Justia Gaming Law Opinion Summaries

Articles Posted in US Court of Appeals for the Third Circuit
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Section 1513 of the Pennsylvania Race Horse Development and Gaming Act prevents the plaintiffs from making political contributions because they hold interests in businesses that have gaming licenses. They sued, claiming First Amendment and Equal Protection violations. The district court concluded that Section 1513 furthers a substantially important state interest in preventing quid pro quo corruption but ruled that the restriction is unconstitutional because the Commonwealth did not draw it closely enough. The court permanently enjoined the enforcement of Section 1513. The Third Circuit affirmed. Limitations on campaign expenditures are subject to strict scrutiny. The government must prove that the regulations promote a “compelling interest” and are the “least restrictive means to further the articulated interest.” Even applying an intermediate threshold, examining whether the statute is “closely drawn,” the Commonwealth does not meet its burden. The overwhelming majority of states with commercial, non-tribal casino gambling like Pennsylvania do not have any political contribution restrictions that apply specifically to gaming industry-related parties. The Commonwealth’s implicit appeal to “common sense” as a surrogate for evidence in support of its far-reaching regulatory scheme is noteworthy in light of the approach taken by most other similarly situated states. View "Deon v. Barasch" on Justia Law

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The 1992 federal Professional and Amateur Sports Protection Act (PASPA), 28 U.S.C. 3702, prohibited governmental entities from involvement in gambling concerning competitive sports. New Jersey’s 2012 Sports Wagering Act authorized sports gambling. NCAA and professional sports leagues (Appellees) filed suit. The district court entered a temporary restraining order (TRO) barring the New Jersey Thoroughbred Horsemen’s Association (NJTHA) from conducting sports gambling, finding that the state law violated PASPA. The court required Appellees to post a $1.7 million bond as security. On appeal, NJTHA successfully challenged the constitutionality of PASPA in the Supreme Court. On remand, NJTHA unsuccessfully sought to recover on the bond. The Third Circuit vacated and remanded. NJTHA was “wrongfully enjoined” within the meaning of Federal Rule 65(c) and no good cause existed to deny bond damages. PASPA provided the only basis for enjoining NJTHA from conducting sports gambling. The Supreme Court ultimately held that that law is unconstitutional; NJTHA had a right to conduct sports gambling all along. There was no change in the law; NJTHA enjoyed success on the merits and is entitled to recover provable damages up to the bond amount. View "National Collegiate Athletic Association v. Governor of New Jersey" on Justia Law

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In 2006, the Pennsylvania Gaming Control Board awarded a slot machine license to PEDP for a $50 million fee. The Board eventually revoked the license when PEDP failed to meet requirements. PEDP unsuccessfully appealed from the revocation in state courts. PEDP then filed a Chapter 11 bankruptcy petition and brought an adversary action against the Commonwealth alleging that the revocation was a fraudulent transfer under 11 U.S.C. 544 and 548 and under Pennsylvania law. Citing the Rooker-Feldman doctrine, the Bankruptcy Court concluded that it lacked jurisdiction over the fraudulent transfer claims because state courts had upheld the revocation. The district court affirmed. The Third Circuit reversed. State and federal courts can address the similar question of property interests; the Bankruptcy Court would not need to review the Commonwealth Court’s decision to reach a conclusion; the Rooker-Feldman doctrine did not bar the court from finding that there was a fraudulent transfer. The Trustee is not “complaining of an injury caused by the state-court judgment and seeking review and rejection of that judgment.” An award of damages for the revocation is not the functional equivalent of reinstating the license. The court did not express an opinion on the merits of the claim or on the possibility of issue preclusion. View "Philadelphia Entertainment and Development Partners, LP v. Commonwealth of Pennsylvania Department of Revenue" on Justia Law