PRESENTED I. Whether the court of appeals erred in concluding that Tulania s Sports Lottery Act violates the Professional and Amateur Sports Protection Act, when its proposed sports betting scheme seeks to operate beyond the extent to which Tulania previously operated a sports betting scheme in II. Whether the court of appeals erred in holding that Tulania s Sports Lottery Act violates the Tulania Constitution, when the proposed sports betting scheme is not a lottery as contemplated by the framers. i

3 TABLE OF CONTENTS QUESTIONS PRESENTED... i TABLE OF CONTENTS... ii TABLE OF AUTHORITIES... iv STATEMENT OF THE CASE...1 I. STATEMENT OF THE FACTS...1 II. STATEMENT OF THE PROCEEDINGS...2 SUMMARY OF THE ARGUMENT...4 ARGUMENT...6 I. Tulania's Sports Lottery Act violates PASPA, failing to comply with any of its annunciated exceptions, because Tulania seeks to operate a sports betting scheme beyond the extent to which its 1976 scheme was conducted A. The Fourteenth Circuit Court of Appeals correctly held that the plain language of 28 U.S.C. 3704(a)(1) only authorizes the Tulania sports betting scheme to the extent that the scheme was conducted in B. Assuming, arguendo, that the language of 3704(a) is ambiguous, the legislative history, statutory construction, and plain statement rule nevertheless fail to support anything other than a narrow construction The structure of 3704(a) supports a narrow reading of the exception because such a reading comports with the intent of Congress The legislative history of PASPA supports a narrow reading of 3704(a) because a broad reading would impede a clear congressional intent to stop the spread of sports gambling Congress clearly expressed its intention to alter the balance of federal and state power through its general prohibition in 3702, expressly prohibiting any sports betting scheme that does not fit within the narrow exception II. The court of appeals properly held that Tulania s Sports Lottery Act is unconstitutional because the proposed sports betting scheme is not a lottery as authorized by the Tulania Constitution...16 ii

4 A. The court of appeals properly held that Tulania s Supreme Court would follow the rule of strict construction, comport with the strong public policy against gambling, and adopt the English rule...17 B. Even under the American rule, the Sports Lottery Act violates the Tulania Constitution by proposing sports betting games where the element of skill predominates the element of chance...20 CONCLUSION AND REQUEST FOR RELIEF APPENDIX A iii

5 TABLE OF AUTHORITIES United States Statutes Professional and Amateur Sports Protection Act, 28 U.S.C passim United States Supreme Court Cases Champion v. Ames (Lottery Case), 188 U.S. 321 (1903)...16 City of Edmonds v. Oxford House, 514 U.S. 725 (1995)...12 Gregory v. Ashcroft, 501 U.S. 452 (1991) McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819)...15 Pa. Dep't of Corrs. v. Yeskey, 524 U.S. 206 (U.S. 1998)...15 Ratzlaf v. United States, 510 U.S. 135 (1994)...9 Raygor v. Regents of the Univ. of Minn., 534 U.S. 533 (2002)...15 Russello v. United States, 464 U.S. 16 (1983) United States Courts of Appeals Cases Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144 (3d Cir. 2009)...7, 9 Major League Baseball v. McCallister, No. 09-AC-0213 (14th Cir. 2009) (App. Ct. Opinion)... passim Nason v. Immigration and Naturalization Serv., 394 F.2d 223 (2d Cir. 1968)...8 United States v. Marder, iv

6 48 F.3d 564 (1st Cir. 1995)...21 United States District Court Cases Major League Baseball v. McCallister, No. 09-AC-0213 (S.D. Tulania 2009) (D. Ct. Opinion)... passim Nat l Football League v. Governor of Del., 435 F. Supp (D. Del. 1977)...16, 18, 20, 21, 23 Federal Legislative Materials 138 Cong. Rec. S (1992) S. Rep. No (1991)...13, 15 State Cases Caribe Hilton Hotel v. Toland, 63 N.J. 301 (1973)...19 Commonwealth v. Laniewski, 98 A.2d 215 (Pa. Super. 1953)...22 Harris v. Mo. Gaming Comm n, 869 S.W.2d 58 (Mo. 1994) (en banc)...18, 22 Opinion of the Justices, 385 A.2d 695 (Del. 1978) People ex rel. Ellison v. Lavin, 179 N.Y. 164 (1904)...20 Opinions of State Attorneys General N.Y. Op. Atty. Gen. 84-F1 (1984)...19, 21, 22 W. Va. Op. Atty. Gen. 8 (1991)...22 v

7 STATEMENT OF THE CASE I. STATEMENT OF THE FACTS In 1973, the Tulania Constitution was amended to allow [l]otteries under State control for the purpose of raising funds. Major League Baseball v. McCallister, No. 09-AC-0213, at (S.D. Tulania 2009) (hereinafter D. Ct. Opinion ). In 1976, Tulania instituted a sports lottery based on the outcome of multiple National Football League ( NFL ) games, but this lottery was discontinued at the end of the NFL season, due in part to the collapse of Delaware s nearly identical lottery for offering a bad line that caused them to incur a severe loss. Id. at Tulania s 1976 sports lottery consisted of three types of games: Football Bonus, Touchdown, and Touchdown II. Id. at 20. Football Bonus divided the fourteen weekly NFL games into seven-game pools, and participants had to pick the winners of all seven games correctly in order to win. Id. Winnings were awarded on a pari-mutuel basis, giving each winner her pro rata share of the total amount bet minus the amount the state was paid. Id. The second game was called Touchdown, and participants picked the winners of games along with one of three point spread ranges. Id. To win, one had to pick both the winning team and the correct point spread range in each of three, four, or five NFL games, and awards were also paid on a pari-mutuel basis. Id. Touchdown II replaced Touchdown during the middle of the season. Id. Participants were given a point spread and asked to choose the team that would beat the point spread in each of twelve games. Id. at To win, one had to correctly choose the team that beat the spread in at least four games and at most twelve, and Touchdown II offered winnings in fixed increments based upon how many winners were picked. Id. at 21. No single-game betting 1

8 on any sport and no multi-game betting on anything other than NFL football was conducted in Id. at 20. In March 2009, Governor Deuce McCallister proposed a sports lottery similar to the 1976 scheme, which the Tulania Legislature later implemented and Governor McCallister signed into law as the Sports Lottery Act (hereinafter Sports Lottery ). Id. at 21, 23. Tulania s Sports Lottery seeks to operate three games: the Single Game Lottery, a point spread bet; the Total Lottery, an over/under bet; and the Parlay Lottery, a wager based on multiple elements. See id. at Tulania has also indicated its intention to expand into non-nfl sports and single-game betting. Id. at 21. It seeks to take advantage of what it sees as an exemption in the Professional and Amateur Sports Protection Act, 28 U.S.C (hereinafter PASPA ) 1 to allow certain states to engage in sports betting. Id. at 24. II. STATEMENT OF THE PROCEEDINGS Major League Baseball, the National Basketball Association, the National Football League, the National Hockey League, Major League Soccer, and the National Collegiate Athletic Association filed suit in the Southern District of Tulania to prevent the operation of Tulania s sports lottery. Id. at 24. Plaintiffs argued that single-game betting and betting on non-nfl sports violates PASPA and that all aspects of the sports lottery violate the Tulania Constitution. Id. at 25. The district court held, as a matter of law, that Tulania s sports lottery is a legal lottery under the Tulania Constitution and that it does not violate PASPA. Id. at 41. First, the court reasoned that the language of PASPA was ambiguous and relied on the plain statement rule and PASPA s legislative history to provide a broad exception to PASPA s general prohibition of 1 See Appendix A, 28 U.S.C

9 sports gambling. Id. at 35. Second, the court held that the Tulania Supreme Court would adopt the American rule to interpret the lottery exception in the Tulania Constitution and find the Sports Lottery legal. Id. at 41. The sports leagues appealed the judgment of the district court to the Fourteenth Circuit Court of Appeals. Major League Baseball v. McCallister, No. 09-AC-0213, at 3 (14th Cir. 2009) (hereinafter App. Ct. Opinion ). The court of appeals reversed the district court s holding on the first count, id. at 3, holding instead that gambling on single games and non-nfl sports violates PASPA as a matter of law. Id. at 13. The court of appeals narrowly interpreted the statutory exception to PASPA s general prohibition of sports gambling on the basis of a plain language analysis of the statute. Id. at 13. Furthermore, the court of appeals reversed the district court on the second count and found that the sports lottery violated the Tulania Constitution as a matter of law. Id. at 17. The court held that the Supreme Court of Tulania would adopt the English rule to narrowly and strictly interpret the lottery exception, and found the Sports Lottery unconstitutional under the terms of the Tulania Constitution. Id. at 18. 3

10 SUMMARY OF THE ARGUMENT The United States Congress enacted PASPA, 28 U.S.C , to prohibit any person or governmental entity from operating a gambling scheme based on the outcome of sporting events, with four express exceptions to the general prohibition. Tulania s Sports Lottery seeks to take advantage of the 3704(a)(1) exception and operate a sports betting scheme consisting of two single-game NFL wagers and an NFL parlay wager, with plans to expand to non-nfl betting. However, a proper analysis of the plain language of the statute and the extrinsic evidence supports a narrow interpretation of 3704(a)(1) that does not encompass Tulania s proposed betting scheme. The ordinary meaning of 3704(a)(1) plainly prohibits games beyond what was conducted in 1976, and the court of appeals properly relied upon the plain language to find that both single-game betting and non-nfl betting violate PASPA. Accordingly, the court of appeals properly refused to resort to extrinsic evidence to interpret the meaning of the statute and found that the Sports Lottery violates PASPA as a matter of law. Assuming, arguendo, that this Court found the statute ambiguous, a narrow interpretation of 3704(a)(1) is nevertheless fully supported by the structure of the statute, its legislative history, and an unmistakably clear congressional intent to alter the federal-state balance. Therefore, this Court should affirm the Fourteenth Circuit s holding that Tulania s Sports Lottery violates PASPA as a matter of law. Furthermore, this Court should affirm the Fourteenth Circuit s holding that none of the games proposed by the Sports Lottery are lotteries as authorized by the Tulania Constitution. The general prohibition of gambling in the Tulania Constitution codifies the strong public policy against gambling in the State of Tulania, subject to a lottery exception that must be narrowly 4

11 construed. The court of appeals properly approached this issue of first impression by looking to precedent governing constitutional construction. The strict construction rule would require the Tulania Supreme Court to narrowly and strictly construe the lottery exception and adopt the English rule to apply the exception accordingly. Additionally, the English rule is most consistent with the drafters intent because there is no textual or contemporaneous legislative indication of a broad construction. Therefore, this Court should uphold the Fourteenth Circuit s ruling that the Tulania Supreme Court should adopt the English Rule. Alternatively, even if the Supreme Court of Tulania were to adopt the American rule and broadly interpret the lottery exception, Tulania s sports lottery would still violate the Tulania Constitution because the exercise of skill predominates the element of chance in dictating the distribution of the prizes. The proposed games provide an opportunity for the bettor to match wits with the state bookmaker, using skill, expertise, and judgment, such that the exercise of skill dominates the element of chance. Therefore, regardless of which rule is adopted by the Tulania Supreme Court, none of the games proposed by the Sports Lottery are encompassed by the lottery exception, and an amendment to the Tulania Constitution is the proper method by which the proponents of a sports betting scheme may seek its adoption. 5

12 ARGUMENT This Court should affirm the Fourteenth Circuit s holding that, as a matter of law, PASPA prohibits Tulania from operating its proposed sports lottery. The proposed games are not encompassed by any of PASPA s annunciated exceptions because they exceed the extent to which Tulania conducted its previous sports lottery in Therefore, both single-game betting and non-nfl betting as contemplated by the Sports Lottery violate PASPA as a matter of law. Furthermore, this Court should affirm the Fourteenth Circuit s holding that the Sports Lottery violates the Tulania Constitution as a matter of law. All of the games proposed by Tulania s sports lottery are unconstitutional because they are not lotteries as authorized by the Tulania Constitution, regardless of whether the Tulania Supreme Court would adopt the English rule or the American rule to interpret the term lottery. The Supreme Court reviews rulings on issues of law, such as in this case, de novo. I. Tulania's Sports Lottery Act violates PASPA, failing to comply with any of its annunciated exceptions, because Tulania seeks to operate a sports betting scheme beyond the extent to which its 1976 scheme was conducted. The court of appeals correctly found that the parts of Tulania s sports lottery that contemplate betting on single games and on sports other than the NFL violate PASPA as a matter of law. See App. Ct. Opinion at 13. PASPA generally prohibits sports betting but lays out four express exceptions in order to avoid a retroactive prohibition and regulate the extent to which certain states may operate sports-based gambling schemes. See generally 28 U.S.C (2006). Tulania s Sports Lottery seeks to take advantage of 3704(a)(1) 2 and operate a sports lottery that is partially based on a system the state conducted briefly in See D. Ct. Opinion at 24. Tulania s proposed lottery scheme, however, seeks to operate games that go 2 See Appendix A, 28 U.S.C

13 beyond the limited lottery that was previously conducted, including single-game betting and betting non-nfl sports. D. Ct. Opinion at 21. These games violate PASPA because they exceed the extent to which the Tulania sports lottery was conducted in 1976 and do not qualify for the 3704(a)(1) exception. A. The Fourteenth Circuit Court of Appeals correctly held that the plain language of 28 U.S.C. 3704(a)(1) only authorizes the Tulania sports betting scheme to the extent that the scheme was conducted in PASPA generally prohibits any person or governmental entity from sponsoring, operating, advertising, or promoting any lottery, sweepstakes, or other betting scheme based directly or indirectly on one or more amateur or professional sporting events. 28 U.S.C (2006). However, 3704 details four exceptions to this prohibition, one of which is pertinent here. See 28 U.S.C (2006). Section 3704(a)(1) expressly allows a 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, U.S.C. 3704(a)(1) (2006). Tulania seeks to use this exception to exempt its sports lottery from PASPA s prohibition, but 3704(a)(1) makes clear, after examining its plain language, that Tulania s proposed games are not encompassed beyond what was conducted in Id. In interpreting a statute, the Court looks first to the statute's plain meaning.... Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 155 (3d Cir. 2009) (quoting Conn. Nat'l Bank v. Germain, 503 U.S. 249, (1992) (internal quotation marks omitted)). If the statutory language is unambiguous, in the absence of a clearly expressed legislative intent to the contrary, that language must ordinarily be regarded as conclusive. Russello v. United States, 464 U.S. 16, 20 (1983) (quoting United States v. Turkette, 452 U.S. 576, 580 (1981)). Section 3704(a)(1) 7

14 only allows a state s sports betting scheme to operate to the extent that the scheme was conducted by that State during the limited time period. 3704(a)(1). The language of this exception is straightforward; it uses no terms of art, technical terms, or statutory definitions. It requires the Court to compare the proposed scheme with the scheme that was conducted previously and only permits its operation to the extent that the previous scheme was conducted. Id. The word scheme is not defined in 3701; however, silence compels [the Court] to start with the assumption that the legislative purpose is expressed by the ordinary meaning of the words used. Russello, 464 U.S. at 21 (quoting United States v Richards, 369 U.S. 1, 9 (1962)). The word scheme implies a specific, more or less articulated and coherent plan. Nason v. Immigration and Naturalization Serv., 394 F.2d 223, 227 (2d Cir. 1968). Additionally, Black s Law Dictionary defines scheme as, [a] systematic plan; a connected or orderly arrangement, esp[ecially] of related concepts. Black s Law Dictionary 1462 (9th ed. 2009). Here, since Congress did not restrict the usage of scheme to a broad or vague definition and the generally accepted definitions of scheme include a degree of specificity, the statutory language suggests that Tulania s sports lottery scheme refers to the specific aspects that make up its overall plan. Tulania s sports lottery scheme is more specific than merely a sports lottery under State control. D. Ct. Opinion at Similarly, conducted is not defined in 3701, but its ordinary meaning is not disputed in the same sense as scheme. The lottery that was conducted previously by Tulania, including the specific set of games offered, is undisputed. D. Ct. Opinion at 20. However, the argument that Tulania may conduct any sports lottery under state control, simply because Tulania 8

15 conducted a sports lottery in 1976, fails because of the plain meaning of the phrase to the extent in 3704(a)(1). Section 3704(a)(1) only allows a state s sports betting scheme to the extent that the scheme was conducted by that State at any time during the limited time period. 3704(a)(1). Similar to the word scheme, the phrase to the extent is not defined in the statute, requiring the Court to return to the ordinary meaning of the words used. Russello, 464 U.S. at 20. The definition of the phrase to the extent requires a determination of the degree to which Tulania s 1976 scheme extended, in order to compare it with the proposed scheme. See Dictionary.com, (last visited Jan. 9, 2011). If the proposed scheme or some of the specific aspects that make up the overall plan go beyond the degree to which the 1976 scheme was conducted, those aspects do not qualify for the 3704(a)(1) exception. Id. Here, any specific aspect of Tulania s Sports Lottery that contemplates a sports lottery that was not conducted in 1976, using the ordinary meaning of conducted, is prohibited. The statutory language is clear and unambiguous, permitting a proposed lottery scheme only to the extent that the scheme was conducted by that State. 3704(a)(1). The ordinary meaning of those words plainly prohibits the parts of Tulania s Sports Lottery that constitute substantive changes beyond what was conducted in 1976; therefore, the inquiry comes to an end. Kaufman, 561 F.3d at 155 (quoting Conn. Nat'l Bank v. Germain, 503 U.S. 249, (1992) (internal quotation marks omitted)). B. Assuming, arguendo, that the language of 3704(a) is ambiguous, the legislative history, statutory construction, and plain statement rule nevertheless fail to support anything other than a narrow construction. The Supreme Court has instructed courts to rely on the plain meaning of statutory text when it is clear. See Ratzlaf v. United States, 510 U.S. 135, (1994) ( we do not resort to 9

16 legislative history to cloud a statutory text that is clear ). Assuming, however, that the language of the statute is ambiguous, the Court will then turn to extrinsic evidence to determine the statute s meaning. See generally, Russello v United States, 464 U.S. 16 (1983). The court of appeals properly rejected Tulania s arguments based on PASPA s construction, legislative history, and effect on the State s sovereign power, holding instead that a narrow reading of 3704(a) is appropriate. See App. Ct. Opinion. The court s interpretation of the extrinsic evidence is correct because a broad reading of the statute neglects other principles of statutory construction, fails to take into account the full legislative history in its proper context, and misapplies the plain statement rule. Therefore, even if the statutory text were unclear, a proper analysis of the available extrinsic evidence supports a narrow reading of 3704(a)(1). 1. The structure of 3704(a) supports a narrow reading of the exception because such a reading comports with the intent of Congress. In addition to its plain meaning, the structure of 3704(a) supports a narrow reading of the 3704(a)(1) exception and comports with the intent of Congress. The court of appeals correctly held that Congress did not intend the phrase was conducted in 3704(a)(1) to include any previously authorized sports lottery because the terms were used separately in 3704(a)(2) and may not be combined. See 28 U.S.C. 3704(a)(2) (2006). The Court explained in Russello that [w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion. Russello, 464 U.S. at 23 (quoting United States v. Wong Kim Bo, 472 F.2d 720 (5th Cir. 1972)). The other sections of PASPA, therefore, may not be construed to fuse the two terms into the phrase was conducted. Conducted cannot mean authorized once Congress separates the terms, and the court of appeals properly rejected that interpretation. See App. Ct. Opinion at 6. 10

17 Additionally, the court of appeals properly rejected Tulania s proposed parallel construction of to the extent in 3704(a)(1), that it would merely indicate a condition as the phrase does in 3704(a)(3). See id. at 7. Section 3704(a)(3) excepts from the general PASPA prohibition: a betting, gambling, or wagering scheme, other than a lottery described in paragraph (1), conducted exclusively in casinos located in a municipality, but only to the extent that -- (A) such scheme or a similar scheme was authorized, not later than one year after the effective date of this chapter, to be operated in that municipality; and (B) any commercial casino gaming scheme was in operation in such municipality throughout the 10-year period ending on such effective date pursuant to a comprehensive system of State regulation authorized by that State's constitution and applicable solely to such municipality[.] 28 U.S.C. 3704(a)(3) (2006). The canon of parallel construction is inapplicable here because the context surrounding the phrase to the extent in each section provides an indication of the usage of the phrase within that section, and to the extent is used differently in the two sections. The plain meaning of the phrase to the extent and the context surrounding the phrase in 3704(a)(1) actually limit the authority granted the states to operate a sports betting scheme to the degree that their previous scheme was conducted. In contrast, the context of 3704(a)(3) identifies two conditions that the scheme must meet, using a structure, context, and syntax that serves a different purpose. See id. If Congress intended to provide the states with a broad exception to conduct sports lotteries as they choose, it could have done so directly. Instead, the phrase to the extent is used as a limiting device in this context, allowing 3704(a)(1) to accomplish its limited statutory purpose of narrowly excepting a few activities from an otherwise comprehensive regulatory scheme. The court of appeals, therefore, properly rejected the parallel construction argument. See App. Ct. Opinion at 7-8. Finally, the language of 3704(a)(1) specifically excepts the activities that a state or other governmental entity undertakes - the schemes - as opposed to an exception granted to the 11

18 entities themselves. See 3704(a)(3). If Congress had intended a broad exception, such that if a state had run a sports lottery in the past, it could conduct any sports lottery without limitation in the future, Congress could have done so directly. It could have excepted the states entirely, rather than individual sports betting schemes, from the general prohibition of PASPA. Instead, Congress expressly excepted a proposed sports-based wagering scheme to the extent that the scheme was conducted by that State during a limited time period. See 3704(a)(1). The court of appeals correctly rejected Tulania s proposed theories of statutory construction, instead recognizing a narrow interpretation of 3704(a)(1). See App. Ct. Opinion at The legislative history of PASPA supports a narrow reading of 3704(a) because a broad reading would impede a clear congressional intent to stop the spread of sports gambling. The court of appeals properly rejected Tulania s argument that the text of PASPA is unclear and refused to resort to its legislative history. See id. at 8. Even if the language were ambiguous, however, the legislative history, read in its proper context, supports a narrow interpretation. Conversely, a broad reading of the text of the statute would not comply with Congress stated public purpose of the Act: to stop the spread of sports gambling. 138 Cong. Rec. S , S7275 (1992) (Sen. DeConcini). This statute is an instance in which an exception to a general statement of policy is sensibly read narrowly in order to preserve the primary operation of the policy. City of Edmonds v. Oxford House, 514 U.S. 725, (1995). Furthermore, a narrow interpretation is just as strongly espoused throughout portions of the legislative history, and the context surrounding the discussions of 3704(a) supports such a reading. It is reasonable, therefore, to infer that Congress intended the 3704(a) exception to be narrowly construed, such that the result of the interpretation comports with the overall purpose of PASPA. 12

19 The Report of the Senate Judiciary Committee, though contradictory in some respects, contains strong statements in support of a narrow interpretation of 3704(a). See S. Rep. No (1991), reprinted in 1992 U.S.C.C.A.N. 3553, 1991 WL The report states that [t]he narrowness of subsection [3704](a) reflects the committee's policy judgment that sports gambling should be strictly contained. Id. at 10. Additionally, the Committee s section-bysection analysis states that Paragraph (1) provides that the prohibition does not apply... to the extent that the scheme actually was conducted... and that Paragraph (1) does not intend to allow the expansion of sports lotteries into head-to-head betting. Id. In contrast, the report also states an intention to exempt sports lotteries that were already permitted under state law, despite the fact that such an exemption was not included in the final language of the statute. Id. at These conflicting viewpoints make clear that the Committee Report is muddled at best. However, the overall purpose of PASPA, public support surrounding the bill, and several specific indications in the report reflect a desire to stop the spread of sports gambling, and a narrow interpretation of 3704(a) would do so. See id. During the Senate floor debate, Senator Dennis DeConcini, one of the principal supporters and a cosponsor of the bill, stated that the bill did not permit States to expand into other areas of sports gaming that they do not already involve themselves in and that to prohibit sports gambling on one hand and to approve potential expansion on the other is really inconsistent and, in my judgment, not good policy. 138 Cong. Rec. S , S7279 (1992). Additionally, Senator Orrin Hatch, who espoused a complete ban on state-sponsored sports gambling, pointed out that the least we can do... is stop the trend of such gambling, through a legislative compromise that provided a general prohibition but limited exceptions in carefully circumscribed situations, where such schemes are already provided for. Id. at S7275. The 13

20 strong support for the bill in the Senate, the discussions of its co-sponsors, and the final language of the bill support a narrow reading of the 3704(a) exceptions. It is undisputed that the overall purpose of PASPA is to prohibit sports gambling, with four express exceptions to the general prohibition. See 28 U.S.C The intent of 3704(a) is to allow certain states to conduct sports betting schemes as they were conducted prior to the introduction of PASPA by excluding from the wide-ranging regulation only those states whose wagering schemes fit within four express, limited exceptions. 3704(a). The Judiciary Committee Report made clear the intention to avoid retroactive prohibition of state schemes that meet the 3704(a) exceptions, but the Report, the discussions of the bill s supporters, and the final language enacted all point to a narrow interpretation of those exceptions. A narrow interpretation would stop the spread of State-sponsored sports gambling and maintain the integrity of sports in America, which comports with the overall purpose of PASPA. 138 Cong. Rec. S , S7275 (1992). A broad interpretation contravenes that purpose and misreads the intentions of Congress. 3. Congress clearly expressed its intention to alter the balance of federal and state power through its general prohibition in 3702, expressly prohibiting any sports betting scheme that does not fit within the narrow exceptions. The court of appeals properly rejected Tulania s argument that the plain statement rule protects the state s right to raise revenue in the manner it deems fit and permits the state to implement its proposed betting scheme. App. Ct. Opinion at 9. The Gregory plain statement rule provides that if Congress intends to alter the usual constitutional balance between the States and the Federal Government, it must make its intention to do so unmistakably clear in the language of the statute. Gregory v. Ashcroft, 501 U.S. 452, (1991) (quoting Will v. Michigan Dept. of State Police, 491 U.S. 58, 65 (1989) (internal quotation marks omitted)). 14

21 Congress unmistakably and clearly expressed its intention to prohibit any governmental entity or person from operating any sports betting scheme that does not fit within four express exceptions, and this wide-ranging federal regulation in 3702 is the primary intention of PASPA. See S. Rep. No at 10. Additionally, there was no unintended intrusion upon state sovereignty. The plain statement rule is designed to assur[e] that the legislature has in fact faced, and intended to bring into issue, the critical matters involved. Raygor v. Regents of the Univ. of Minn., 534 U.S. 533, 544 (2002) (quoting Will v. Michigan Dept. of State Police, 491 U.S. 58, 65 (1989) (internal quotation marks omitted). PASPA s massive intrusion affected all fifty states in a concerted and purposeful Congressional effort to stop the spread of sports gambling, so there is no question that Congress intended to bring into issue the matters involved. Even in states with schemes excepted by 3704(a)(1), the spared betting schemes may only be conducted to the extent that they were conducted between January 1, 1976 and August 31, (a)(1). Since Congress made its intention to alter the balance of sports betting regulation unmistakably clear in 3702, there is no need to force a broad interpretation upon 3704(a)(1) to preserve the sovereign power of the states. The intention of Congress is clear, and a narrow interpretation of 3704(a)(1) comports with that intention. Finally, the Gregory plain statement rule has been applied to legislation in traditionally sensitive areas or legislation affecting the historic powers of the states, Gregory 501 U.S. at 460, also referred to as traditional and essential State function[s]. Pa. Dep't of Corrs. v. Yeskey, 524 U.S. 206, 209 (U.S. 1998). PASPA is not subject to the plain statement rule because the ability of the states to raise revenue as each sees fit has long been limited by federal regulation, going back to McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819). Similarly, 15

22 gambling has been the subject of federal regulation as early as Champion v. Ames (Lottery Case), 188 U.S. 321 (1903), and PASPA is merely another exercise of the power granted to Congress by the Commerce Clause. See McCulloch, 17 U.S. (4 Wheat.) 316 (1819). State-sponsored sports gambling in order to raise revenue is not a historic power of the state beyond the regulation of Congress and therefore, is not subject to the Gregory plain statement rule. II. The court of appeals properly held that Tulania s Sports Lottery Act is unconstitutional because the proposed sports betting scheme is not a lottery as authorized by the Tulania Constitution. The Tulania Constitution, as amended in 1974, generally prohibits gambling but contains an exception that authorizes lotteries under State control for the purpose of raising funds. D. Ct. Opinion at Tulania s Sports Lottery seeks to take advantage of this lottery exception and implement a sports gambling scheme under state control. Id. at 21. The term lottery is not defined in the text of the Tulania Constitution, Id. at 35, but for the reasons that follow, the Sports Lottery is unconstitutional because its proposed gambling scheme is not a lottery as contemplated by the drafters of the Tulania Constitution. There are three elements necessary to a lottery: prize, consideration, and chance. Nat l Football League v. Governor of Del., 435 F. Supp. 1372, 1383 (D. Del. 1977). The requirement of chance has been articulated using the English rule, which requires pure chance to dictate the distribution of the prize, and the American rule, which requires chance to be the dominant factor... in the qualitative or causative sense. Id. at The Tulania Supreme Court has not yet ruled upon whether Tulania s courts should use the English rule or the American rule to interpret the lottery exception in their Constitution. D. Ct. Opinion at 36. However, because it is most consistent with the strict construction rule, the drafters intent, and the public policy of Tulania, the court of appeals properly held that the Tulania Supreme Court would adopt the 16

23 English rule. See App. Ct. Opinion. Therefore, since it is undisputed that Tulania s proposed sports lottery games involve an element of skill in picking the winner or winners of a sporting event, the Sports Lottery is not a pure chance lottery and violates the Tulania Constitution. Alternatively, even if the Supreme Court of Tulania were to adopt the American rule instead of the English rule, the proposed betting scheme would still violate Tulania s Constitution. The proposed games combine the exercise of skill on the part of both the bettor and the state bookmaker and an element of chance, but chance is not the dominant factor that dictates the distribution of the prize. Betting on the outcome of a sporting event provides an opportunity for the bettor, as well as the bookmaker, to employ skill, expertise, and statistical research, matching wits against each other, such that the most sophisticated party would gain the advantage. This predominance of the exercise of skill in Tulania s proposed games fails the dominant factor test, and would still violate Tulania s Constitution. The Sports Lottery, therefore, does not satisfy the requirement of chance, as dictated by the English rule nor the American rule. Regardless of the rule applied, the scheme is not a lottery and does not meet the lottery exception in the Tulania Constitution. A. The court of appeals properly held that Tulania s Supreme Court would follow the rule of strict construction, comport with the strong public policy against gambling, and adopt the English rule. Tulania s Constitution broadly prohibits gambling but contains a narrow lottery exception, and the court of appeals correctly pointed out that Tulania courts should not unnecessarily broaden that narrow exception by applying the American rule. Id. at 13. Any exception to such general constitutional prohibition must be narrowly and strictly construed. Opinion of the Justices, 385 A.2d 695, 701 (Del. 1978) (citing U.S. v. Allen, 163 U.S. 499 (1895)). The Tulania courts have not ruled on whether the English or American rule applies in 17

24 their state, but the Tulania Supreme Court should, and likely would, follow this strict construction rule and adopt the English rule. It is undisputed that the majority of American jurisdictions have adopted the American rule, or dominant factor test. D. Ct. Opinion at 36. However, each of those jurisdictions adopted the rule while interpreting their own constitution or gambling statute, often with the help of a broad, contemporaneous legislative definition of lottery or a broad textual exception. See, e.g., NFL, 435 F. Supp. at 1385; Harris v. Mo. Gaming Comm n, 869 S.W.2d 58, 62 (Mo. 1994) (en banc). The district court relied heavily on NFL, a 1977 District of Delaware decision in which Judge Stapleton reasoned that the Delaware Supreme Court would adopt the American rule. 435 F. Supp. at Judge Stapelton, however, gave due deference to a broad and contemporaneous legislative definition of lottery, which Tulania does not have. Id. On the contrary, states such as Tulania with a general constitutional ban on gambling, and no constitutional or contemporaneous legislative indication of a broad exception, must narrowly construe any exception to such a ban. Opinion of the Justices, 385 A.2d at 701. The court of appeals, therefore, properly found both that the English rule is most consistent with a narrow interpretation of the term lottery, as used in the Tulania Constitution, and that the Tulania Supreme Court would adopt it. See App. Ct. Opinion at 14. Additionally, the court of appeals correctly found that gambling is against the public policy of Tulania, which supports a narrow reading of this exception to Tulania s Constitutional ban on gambling. See App. Ct. Opinion at 13. All forms of gambling are prohibited by the Constitution of Tulania, and only certain forms are expressly authorized by exceptions to the general prohibition. Id. This Constitutional ban on gambling would be directly contravened if Tulania s Supreme Court expanded the exceptions through a broad interpretation. Furthermore, 18

25 that which was not contemplated by the constitutional drafters may not be made so now either by legislative act or judicial fiat. Op. of the Justices, 385 A.2d at 705. Accordingly, the Tulania Supreme Court would likely rely on the public policy against gambling in the State s Constitution to adopt the English rule. New Jersey s Supreme Court discussed its policy toward gambling under a similar constitutional construction as one of carefully regulating certain permitted forms of gambling while prohibiting all others entirely. Caribe Hilton Hotel v. Toland, 63 N.J. 301, 307 (1973). Similarly, the New York Attorney General opined that his State s constitution showed no intent on the part of the framers to sanction the kind of gambling involved in the proposed [sports betting] game. N.Y. Op. Atty. Gen. 84-F1 (1984), at 1, available at 1984 WL The general prohibition on gambling in these states, although subject to express exceptions, shows an intent on the part of the framers to carefully regulate and narrowly construe any such exceptions. The Tulania Supreme Court would likely approach their state s gambling policy similarly, without reading any broad meaning into the express exceptions. As the court of appeals correctly pointed out, the constitutional drafters would have used a more general phrase if they intended to carve out a broad exception to the general ban on gambling. App. Ct. Opinion at 14. Therefore, an amendment to the Tulania Constitution would be required in order to implement any gambling scheme that does not fit within the narrowly construed express exceptions to the general prohibition. See id. The court of appeals properly held that the Tulania Supreme Court would, and should, apply the English Rule and narrowly construe the lottery exception in the Tulania Constitution to only authorize games of pure chance. See id. at 15. It is undisputed that Tulania s proposed sports lottery games involve an element of skill in picking the winner or winners of a sporting 19

26 event. Id. Therefore, the English rule precludes the Sports Lottery from being a lottery authorized by the Tulania Constitution. B. Even under the American rule, the Sports Lottery Act violates the Tulania Constitution by proposing sports betting games where the element of skill predominates the element of chance. While the method of analysis would change if the Tulania Supreme Court were to adopt the American rule, the result would not. The lottery exception in the Tulania Constitution, which authorizes lotteries under State control for the purpose of raising funds, would be broadly interpreted to encompass a game in which chance is the dominating element that determines the result of the game, People ex rel. Ellison v. Lavin, 179 N.Y. 164, 171 (1904), or dominant factor. NFL, 435 F. Supp. at However, the element of skill present in Tulania s proposed sports betting scheme predominates the element of chance; therefore, the proposed scheme fails the tests of both the broad American rule and the narrow English rule. The proposed games are not lotteries as that term is interpreted by either of the prevailing approaches to the question of what qualifies as a lottery. The games proposed by Tulania s Sports Lottery combine the exercise of skill and an element of chance. The point spread and over/under bets require the bettor to place their wager based on a betting line put out by the state bookmaker. Dist. Ct. Opinion at 22. The state bookmaker makes judgments as to the probabilities of certain events bet upon, such as which team will win and by how much or the amount of total points scored. Id. In making these judgments, bookmakers consider all relevant information that may affect the outcome of the event. See generally NFL, 435 F. Supp. at 1385 (explaining the factors involved and how educated predictions may be made). For NFL games, not only will the particular teams and players affect the outcome, but other factors may have an effect, such as travel circumstances for 20

27 the teams, the weather, or the type of grass. Id. The resulting betting lines are the products of the bookmaker s exercise of considerable skill in an attempt to create an advantage for the state and even out the total amount of bets placed on each side of the contest. See NFL, 435 F. Supp. at The skill of the bettor comes into play when she decides where to place a wager in relation to the line or lines put out by the state bookmaker. The bettor may make her own estimates of the probabilities of those same events, using reason, judgment, or expertise to decide how to bet. See N.Y. Op. Atty. Gen. 84-F1 (1984), at 10, available at 1984 WL She may even employ the compilation and calculation of any number of statistics, or conduct massive amounts of research, to help determine a good bet. Id. A potential bettor may conduct research and analyze statistics, only to decide not to bet because she made an educated judgment that the betting line gives the state too much of an advantage or makes the odds too close. The state bookmaker knows that sophisticated bettors are working hard to outsmart the betting line and win potentially huge amounts of money, and the bookmaker must be virtually perfect in her bookmaking in order to avoid a calamity such as Delaware s Touchdown II failure in D. Ct. Opinion at 21. Thus, the point spread and betting line are introduced in an attempt to inject a further factor of chance. NFL, 435 F. Supp. at In United States v. Marder, the court applied the American rule and stated that in order for chance to be the dominant factor in a wager, the element of chance must be present in such a manner as to thwart the exercise of skill or judgment in a game. United States v. Marder, 48 F.3d 564, 569 (1st Cir. 1995). Using a similar analysis, a sports betting scheme that provides such an opportunity for the bettor to employ judgment, expertise, and statistical analysis, cannot be said to contain an element of chance that thwarts the exercise of skill. Accordingly, state courts and Attorneys General have recognized the significant exercise of skill and judgment in 21

28 sports betting. See, e.g., Commonwealth v. Laniewski, 98 A.2d 215, 249 (Pa. Super. 1953) ( Past records, statistics and other data might be consulted, and, by reasoning from them, a forecast might be made as to the outcome of any particular game or games. ); Harris, 869 S.W.2d at 62 (Games that are not lotteries have an element of skill. Skill increases the probability of winning. ); N.Y. Op. Atty. Gen. 84-F1 (1984), at 10, available at 1984 WL ( the exercise of bettor's judgment in trying to select the winners or losers of such contests, and to figure the point spreads, involves substantial (not slight) skill. ); W. Va. Op. Atty. Gen. 8 (1991), at 4, available at 1991 WL ( the amount of skill involved in sports betting places this form of gambling outside the parameters of a lottery. ). This significant exercise of skill predominates the element of chance; therefore, sports betting such as that proposed by Tulania fails the dominant factor test and is not a lottery. Also useful in analyzing the predominance of skill in sports betting is the method by which Delaware s 1976 Touchdown II betting scheme failed. D. Ct. Opinion at 21. Sophisticated bettors took advantage of a bad line offered by the State s Lottery Office, wagering heavily against the State and causing massive losses and the collapse of the system soon thereafter. Id. This collapse shows that the state bookmaker is not infallible and that chance does not predominate over skill in games where the savvy bettor may outwit the bookmaker. If Delaware s lottery were based predominantly on chance, the skill and expertise of the bettors, as compared to the State bookmaker s, would have had a much less significant effect. The skill of the bettor, however, was determinative in causing Delaware s losses, evidencing the game s reliance on skill over chance, such that the likelihood of winning was not the same for every player. The savvy bettors, who knew from their expertise that the State bookmaker s line was bad, won massive amounts of money at the expense of the state. This shows that randomly 22

29 picking sides would not have been an effective strategy in that game, because Touchdown II was not predominantly a game of chance. The experience of Delaware s 1976 Touchdown II game caused Tulania to discontinue its 1976 sports lottery, id., and the risk of a similar collapse is apparent in the proposed games of the Sports Lottery. The state bookmaker would be susceptible to a similar bad line and open to massive losses caused by savvy bettors. While adding a point spread or betting line to a sports lottery game tends to equalize the odds, NFL, 435 F. Supp. at 1385, the state bookmaker must skillfully craft the point spread or betting line; otherwise, the state will face massive losses just as Delaware did. The court of appeals correctly noted that the lack of expertise on the part of Delaware s bookmaker, as compared to the skilled and sophisticated bettors, caused the demise of the Delaware scheme. App. Ct. Opinion at 16. Tulania s proposed games involve the same level of required skill on the part of the bookmaker, which is matched directly against similarly skilled bettors. This matching of wits demonstrates that Tulania s proposed games depend predominantly on the exercise of skill and fail the test of the American rule. Therefore, the proposed betting scheme in Tulania s Sports Lottery fails the test of the American rule because the element of chance does not thwart the exercise of skill or judgment in the games. The same reasoning applies to the Parlay Lottery, D. Ct. Opinion at 21-22, which requires the bettor to wager on multiple games or events, because the exercise of skill predominates the element of chance even if more skill is required. Technology and research used for single-game betting can be adapted and applied to multiple-game betting, to the same effect. Additionally, the same reasoning applies to the Football Bonus game from 1976, id. at 21, which only required the bettor to pick the winners of NFL games. The pari-mutuel payout does not change the amount of skill required to pick the winners of the games, which 23