NO In the SUPREME COURT OF THE UNITED STATES OF AMERICA

Transcription

1 NO In the SUPREME COURT OF THE UNITED STATES OF AMERICA 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 LEAUGE; NATIONAL HOCKEY LEGAUE; MAJOR LEAGUE SOCCER; NATIONAL COLLEGIATE ATHLETIC ASSOCIATION; Respondent. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTEENTH CIRCUIT Team # 15 Counsel for the Petitioner

2 QUESTIONS PRESENTED 1. Should a lottery which meets PASPA s sports lottery ban exception be limited to only making de minimus changes when the legislative language used to limit the lottery is ambiguous and upsets the balance of Federal State power by stripping Tulania of its State sovereignty? 2. Should a scheme approved by the legislature and signed into law by the Governor where participants bet on sporting events be considered a lottery when Tulania s constitutional definition of a lottery is ambiguous and the scheme meets the requisite requirements of the standard definition of a lottery? i

3 TABLE OF CONTENTS QUESTIONS PRESENTED i TABLE OF CONTENTS ii TABLE OF AUTHORITIES iii STANDARD OF REVIEW STATEMENT OF THE CASE SUMMARY OF THE ARGUMENT ARGUMENT I. PASPA does not prohibit Tulania from conducting a sports lottery A. PASPA s statutory language and legislative history is at least ambiguous as to the issue of whether it prohibits Tulania from conducting its 2009 sports lottery Statutory interpretation Legislative History B. Given that the language and legislative history is ambiguous, Gregory s plain statement rule applies C. Public Policy suggests that Tulania should be permitted to conduct the sports lottery enacted in II. The sports lottery is an authorized lottery under Tulania s Constitution because all elements of a lottery are met A. The American rule is appropriate because it will allow for the uniformity of law and it not overly inclusive B. Under the American rule, the sports letter of Tulania is a game of chance and therefore, a lottery C. If the Court decides to use the English rule, the sports lottery is still a lottery CONCLUSION ii

4 Table of Authorities United States Supreme Court Cases: Page Atascadero State Hosp. v. Scanlon, 473 U.S. 234 (1985) BedRoc Ltd., LLC v. U.S., 541 U.S. 176 (2004)U.S. v. Bass, 404 U.S. 336 (1971) Cal. Div. of Labor v. Dillingham Constr., 519 U.S. 316 (1997) Gregory v. Ashcroft, 501 U.S. 452 (1991) , 11,15, 16 Lawrence v. State Tax Comm n, 286 U.S. 276 (1932) Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001) Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947) Richards v. U.S., 369 U.S. 1 (1962) Salinas v. U.S., 522 U.S. 52 (1997) , 12 United States Court of Appeals Cases: Bruesewitz v. Wyeth, 561 F.2d 233 (3d. Cir. 2009) , 7, 9 H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229 (1989) Johnson v. Phinney, 218 F.2d 303, 306 (5 th Cir. 1955) , 19 Paradissiotis v. Rubin, 171 F.3d 983 (5th Cir. 1999) U.S. v. Marder, 48 F.3d 564, 569 (1 st Cir. 1995) State Court Cases: Alaska Morrow v. State, 511 P.2d 127 (Ala. 1973) , 21, 23 Opinion of the Justices, 251 So. 2d 751 (Ala. 1971) California Hotel Employees and Rest. Employees Int l Union v. Davis, 981 P.2d 990 (Cal. 1999) Loeb Allen on Habeus Corpus, 377 P.2d 280 (Cal. 1962) iii

5 Delaware Nat l Football League v. Governor of the State of Delaware, 435 F. Supp (D. Del. 1977) NFL v. Governor of Delaware, 435 F. Supp (D. Del. 1977) Indiana Lashbrook v. State, 550 N.E.2d 772, 775 (Ind. Ct. App. 1990) , 16 Massachusetts Commonwealth v. Lake, 57 N.E.2d 923 (Mass. 1944) Montana State ex Inf. McKittrick v. Globe-Democrat Pub. Co., 110 S.W.2d 705, 713 (Mo. 1937).. 15, 20 North Carolina State v. Stroupe, 76 S.E.2d 313, 316 (N.C. 1953) New York People ex rel. Ellison v. Lavin, 7 N.E. 753 (N.Y. 1904) Pennsylvania Commonwealth v. Laniewski, 98 A.2d 215, 217 (Pa. Super. Ct. 1953) , 18 Rhod Island In re Advisory Opinion to the Governor, 856 A.2d 320 (R.I. 2004) , 16 Washington Seattle Times Co. v. Tielsch, 495 P.2d 1366 (Wash. 1972) , 19 West Virginia State v. Hudson, 37 S.E.2d 553 (W. Va. 1946) Wisconsin State v. Dahlk, 330 N.W.2d 611 (Wis. Ct. App. 1983) iv

6 STANDARD OF REVIEW The United States Supreme Court will review all matters in this case using the de novo standard or review. STATEMENT OF THE CASE This Court is being asked to reverse a United States Court of Appeals for the Fourteenth Circuit judgment that Tulania s Sports Lottery violates both the Professional and Amateur Sports Protection Act ( PASPA ) and the Tulania Constitution. The issue at hand is how to interpret the ambiguous language of the Tulania Constitution and PASPA to determine whether a sports lottery is constitutional and whether that lottery is restricted under PASPA from making substantial changes from its 1976 version. In 1973, Tulania s Constitution was amended to authorize state controlled lotteries for the purpose of raising funds. The Constitution was further amended in 1974 to allow lottery games that affiliate the determination of the winners of a game with any racing or sporting event held within or without the State. Two years after Tulania amended its Constitution to allow sports lotteries, it debuted a multi-game (parlay) in which participants would place a wager dependent on the outcome of NFL games. Although the lottery was initially debuted for NFL games, Tulania intended to extend it to other sports. The 1976 lottery consisted of three separate games collectively known as scoreboard. The first game called Football Bonus, divided the fourteen NFL games placed each week into two seven game pools. Bettors were able to place bets ranging from $1.00 to $10.00 in one or both pools. In order to win, the bettor had to correctly predict the winners of all seven games in the pool. A bonus was awarded if the bettor entered both pools and correctly guessed the results of all fourteen games. 1

7 The second game called Touchdown grouped weekly NFL games into pools of three, four, and five games. In order to win, the bettor had to correctly guess the outcome of each of the games in the pool and correctly guess the range of the game s final score from three provided ranges. Touchdown was replaced mid-season by the third game Touchdown II. In Touchdown II, bettors were provided a published point spread for twelve games being played that week. In order to win, the bettors had to correctly guess the team that would beat the point spread in a minimum of four and a maximum of all twelve games. In both Football Bonus and Touchdown, prizes were awarded on a pool, or parimutuel basis where payments were calculated by paying pro rate to all winning bettors the total amount they bet, less the amount they paid to place the bet. Touchdown II, offered a fixed payout based upon the number of games on which players correctly predicted the winner. Coincidently, at the same time Tulania adopted its lottery system, the State of Delaware also amended their constitution and adopted an identical lottery system to Tulania. Unfortunately, the Delaware Lottery Office made a mistake with touchdown II and offered a bad line for the December 12 th games. Bettors recognized the Lottery Office s mistake and wagered heavily to take advantage of the bad line. Delaware sustained massive losses and were forced to draw on its emergency fund to pay the winning bettors. Although Tulania did not experience a loss, Delaware s mistake concerned Tulania and it discontinued its lottery to avoid a similar mistake. On January 1, 1993, PASPA became law prohibiting any person or governmental entity from sponsoring, promoting, operating, advertising, or promoting: a lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly, on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, 2

8 or on one or more performances of such athletes in such games. 28 U.S.C. 3704(a)(1). Although PASAPA no longer allows states to construct lotteries, it provides an exception for states that conducted sports-based gambling schemes between January 1, 1976 and August 31, The acception allows States to operate a lottery to the extent that the scheme was conducted by the State or other governmental entity between 1976 and PASPA was enacted because Congress feared the spread of gambling on sporting events would damage the integrity and character of sports. Furthermore, Congress did not want public confidence in sports to diminish and the nation s youth to be exposed to inappropriate values. In March 2009, amidst a budget emergency, Tulania Governor Deuce McCallister proposed reinstating a sports lottery. Governor McCallister cited Tulania s 1976 sports gambling lottery as an exception to PASPA and proposed a gambling lottery which would include all forms of betting on professional sporting events. The lotteries would consist of single-game lotteries (in which players would be asked to select the winning team in any given sports context with a line such as a point spread ), total lotteries (in which players would have to select whether the total points scored by both teams in a single game would be over or under a specified number, an over/under bet), and parlay lotteries (in which players would be asked to correctly choose the outcomes on multiple elements, such as the winners of two or more sports). The Sports Lottery Act was proposed by Governor McCallister to Tulania s legislature as a solution to a projected $800 million budget deficit for fiscal year The Tulania legislature and Governor McCallister approved a gaming proposal which included both point-spread betting (which is the betting line quoted for a contest where the favorite gives up points and the underdog takes point) and money line betting (which is the linemaker s estimate of the probability of a team winning or some series of events occurring). 3

9 In addition to the Sports Lottery Act, Tulania s legislature passed a bill which invoked the sports lottery in an attempt to safe guard it against mistakes like the Delaware Sports Lottery experienced in The bill required the Lottery Director to administer the sports lottery in a manner that would produce the greatest income for the State while minimizing or eliminating the risk of financial loss. Tulania intended to commence its sports lottery on September 1, 2009, in time for the start of the NFL regular season. Although the NFL is the lotteries primary focus, Tulania has plans to extend the lottery to all other major professional and college sports. The Respondent filed suit in the United States District Court for the Southern District of Tulania to prevent Tulania from commencing a sports lottery. The District Court held in favor of Tulania concluding as a matter of law, Tulania s Sports Lottery is a constitutionally legal lottery that does not violate PASPA. The Respondent s appealed to the United States District Court of Appeals for the Fourteenth Circuit. The Appeals Court held as a matter of law, Tulania s proposed sports lottery violated PASPA and was unconstitutional under Tulania s Constitution. SUMMARY OF THE ARGUMENT PASPA does not prohibit Tulania from conducting a sports lottery with substantial changes from the lottery conducted in It is clear from PASPA s statutory text Tulania meets the grandfather clause exception to having a sports lottery; however, the legislative history and statutory text are ambiguous as to the extent that Tulania may conduct its lottery. The statutory text states Tulania may conduct a sports lottery to the extent that it conducted a sports lottery scheme between 1976 and This language is ambiguous because it may be interpreted in different ways. It could be interpreted as a condition that a State wishing to conduct a sports lottery must have conducted a lottery scheme between 1976 and 1990 in order 4

10 to qualify for the exception, or it could be interpreted to mean that the new lottery scheme can only be implemented to the extent it was applied during the time of the exception. Due to the ambiguity of the statutory text and legislative history, this Court should look to the Gregory plain statement rule. Under this rule, Congress should make its intentions clear and manifest if it intends to pre-empt a State s laws. If Congress is unclear in its intent, and a statute is susceptible to two plausible interpretations which have the ability to alter the existing balance of federal and state powers, Courts should adopt the interpretation that maintains the existing balance in order to preserves States sovereign rights. Due to Tulania s projected budgetary deficit, Tulania has a compelling interest to raise revenue, which this Court has described as the most plenary of sovereign powers. Under Gregory s plain statement rule, PASPA s ambiguous statutory text should be applied in a manner that allows Tulania to combat its budget deficit through a sports lottery. Furthermore, public policy suggests that Tulania should be permitted to conduct the sports lottery enacted in 2009 because gambling on sporting events is highly prevalent and Tulania should be able to profit from sporting lotteries in order to combat its budget deficit. Additionally, Tulania s sports lottery is an authorized lottery under Tulania s Constitution because all elements of a lottery are met. Tulania s Constitution authorizes statecontrolled lotteries; however, it does not define the term lottery. Due to the Constitution s failure to define lottery, a standard definition of lottery should be used. A standard definition of lottery contains three parts: 1) it must have a prize; 2) consideration, and 3) chance. Under Tulania s proposed lottery, money is given as consideration or the fee for the bet. Money is also the prize. Although Tulania s lottery clearly contains a consideration and a prize, whether it contains chance is the issue of this case. 5

11 In order to determine whether chance is present, Courts have adopted two rules: the American rule and the English rule. Under the American rule, also known as the dominant factor rule, chance is present if it is the dominating element that determines the result of the game. Under the English rule, chance is only present if the game depends purely on chance. The American rule is used by the majority of United States jurisdictions and should be adopted in this case because it allows for uniformity of law. Furthermore, the American rule is clearer than the English rule which has been found to be overly inclusive and confusing. ARGUMENT I. PASPA DOES NOT PROHIBIT TULANIA FROM CONDUCTING A SPORTS LOTTERY The Leagues stance that PASPA prohibits Tulania from conducting a sports lottery that is substantively different from the one it conducted between 1973 and 1976 is meritless for three main reasons. First, PASPA s statutory text and legislative history is at least ambiguous as to the specific issue presented here. Second, given this ambiguity, Gregory s plain statement rule applies, which prevents the application of ambiguous statutory text in a manner that would interfere with Tulania s autonomy as a sovereign State and violate cherished principles of federalism. Third, the Leagues public policy argument that Tulania s sports lottery will harm the reputation of their sports is disingenuous, if not hypocritical; instead, public policy suggests that Tulania, as a laboratory of democracy, should be free to plug its record budget deficit by implementing the 2009 version of its sports lottery. A. PASPA S STATUTORY LANGUAGE AND LEGISLATIVE HISTORY IS AT LEAST AMBIGUOUS AS TO THE ISSUE OF WHETHER IT PROHIBITS TULANIA FROM CONDUCTING ITS 2009 SPORTS LOTTERY 1. STATUTORY INTERPRETATION When performing statutory interpretation, we begin by looking to the text itself. U.S. v. Bass, 404 U.S. 336, 339 (1971). Congressional purpose is the ultimate touchstone of our inquiry. Bruesewitz v. Wyeth, 561 F.2d 233, 239 (3d. Cir. 2009) (quoting Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 541 (2001)). Courts start with the assumption that the legislative purpose is expressed by the 6

12 ordinary meaning of the words used. H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 238 (1989) (quoting Richards v. U.S., 369 U.S. 1, 9 (1962)). Moreover, where a broad reading of a statute would mark a major inroad into a domain traditionally left to the States, we refuse to adopt a broad reading in the absence of a clearer direction from Congress. Bass, 404 U.S. at 339. Courts operate under the assumption that the historic police powers of the States [a]re not to be superseded by the Federal Act unless that [is] the clear and manifest purpose of Congress. Bruesewitz, 561 F.3d at 239 (quoting Cal. Div. of Labor v. Dillingham Constr., 519 U.S. 316, 325 (1997)). Here, PASPA s statutory text itself is at least ambiguous as to the issue of whether it prohibits Tulania from conducting its 2009 sports lottery. PASPA generally prohibits states from sponsoring, operating, advertising, or promoting a lottery, sweepstakes, or other betting, gambling, or wagering scheme based directly or indirectly... on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or one or more performances of such athletes in such games. 28 U.S.C However, the statute provides that such prohibition shall not apply to a 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 21, U.S.C. 3704(a)(1). There is no issue that Tulania conducted a sports lottery in 1976, placing its scheme within the statutory exception period. See MLB v. McAllister, No. 09-AC-0213 at *20 (S.D. La. 2009), rev d, No (14th Cir. 2010) ( McAllister I ). The Leagues argue, however, that Tulania is prohibited from conducting its current sports lottery because PASPA s grandfather clause only permits it to conduct the same gambling scheme it conducted in Id. at *26. Somewhat confusingly, however, the Leagues concede that PASPA permits Tulania to make de minimis changes to its 1976 gambling scheme, as long as the changes do not amount to a substantive change. Id. The Leagues contradictory stance only furthers Tulania s argument that the statutory phrasing of PASPA is at least ambiguous. This is because if one was to strictly construe the statute, as the Leagues contend, it seems curious as to why any changes would be allowed to be made at all, not to mention the issue of what would count as a substantive 7

13 change as opposed to a de minimis change. See Northwestern Bell, 492 U.S. at 241 n.3 (noting that the Court prefers to confront [interpretation] problems directly, not by introducing a new and perhaps more amorphous concept into the analysis that has no basis in the text or legislative history ). Aside from the Leagues contradictory interpretation, there are textual reasons why PASPA is ambiguous. PASPA does not define the term scheme. This Court has noted that the term scheme is ambiguous in and of itself. See Id. (noting that scheme is hardly a self-defining term, which depends on the eye of the beholder ). Contemporary dictionaries support a broader definition of scheme, which would permit Tulania to conduct its 2009 sports lottery. See Black s Law Dictionary (6th ed. 1991) (defining scheme as a design or plan formed to accomplish some purpose; a system ); (defining scheme as a plan, design, or program of action to be followed; project ; or any system of correlated things, parts, etc., or the manner of its arrangement ). Under a plain definition of scheme one could plausibly argue that Tulania s current scheme is the same as its 1976 scheme, in that both plans were designed to accomplish the same purpose of raising revenue for the State through sports gambling. Accordingly, the plain meaning of scheme hardly restricts Tulania s options to precisely the same sports lottery it conducted in Furthermore, the phrase to the extent that the scheme was conducted is also ambiguous. The Leagues contend this language is language of limitation, that is, that it limits the exception to those lotteries actually conducted. MLB v. McAllister, No at *6 (14th Cir. 2010), rev g No. 09-AC (S.D. La. 2009), cert. granted, No (2010) ( McAllister II ). However, there is no compelling reason, statutory or otherwise, to read the text in this manner. To the contrary, the phrase to the extent that should be read as conditional language, that is, that it presents a condition that must be satisfied before a State is allowed to conduct a sports lottery. See Paradissiotis v. Rubin, 171 F.3d 983, 987 (5th Cir. 1999) (refusing to read the phrase to the extent as a limiting device, and instead reading it as a phrase that includes rather than excludes ). Here, the condition would be that a State wishing to conduct a sports lottery must have conducted a sports lottery scheme between 1976 and 1990, which Tulania did. 8

14 Additionally, the canon of parallel construction dictates that the phrase to the extent that should be read as a conditional phrase and not as limiting language. Section 3704 of PASPA provides that Section 3702 shall not apply to: (3) 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) (emphasis added). Here, the phrase to the extent that clearly introduces the condition that Section 3702 of PASPA does not apply to sports lotteries conducted in a municipality s casinos on the condition that the State authorized the operation. The phrase to the extent that in Section 3702 should be given a similar construction, one that allows Tulania to conduct its 2009 sports lottery because it conducted a sports lottery in In any case, PASPA s language here is at least ambiguous. 2. LEGISLATIVE HISTORY Given that the statutory language of PASPA is ambiguous, it is necessary to consult PASPA s legislative history to resolve the ambiguity. See BedRoc Ltd., LLC v. U.S., 541 U.S. 176, 187 n.8 (2004) (noting that resort to legislative history is appropriate when necessary to interpret ambiguous statutory text ); Northwestern Bell, 492 U.S. at 236 ( Our guides in the endeavor [of statutory interpretation] must be the text of the statute and its legislative history ); Bruesewitz, 561 F.3d at 244 (noting that [i]t is... appropriate to consider legislative history to resolve ambiguity in a statute s text); U.S. v. Gregg, 226 F.2d 253, 257 (3d. Cir. 2000) ( Where the statutory language does not express Congress s intent unequivocally, a court traditionally refers to the legislative history... ). Here, authoritative legislative history demonstrates that Congress did not intend for PASPA to prohibit States that conducted a sports lottery during the exception period from expanding their lotteries. The Report of the Senate Judiciary Committee, which is given considerable weight as the committee that considered PASPA in the Senate, states in pertinent part as follows: 9

15 [The Committee] has no wish to apply this new prohibition retroactively to [Tulania]. Oregon, or Delaware, which instituted sports lotteries prior to the introduction of our legislation.... Therefore, [PASPA] provides an exemption for those sports gambling operations which already are permitted under State law... Under [Section 3707(a)(1)] [Tulania], Oregon and Delaware may conduct sports lotteries on any sport, because sports lotteries were conducted by those States prior to August 31, Paragraph (1) is not intended to prevent [Tulania], Oregon or Delaware from expanding their sports betting schemes into other sports as long as it was authorized by State law prior to enactment of this Act. S. Rep. No at *8-10 (1991), available at 1991 WL , reprinted in 1992 U.S.C.C.A.N. 3553, (emphasis added). Additionally, the primary sponsor of PASPA in the Senate, Senator Deconcini, stated: The intent of the legislation is not to interfere with existing laws, operations, or revenue streams. Therefore, it provides an exemption for those sports gambling operations which already are permitted under State law.... Let me make it clear that the grandfather provision only allows those States that have sports gambling authorized by State law to continue to do what they are doing now or could do under State law. 138 Cong. Rec. S (June 2, 1992), available at 1992 WL (Cong. Rec.). This authoritative legislative history demonstrates that Congress did not intend for PASPA to prohibit States that already had sports lotteries on the books, including Tulania, from conducting sports lotteries that were at least authorized by state law during the exception period. Here, there is no issue that Tulania s state law during the exception period authorized Tulania to conduct the type of sports lottery it now plans to conduct. See McAllister I at *19-20 (noting that in 1973 Tulania amended its Constitution to permit [l]otteries under State Control for the purpose of raising funds ; and that in 1974 Tulania enacted legislation authorizing sports lotteries that affiliate the determination of the winners of a game with any racing or sporting event held within or without the State. ). Accordingly, the legislative history of PASPA indicates that PASPA was not intended to prohibit Tulania from conducting the March, 2009 version of its sports lottery. 10

16 B. GIVEN THAT THE LANGUAGE AND LEGISLATIVE HISTORY IS AMBIGUOUS, GREGORY S PLAIN STATEMENT RULE APPLIES Given PASPA s ambiguity, PASPA should be construed in such a manner that allows Tulania to conduct its 2009 sports lottery, because such an interpretation acknowledges this Nation s cherished principles of federalism. In Gregory v. Ashcroft, 501 U.S. 452, 457 (1991), this Court recognized the Constitution establishes a system of dual sovereignty between the States and the Federal Government. Under this system, the States retain substantial sovereign authority under our constitutional system. Id. The Court recognized the numerous advantages of dual sovereignty, including that it is more sensitive to the diverse needs of a heterogeneous society;... increases opportunity for citizen involvement in democratic processes;... allows for more innovation and experiment in government; and... makes government more responsive by putting the States in competition for a mobile citizenry. Id. at 458. For these reasons, it is incumbent on the federal courts to be certain of Congress intent before finding that a federal law overrides [the federal-state] balance. Id. at 460 (quoting Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 243 (1985)). Accordingly, if Congress intends to upset the usual federal-state balance, it must make its intention unmistakably clear in the language of the statute. Id. (emphasis added). In other words, Congress should make its intention clear and manifest if it intends to pre-empt the historic powers of the States. Id. at 461 (emphasis added) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)). The Gregory plain statement rule is nothing more than an acknowledgment that the States retain substantial sovereign powers... with which Congress does not readily interfere. Id. Here, as noted above, PASPA s language is at least ambiguous, and thus fails Gregory s plain statement requirement. One cannot conclude from PASPA s relevant statutory language that it would be plain to anyone reading the Act that the statute encompasses the conduct at issue. Salinas v. U.S., 522 U.S. 52, 60 (1997). Nor does PASPA s statutory language or its legislative history make absolutely certain, Gregory, 501 U.S. at 464, that Congress intended to prohibit Tulania from conducting its 2009 sports lottery. This is because, as noted above, it is not clear what the term scheme means in PASPA, 11

17 or whether the phrase to the extent that is meant to be conditional or limiting. Where a statute is susceptible of two plausible interpretations, one of which would... alter[] the existing balance of federal and state powers[, this Court has Stated that] the proper course [is] to adopt a construction which maintains the existing balance. Salinas, 522 U.S. at 59. This analysis is even more compelling where the statute at issue impinges on a state interest which is of the most fundamental sort for a sovereign entity. Gregory, 501 U.S. at 460. The issue in Gregory was whether the Age Discrimination in Employment Act ( ADEA ), 29 U.S.C , prevented the State of Missouri from requiring its judges to retire when they reached the age of seventyfive. Gregory, 501 U.S. at 455. The Court considered Missouri s mandatory retirement law to lie at the heart of representative government, id. at 463, and held that the ADEA did not prohibit it. Id. at 473. Here, Tulania has an equally compelling interest, if not more so, in raising revenue, which this Court has described as the most plenary of sovereign powers. Lawrence v. State Tax Comm n, 286 U.S. 276, 278 (1932). This is especially true given the fact that Tulania has a budget crisis, wherein the State was faced with a record budget deficit of approximately $800 million, which prompted Tulania to reinstitute its sports lottery. McAllister I at *21, Accordingly, Gregory s plain statement rule prohibits PASPA s ambiguous statutory text from being applied in such a manner that prohibits Tulania from combating its budget deficit through a sports lottery. C. PUBLIC POLICY SUGGESTS THAT TULANIA SHOULD BE PERMITTED TO CONDUCT THE SPORTS LOTTERY ENACTED IN 2009 The Leagues argument that Tulania s implementation of its proposed lottery will harm the integrity of their respective sports leagues is at best disingenuous. To begin with, the Leagues are currently reaping huge profits from non-state conducted sports gambling. McAllister I at *34-5 (noting that [the professional sports leagues have long been aware of extensive wagering on their games, have taken virtually no action to prevent it, have recently acquiesced in it, and, in fact, have benefitted from it ). Moreover, much of the currently existing sports gambling is conducted illegally. Id. at 34; see also S. Rep. No at *16 (Minority Report of Sen. Grassley) (noting that PASPA will give organized 12

18 crime an absolute monopoly on sports wagering in 47 of the 50 states ). In fact, the most prevalent form of [sports] gambling is the illegal form office pools and head-to-head bets with bookies. NFL v. Governor of Delaware, 435 F. Supp. 1372, 1378 (D. Del. 1977). Despite the prevalence of illegal and legal sports gambling, the fact is that this gambling has not injured the NFL and there is no reason to believe it will do so in the future. Id. Given the Leagues historical acquiescence in legal and illegal gambling on their respective sports, and the extent to which they profit from it, it seems all too convenient for the Leagues to argue that Tulania should be prohibited from conducting a sports lottery to combat its record budget deficit. See S. Rep. No at *16 (Minority Report of Sen. Grassley) (quoting Andrew Beyer, Wash. Post, Nov. 16, 1991, at G9 ( Under the circumstances [of the Leagues acquiescence in legal and illegal gambling on their sports], it would seem inescapably logical for cash-strapped State governments to legalize sports betting and let the revenue from it flow to legitimate purposes instead of criminals. )). The Leagues argument that state-sponsored sports lotteries will harm their reputation is hypocritical, as demonstrated by the Leagues own entanglements in sports gambling. As a policy matter, the Leagues should be prevented from making this disingenuous argument to prevent Tulania from alleviating its budget deficit through the 2009 version of its sports lottery, when the Leagues are currently profiting from sports gambling affirmatively sanctioned by the Leagues themselves. In sum, given the questionable applicability of PASPA to Tulania s 2009 sports lottery, Gregory s plain statement requirement, traditional notions of federalism, the budget emergency Tulania finds itself in, and the Leagues tenuous policy argument, this Court should reject the Leagues argument and find that Tulania is not prohibited by PASPA from conducting its 2009 sports lottery. 13

19 II. THE SPORTS LOTTERY IS AN AUTHORIZED LOTTERY UNDER TULANIA S CONSTITUTION BECAUSE ALL ELEMENTS OF A LOTTERY ARE MET. The issue in this case is whether the Sports Lottery is an authorized lottery under Tulania s Constitution. The constitution authorizes state-controlled lotteries, but it does not define the term lottery. Major League Baseball v. Deuce McAllister, No. 09-AC-0213 at 35 (S.D. Tul. 2010). There is no dispute that the Sports Lottery is state-controlled; however, because the Tulania Legislature did not define the term lottery the issue in this case is whether the Sports Lottery meets the common law definition of a lottery. Although there are statutes specifically defining the word lottery, in the general sense it refers to a gambling game or device wherein one gives up something of value for the chance of obtaining a prize in money or property of value. Its essential elements are chance, consideration and a prize. Johnson v. Phinney, 218 F.2d 303, 306 (5 th Cir. 1955). In order to determine whether the Sports Lottery is a lottery, it must meet the elements of prize, consideration and chance. In answering that question, we are guided by the principle that legislative enactments enjoy a presumption of validity and constitutionality. In re Advisory Opinion to the Governor, 856 A.2d 320 (R.I. 2004). The Sports Lottery contains a prize element. Prize encompasses property that the operator offers to distribute to one or more winning participants and not to keep for himself. Hotel Employees and Rest. Employees Int l Union v. Davis, 981 P.2d 990, 996 (Cal. 1999). Under both the Sports Lottery, if a bettor wins, he receives money in apportion to the risk of his wager. The money a winning bettor receives is property that is withheld from the State and given to the winning participant. Therefore, the money given to each winner is a prize. The Sports Lottery also contains a consideration element. Consideration is the fee (in the form of money or anything else of value) that a participant pays the operator for entrance. 14

20 Id. In the Sports Lottery, the consideration is provided when a person actually places a bet. As was stated in Lashbrook v. State, [t]he substantial sums participants invest in the schemes constitute the necessary consideration N.E.2d 772, 775 (Ind. Ct. App. 1990). Therefore, the element of consideration is met. The last element of a lottery is chance. To determine whether chance is present in a scheme the courts have adopted two rules: the American rule and the English rule. Morrow v. State, 511 P.2d 127 (Alaska 1973). Under the American rule, also know as the dominant factor rule, [t]he test of the character of the game is not whether it contains an element of chance or an element of skill, but which is the dominating element that determines the result of the game? People ex rel. Ellison v. Lavin, 7 N.E. 753, 755 (N.Y. 1904). Under the English rule, or pure chance rule, a game or contest is not a lottery... unless the result depends entirely upon chance. State ex Inf. McKittrick v. Globe-Democrat Pub. Co., 110 S.W.2d 705, 713 (Mo. 1937). This issue is one of first impression in Tulania. Based on the discussion below, the American rule is proper. A. THE AMERICAN RULE IS APPROPRIATE BECAUSE IT WILL ALLOW FOR THE UNIFORMITY OF LAW AND IT IS NOT OVERLY INCLUSIVE. The American rule is proper in this case because it is the rule used by the majority of United States jurisdictions. Furthermore, the American rule is the only rule that accounts for both skill and chance and due to this, makes gambling laws effective. Lastly, the English rule is overly inclusive, which causes a lack of clarity to the public. The American rule is proper because it allows for uniformity of law. It is used by an overwhelming majority of jurisdictions in the United States. In the United States... it is now generally held that chance need be only the dominant factor. McKittrick, 110 S.W. at 713. See also, U.S. v. Marder, 48 F.3d 564, 569 (1 st Cir. 1995); Johnson, 218 F.3d at 306 ( With respect 15

21 to the element of chance, the authorities are in general agreement that if such element is present and predominates in the determination of a winner, the fact that players may exercise varying degrees of skill is immaterial; and the game or device is a lottery. ); Nat l Football League v. Governor of the State of Delaware, 435 F. Supp. 1372, 1384 (D. Del. 1977) ( I believe the Delaware Supreme Court would be inclined to adopt the majority, dominant factor rule. ); Morrow, 511 P.2d at 129 ( We agree that under the sounder approach is to determine the character of the scheme under the dominant factor rule. ); In re Betty Loeb Allen on Habeus Corpus, 377 P.2d 280, 281 (Cal. 1962) ( The test is not whether the game contains an element of chance or an element of skill but which of them is the dominating factor in determining the result of the game. ); Ellison, 71 N.E. at 755 ( The test of the character of the game is not whether it contains an element of chance or an element of skill, but which is the dominating element that determines the result of the game. ); State v. Stroupe, 76 S.E.2d 313, 316 (N.C. 1953) ( [A] game of chance is one in which the element of chance predominates over the element of skill.... ). Commonwealth v. Laniewski, 98 A.2d 215, 217 (Pa. Super. Ct. 1953) ( Hence a particular scheme may be a lottery even though skill, judgment or research enter into it in some degree, if chance in a larger degree determines the result. ); In re Advisory Opinion to the Governor, 856 A.2d at 328 ( To determine whether the element of chance is present in a particular scheme or plan, this Court has adopted the dominant factor doctrine. ); Seattle Times Co. v. Tielsch, 495 P.2d 1366, 1369 (Wash. 1972) ( Chance within the lottery statute is one which dominates over skill or judgment. ); State v. Hudson, 37 S.E.2d 553, 558 (W. Va. 1946) ( The essential elements of a lottery are consideration, prize and chance, and, where they are present and chance predominates even though skill or judgment may enter... the scheme or device is a lottery. ). 16

22 Based on the exhaustive precedent listed above, it is plainly evident that to maintain uniformity of the law, the American rule is appropriate. Furthermore, the American rule accounts for both chance and skill and thereby gives full effect to gambling laws in the states. [W]here the game contains elements of both chance and of skill, in order to render the laws... effectual... it has been found necessary to draw a compromise line between the two elements... with the American rule. Lake, 57 N.E.2d at 925. Lastly, the American rule is proper because the English rule has been found to be overly inclusive and confusing. In Morrow, the Alaska Supreme Court evaluated whether a particular scheme was a lottery. 511 P. 2d at 129. The court determined that the American rule was proper and gave its reasoning. Id. The pure chance doctrine would legalize many guessing contests and other schemes, where only a small element of skill would remove such games from classification as lotteries. This could lead to large-scale evasion of the statutory purpose. In many instances the gambling aspect of a lottery could be cleverly concealed so that ignorant and unwary persons would be enticed into participation before they became aware of the true nature of the scheme. Based on the uniformity of law, the ability to balance chance and skill, and the lack of clarity in the English rule, the American rule is proper. B. UNDER THE AMERICAN RULE, THE SPORTS LOTTERY OF TULANIA IS A GAME OF CHANCE AND THEREFORE, A LOTTERY. The Sports Lottery is dominated by chance and under the American rule that makes the scheme a lottery. In Ellison, the court addressed whether a cigar scheme was classified as a game of chance or of skill. 71 N.E. at 753. The publisher of a newspaper printed a cigar scheme advertising the following: The persons who estimate nearest to the number of cigars on which $3.00 tax per thousand is paid during the month of November, 1903, as shown by the total sales 17

23 of stamps made by the United States Internal Revenue Department during November 1903, will be awarded.... Id. The publisher was arrested and subsequently sought to dismiss the charges because the cigar scheme did not constitute a lottery. Id. at 754. The court disagreed, stating that the cigar scheme was a game of chance and constituted a lottery. Id. at 756. The court stated that an event presents the element of chance so far as after the exercise of research, investigation, skill and judgment we are unable to foresee its occurrence or non-occurrence, or the forms and conditions of its occurrence. Id. at 754. Applying this reasoning to Tulania s circumstance, despite the fact that a player can research the various teams, players, odds of winning and other information to aid in their bet, that does not allow the bettor to foresee the result. Based on the reasoning employed in Ellison, this lack of foreseeability makes the Sports Lottery a game of chance. Furthermore, in Laniewski, All American tickets were sold to patrons and each ticket listed twenty football games to be played on a particular date. 98 A. 2d at 216. The player would select the winner of between three and fifteen games and depending on the number of winners correctly guessed, they received a prize. The tickets also contained a point spread. The defendants were charged with running a lottery and took exception to the prosecution s characterization of the tickets being a lottery. Id. However, the court disagreed. [T]here are many unpredictable elements which can and do enter into the eventual outcome. These elements-including the fact that at least twenty-two men are concerned in playing he game constitute the chance which makes this particular pool a lottery. No one knows what may happen once the game has begun. Id. at 217. The lottery in Laniewski is merely a combination of both the point-spread and money line games in the Sports Lottery and the same reasoning should apply. Regardless of the amount of information that a bettor receives prior to placing his bet, the game must still be played and 18

24 there are a number of variables out of the bettor s control that dictate the outcome. In combination, the variables create an unpredictability that makes the Sports Lottery a game of chance. Morrow involved the sale of football cards. 511 P.2d at 128. A football card listed certain games to be played on certain days. The bettor was required to choose the winner of the contest and the winning team must win by more than the listed point-spread on the card. The Alaska Supreme Court concluded that it did not have enough information to determine whether the football cards constituted a lottery, but stated that skill dominates over chance if without skill it would be absolutely impossible to win the game. Id. at 129. Based on the test espoused by this court, skill does not predominate over chance in the Sports Lottery. Under the Sports Lottery, a bettor does not have to use any skill in order to win. They can blindly guess and win the bet. Therefore, the Sports Lottery is a game of chance and not a game of skill. In Seattle Times Co., a local newspaper ran a Guest-Guesser football-forecasting scheme. 495 P. 2d The scheme was very similar to the Football bonus scheme used in Tulania in Major League Baseball, 09-AC-0213 at 20. The newspaper published a list of twenty football games to be played over nine weekends. Bettors were required to pick the winner of each contest and submit their prediction via a coupon printed in the paper. The court determined that the scheme constituted a game of chance and was a lottery. Id. at It is true that for an avid student of the sport of football the chance taken is not so great as for those who have little interest in the game. However, it is even common knowledge that the predictions even among these so-called experts are far from infallible. Any attempt to forecast the result of a single athletic contest, be it football, baseball or whatever, is fraught with chance. Id. The analysis in this case is clear. Any sports contest has numerous variables that determine the result. Collectively, the great number of unknowns makes athletic events games of chance. 19

25 Lastly, in Nat l Football League, the court addressed a football scheme identical to the Tulania scheme used in F. Supp The Delaware scheme included a Football Bonus, Touchdown and Touchdown II scheme. It also contained a Single-Game Lottery, which required bettors to select a winning team by a given point spread, just as the Single-Game Lottery does in the Sports Lottery. Id. at 1376; Major League Baseball, 09-AC-0213 at 22. The court held that the scheme was a game of chance and a lottery. Id. at [T]he results of NFL games are a function of myriad of factors such as the weather, the health and mood of the players and the condition of the playing field. Some educated predictions can be made about each of these but each is also subject to last minute changes and to an element of unknowable, or to put it another way, to an element of chance. Id. at The Delaware scheme was identical to the scheme in Tulania in 1976 and it also contains a Single-Game Lottery that is identical to the current Sports Lottery. This is the same scheme and the same reasoning should be applied. Based on the foregoing discussion, Tulania s Sports Lottery is dominated by chance and therefore, it is a lottery. C. IF THE COURT DECIDES TO USE THE ENGLISH RULE, THE SPORTS LOTTERY IS STILL A LOTTERY. However, if this Court were to determine that the English rule is proper in this circumstance, the Sports Lottery is still a lottery. Under the English rule a game or contest is not a lottery... unless the result depends entirely upon chance. McKittrick, 110 S.W. 2d at 713 (emphasis added). The result of the Sports Lottery is completely dependent on chance and therefore, under the English rule, it is a lottery. Under the definition of the English rule, if the result of a contest is based entirely on chance, it is a lottery. As discussed above, the result of an athletic contest is completely dependent on chance because there are a number of variables bettors cannot control that 20

26 determine the winner. Allen best demonstrates the contrast between games of skill and chance. 377 P. 2d 280. In that case, the court determined that bridge was a game of skill. That determination was based on the fact that in bridge there was a continually recurring necessity in the bidding and play of the hand to make decisions, which considered together, will ordinarily be determinative of the outcome of the game. Id. at 282 (emphasis added). Bridge was a game of skill because each hand a player played determined the outcome. The player was able to exercise their judgment or skill until the winner was determined. Contrary to the nature of bridge, a bettor in the Sports Lottery is unable to exercise judgment during the game. As is stated in the District Court opinion, the point-spread or odds of winning is fixed at the time the player places the wager so that the player knows when the bet is placed the exact amount of the payoff for a successful wager. Major League Baseball, 09-AC-0213 at 23. There is nothing that the bettor can do to change the outcome and because he cannot exercise skill in determining the outcome, the Sports Lottery is not a game of skill. Furthermore, as was noted in the District Court opinion, under the English Rule, games of skill have only been found in pari-mutuel betting circumstances. Major League Baseball, 09- AC-0213 at 40. See also, Opinion of the Justices, 251 So. 2d 751 (Ala. 1971), Rohan v. Detroit Racing Ass n, 22 N.W. 2d 433 (Mich. 1946). The Sports Lottery is a betting line and not a parimutuel game. Therefore, the element of chance is met regardless of whether the American rule or English rule is utilized in this case. Based on the foregoing discussion, the elements of prize, consideration and chance have been satisfied; therefore, the Sports Lottery is an authorized lottery under Tulania s Constitution. 21