Docket No In The SUPREME COURT OF THE UNITED STATES OF AMERICA

Docket No. 09-214 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, v. MAJOR LEAGUE BASEBALL; NATIONAL BASKETBALL ASSOCIATION; NATIONAL FOOTBALL LEAGUE; NATIONAL HOCKEY LEAGUE; MAJOR LEAGUE SOCCER; NATIONAL COLLEGIATE ATHLETIC ASSOCIATION; Respondent. ON WRIT OF CERTIORARI FROM THE UNITED STATES COURT OF APPEALS OR THE FOURTEENTH CIRCUIT BRIEF FOR RESPONDENT Team No. 14 Counsel for Respondent

QUESTIONS PRESENTED I. WHETHER THE BROAD BAN ON STATE-SPONSORED SPORTS BETTING UNDER THE PROFESSIONAL AND AMATEUR SPORTS PROTECTION ACT PRECLUDES TULANIA FROM AUTHORIZING AND CONDUCTING A COMPREHENSIVE SPORTS GAMBLING SCHEME. II. WHETHER TULANIA S PROPOSED SPORTS GAMBLING SCHEME FALLS OUTSIDE THE SCOPE OF THE LOTTERY EXCEPTION TO TULANIA S CONSTITUTIONAL PROHIBITION ON GAMBLING. i

TABLE OF CONTENTS QUESTIONS PRESENTED... i TABLE OF AUTHORITIES... iv OPINIONS BELOW...1 JURISDICTION...1 STATUTORY PROVISIONS...1 STANDARD OF REVIEW....2 STATEMENT OF THE CASE...2 Statement of Facts...2 Procedural History...5 SUMMARY OF ARGUMENT...6 ARGUMENT...7 I. TULANIA S PROPOSED SPORTS BETTING SCHEME VIOLATES PASPA....7 A. The Plain Language of PASPA Does Not Permit Tulania to Authorize a Sports Betting Scheme that Includes Single-Game Betting on All Sports....8 B. PASPA s Purpose and Statutory History Preclude Tulania from Operating the Proposed Sports Betting Scheme....11 C. The Plain Statement Rule Does Not Permit Tulania s Sports Betting Scheme.....13 1. The Rule Does Not Apply...14 2. Even if the Rule Applies, it is Satisfied....16 II. THE SPORTS LOTTERY ACT VIOLATES TULANIA S CONSTITUTION....17 A. The SLA Games Do Not Qualify as Lotteries....18 1. Bettors use Skill to Make Their Wagers....18 2. In the SLA Games, Skill Outweighs the Presence of Chance...19 ii

B. This Court Should Apply the Pure Chance Rule in Light of Tulania s Public Policy and the Canons of Construction....22 CONCLUSION...25 APPENDIX A...26 APPENDIX B...27 iii

United States Supreme Court Cases: TABLE OF AUTHORITIES City of Edmonds v. Oxford House, Inc., 514 U.S. 725 (1995)...10, 15 FTC v. Morton Salt Co., 334 U.S. 37 (1948)...7, 17 Gregory v. Ashcroft, 501 U.S. 452 (1991)... passim Russello v. United States, 464 U.S. 16 (1983)...8, 9, 10 Pa. Dep t of Corr. v. Yeskey, 524 U.S. 206 (1998)...15, 16 Salinas v. United States, 522 U.S. 52 (1997)...10, 12, 14 United States v. Bass, 404 U.S. 336 (1971)...16 United States v. Oakland Cannabis Buyers Coop., 532 U.S. 483 (2001)...13 White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (1980)...15 United States Courts of Appeals Cases: Disabled in Action of Pa. v. Se. Pa. Transp. Auth., 539 F.3d 199 (3d Cir. 2008)...11 Kaufman v. Allstate N.J. Ins.Co., 561 F.3d 144 (3d Cir. 2009)...8 Nason v. INS, 394 F.2d 223 (2d Cir. 1968)...8, 9 iv

United States v. Marder, 48 F.3d 564 (1st Cir. 1995)...23 United States District Court Cases: Nat l Football League v. Governor of Del., 435 F. Supp. 1372 (D. Del. 1977)...17, 20, 21 State Court of Appeals Cases: Affiliated Enter. Inc. v. Waller, 5 A.2d 257 (Del. Super. Ct.1939)...17 Citation Bingo, Ltd. v. Otten, 910 2P.d 281 (N.M. 1995)...23 Commonwealth v. Laniewski, 98 A.2d 215 (Pa. Super. 1953)...21 Engle v. State, 90 P.2d 988 (Ariz. 1939)...21, 22 Gandolfo v. La. State Racing Comm n, 78 So. 504 (La. 1954)...18, 19 Ginsberg v. Centennial Turf Club, 251 P.2d 926 (Colo. 1952)...18, 19 Harris v. Mo. Gaming Comm n, 869 S.W. 2d 58 (Mo. 1994) (en banc)...19 In Re Advisory Opinion to the Governor, 856 A.2d 320 (R.I. 2004)...21 Morrow v. State, 511 P.2d 127 (Alaska 1973)...23, 24 People ex. rel. Ellison v. Lavin, 71 N.E. 753 (N.Y. 1904)...18, 21, 23 v

Oneida County Fair Bd. v. Smylie, 386 P.2d 374 (Idaho 1963)...20 Opinion of the Justices, 385 A.2d 695 (Del. 1978)...22, 23 Rohan v. Detriot Racing Ass n, 22 N.W. 2d 433 (Mich. 1946)... passim State ex. rel. Dussault v. Kilburn, 109 P. 2d 1113 (Mont. 1941)...18 State v. Dahlk, 330 N.W. 2d 611 (Wis. Ct. App. 1983)...20, 21 Advisory Opinions: N.Y. Op. Atty. Gen. 84-F1 (1984)...23, 24 W. Va. Op. Atty. Gen. 8 (1991)...19 Legislative Materials: Cong, Rec. S7274 (1992)... passim S. Rep. No. 102-248 (1991)... passim Statutes: 28 U.S.C. 3702... 3, 7, 10 28 U.S.C. 3704... passim vi

Docket No. 09-214 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, MAJOR LEAGUE BASEBALL; NATIONAL BASKETBALL ASSOCIATION; NATIONAL FOOTBALL LEAGUE; NATIONAL HOCKEY LEAGUE; MAJOR LEAGUE SOCCER; NATIONAL COLLEGIATE ATHLETIC ASSOCIATION; Respondent, v. ON WRIT OF CERTIORARI FROM THE UNITE STATES COURT OF APPEALS FOR THE FOURTEENTH CIRCUIT BRIEF FOR RESPONDENT OPINIONS BELOW The opinion of the United States Court of Appeals for the Fourteenth Circuit is reported at Major League Baseball et. al. v. McCallister et. al., No. 09-2108, slip op. at 1-16 (14 th Cir.) ( MLB II ). The opinion of the United States District Court for the Southern District of Tulania is reported at Major League Baseball et. al. v. McCallister et. al., No. 09-2108, slip op. at 1-23 (S.D. Tulania) ( MLB I ). JURISDICTION This Court has jurisdiction to review the decision of the Fourteenth Circuit upon granting a petition for a writ of certiorari. 28 U.S.C. 1254(1) (2006). STATUTORY PROVISIONS The relevant portions of the following statutory provisions appear in the appendices 1

following this brief: 28 USCS 3702, 3704, the Tulania Constitution, and the Tulania Sports Lottery Act (2009). STANDARD OF REVIEW For the purposes of this hypothetical, the United States Supreme Court will review all matters de novo. STATEMENT OF THE CASE I. Statement of Facts The Professional Sports Leagues 1, the Respondent in this case, have provided professional sporting event entertainment as an American pastime for well over a century. The State of Tulania enacted the Sports Lottery Act ( SLA ) authorizing a betting scheme that would enable the public to make parlay and single-game bets on the full range of sporting events the leagues offer. MLB I, at 21-22. The Leagues brought suit against Petitioner Deuce McCallister, Tulania Governor, and Ronald Hughes, Tulania State Lottery Director, to challenge the SLA. MLB I, at 19. The Leagues assert that the SLA violates both the Professional and Amateur Sports Protection Act and the Tulania Constitution. Id. A. The Professional and Amateur Sports Protection Act Recognizing the value of professional sports leagues and the potential harms of widespread gambling, Congress enacted the Professional and Amateur Sports Protection Act ( PASPA ) as a broad ban on state-sponsored sports betting schemes. MLB II, at 11. PASPA prevents states from authorizing a lottery, sweepstakes, or other betting, gambling, or wagering 1 Major League Baseball, National Basketball Association, National Football League, National Hockey League, Major League Soccer, National Collegiate Athletic Association (collectively, The Leagues ) 2

scheme based, directly or indirectly... on one or more competitive games in which amateur or professional athletes participate. 28 USCS 3702. Congress created a grandfather clause exception to PASPA for states that had preexisting state-sponsored sports betting schemes. 28 USCS 3704(a)(1). This grandfather clause permits a State to conduct a lottery, sweepstakes, or other betting, gambling, or wagering scheme... to the extent that the scheme was conducted by that State... at any time during the period beginning January 1, 1976, and ending August 31, 1990. 28 USCS 3704(a)(1). B. Tulania History of Gambling Tulania s Constitution has always contained a general ban on gambling. MLB II, at 13. This ban was narrowly amended in 1973 to permit lotteries under State control for the purpose of raising funds. MLB I, at 19-20. Subsequently, the Tulania legislature passed legislation permitting sports betting games that affiliate the determination of the winners of a game with any racing or sporting event held within or without the State. Id. at 23. 1. Scoreboard Under this legislation, three different parlay games were conducted during the 1976 NFL season, collectively called Scoreboard. Id. at 20. No single-game betting was ever conducted, or even discussed. Id. Tulania cancelled Scoreboard after only one season and has never contemplated conducting another sports gambling scheme until now. Id. In the first game, Football Bonus, every NFL game for the week was placed in one of two seven-game pools. Id. Participants bet anywhere from $1 to $10, predicting the winning teams for games in either or both pools. Id. A bettor won if he correctly predicted all the games within a pool. Id. Payouts were made on a pari-mutuel basis, where prize money was divided proportionally among the winners. Id. 3

In the second game, Touchdown, participants predicted winners of three to five NFL games and selected one of three potential point spreads for those games. Participants chose which NFL games to include in their wagers. Like Football Bonus, payouts were made on a pari-mutuel basis. Id. Mid-season, Touchdown was replaced by Touchdown II. Id. In this game, participants picked the teams that would beat the point spread in a minimum of four and a maximum of twelve games. Id. at 21. The payout for this game was fixed based on how many games you correctly picked. Id. During the 1976 season, Delaware had an identical betting scheme that collapsed after participants strategically took advantage of a bad line. Id. As a result of the collapse, Delaware was forced to draw on emergency funds to pay winning bettors. Concerned about suffering similar economic harm, Tulania discontinued Football Bonus and Touchdown II at the end of the 1976 season. Id.. 2. The Sports Lottery Act Over three decades later, Tulania Governor Deuce McCallister sought to implement a comprehensive sports gambling scheme to help reduce the State s budget deficit. In response, the Tulania Legislature accepted the proposal and passed the SLA, which included both parlay and single-game betting on a variety of sports. Id. at 23. The SLA does not permit betting on any Tulania professional or university sports teams. Id. at 24. Unlike Scoreboard, which applied only to the NFL and included only parlay games, the SLA applies to all professional sports leagues and includes three different betting games: single- 4

game bets, parlay bets, and over/under bets. 2 Id. at 21. The SLA also provides for two different betting-line structures: point spreads and money lines. A point spread betting-line is one in which the favorite gives up points and the underdog takes points. Id. at 22. With a money line, the bettor estimates the probability that a team will win or that some other event will occur. Id. Under a money line, the bettor betting on the favored team must bet more than a bettor betting on the underdog to win the same amount. Id. at 23. Because of these noticeable differences, and the skill involved in understanding and playing the new betting games, the professional sports leagues filed suit challenging the SLA under PASPA and Tulania s Constitution. II. Procedural History Following Tulania s enactment of the SLA, the Leagues filed this complaint in the Southern District of Tulania to prevent the State from commencing the SLA games. Id. at 24. First, the Leagues allege that PASPA precludes Tulania from conducting the single-game bets and bets on non-nfl sports. Id. Second, the Leagues allege that the entire scheme is unconstitutional under Tulania s Constitution. Id. Tulania argues that the scheme falls under exceptions found in both PASPA, Id. at 26-27, and Tulania s Constitution, Id. at 35. The lower court held for Tulania on both counts. Id. at 19. The Leagues appealed, MLB II, at 3, and the U.S. Court of Appeals for the Fourteenth Circuit reversed the district court s judgment on both issues, Id. at 18. The court held that (1) the Act did not fall under the PASPA exception because the new single-game bets and non-nfl games bets were not previously conducted, Id. at 13, and (2) the games in the Act were not lotteries within the meaning in the State s Constitution, Id. at 17. In 2010, this Court granted certiorari to review both decisions of the Fourteenth Circuit. Id. at 2. 2 An over/under bet is where players select whether the total points scored by both teams in a game would be over or under a specified number. MLB I, at 21. 5

SUMMARY OF THE ARGUMENT For almost as long as professional sports have existed in America, sports betting has tarnished the integrity of the games. Gambling adversely affects American culture, undermining both honest athletic competition and public confidence in America s sporting heroes. Both the federal government and Tulania have enacted legislation to prevent sports gambling. Through the SLA, Tulania constructed a sports betting scheme unparalleled by most states, involving betting on all sporting events except ones involving Tulania teams. Tulania s proposed scheme violates both federal law under PASPA and the Tulania Constitution. Tulania s proposed betting scheme violates PASPA for three reasons. First, the plain language of the exception unambiguously precludes such a broad expansion of Tulania s sports betting. Second, even if the statutory language was ambiguous, the purpose and legislative history show that Tulania s proposed scheme falls outside of the exception. Third, the plain language rule does not apply here; however, even if it did apply, it is satisfied because Congress unmistakably intended PASPA to control state-run sports betting schemes. In addition to violating PASPA, Tulania s proposed betting scheme violates Tulania s Constitution. The State contends that the scheme fits into the narrow state-lottery exception. However, the betting games proposed do not qualify as lotteries because they require skill and the element of chance is not sufficiently controlling. This is true regardless of whether the court applies the pure chance rule or the predominant factor rule; however, the pure chance rule should apply here because it provides the appropriately narrow construction and is consistent with Tulania s public policy. Accordingly, we respectfully ask this court to AFFIRM the lower court s decision that the SLA violates both PASPA and the Tulania Constitution. 6

ARGUMENT I. TULANIA S PROPOSED SPORTS BETTING SCHEME VIOLATES PASPA. Tulania s proposed sports betting scheme violates the Professional and Amateur Sports Protection Act ( PASPA ), which is a broad federal ban on state-sponsored sports betting. PASPA makes it unlawful for any State to authorize 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... 28 USCS 3702. This broad ban was enacted to stop the proliferation of state-sponsored sports betting, which Congress identified as having a negative effect on society and the integrity of professional sports. S. Rep. No. 102-248 (1991). Congress provided a narrow statutory exception to PASPA to preserve limited sports betting games in states that had pre-existing schemes. This exception, or grandfather clause, permits a State to conduct a lottery, sweepstakes, or other betting, gambling, or wagering scheme... to the extent that the scheme was conducted... at any time during the period beginning January 1, 1976, and ending August 31, 1990 28 USCS 3704(a)(1). Tulania bears the burden of proving that its proposed scheme falls under the exception. FTC v. Morton Salt Co., 334 U.S. 37, 44-45 (1948). Tulania has not met this burden. Its proposed scheme, which would authorize parlay and single-game betting on all sporting events, goes beyond the scope of the narrow exception and violates PASPA for three reasons. First, the plain language of the exception unambiguously precludes such a broad expansion of Tulania s sports betting scheme. Second, even if the language of the statute were ambiguous, the Congressional purpose and legislative history show that Tulania s proposed scheme does not fall within the exception. Third, the plain language rule 7

does not apply here; however, even if the rule did apply, it is satisfied because Congress unmistakably intended PASPA to control the States ability to run sports betting schemes. A. The Plain Language of PASPA Does Not Permit Tulania to Authorize a Sports Betting Scheme that Includes Single-Game Betting on All Sports. The plain meaning of PASPA s language precludes Tulania from authorizing a sports betting scheme that includes single-game betting on all sports. Where Congress does not define the terms in a statute, courts assume that the legislative purpose is expressed by the ordinary meaning of the words used. Russello v. United States, 464 U.S. 16, 21 (1983). If the statute is unambiguous under the ordinary meaning of the words, the court s inquiry ends. Kaufman v. Allstate, 561 F.3d 144, 155 (3d Cir. 2009) (citing Conn. Nat l Bank v. Germain, 503 U.S. 249, 253-54 (1992)). Here, the plain meaning of the statute is clear and is not rendered ambiguous simply because Tulania can devise an alternate meaning. The statutory language restricts Tulania to operating only the same games it offered during the 1976 NFL season. Under the exception, Tulania is permitted to conduct sports gambling only to the extent that the scheme was conducted at any time during the period beginning January 1, 1976, and ending August 31, 1990. 28 USCS 3704(a)(1). Tulania asserts that it is now able to conduct any sports betting game, in any form, involving any sport, simply because it conducted three parlay games for one NFL season. The plain meaning of the exception unambiguously precludes Tulania from expanding Scoreboard in this way. The word scheme implies more than just the intent to conduct an activity; it requires a specific, more or less articulated and coherent plan or program of future action. Nason v. INS, 394 F.2d 223, 227 (2d Cir. 1968). In Nason, an immigrant was slated for deportation as an alien who ha[d] been convicted of two crimes involving moral turpitude not arising out of a single scheme of criminal misconduct. Id. at 224 (citing 8 U.S.C. 1251(a)(4)). To avoid 8

deportation, Nason argued that he was exempt from the broad statute because the two crimes he was convicted of were really part of a single scheme that he had intended to continue. Id. at 226. The court held that this mere intent was not enough to establish a single scheme, because scheme cannot be interpreted as an abstract concept or strategy capable of future application at any time and any place, but planned definitely for none. Id. As used in PASPA, the word scheme requires more than just Tulania s stated intent to expand Scoreboard beyond the NFL. This mere intention does not give Tulania the right to now conduct both parlay and single-game betting among a variety of sports. Similar to the statute in Nason, which required more than just an intention to act, PASPA requires that Tulania s proposed games were previously part of a specific, more or less articulated and coherent plan or program of future action. Id. Tulania cannot now conduct single-game betting or games for sport contests other than the NFL. It stated only an intent to extend Scoreboard to other sports but gave no evidence of any concrete plans to do so and never even contemplated including new games. MLB I, at 20. Thus the exception only allows Tulania to conduct games that were part of Scoreboard in 1976. Even if games or sports other than the ones included in Scoreboard could be considered part of the 1976 scheme, they are allowed only to the extent that the scheme was conducted in 1976. 28 USCS 3704(a)(2). This phrase does not mean what Tulania asserts it does that mere authorization in 1976 is enough because Congress used different language to require only authorization under another, unrelated exception. Where Congress uses different language in two separate statutory provisions, the provisions must be interpreted to mean two different things. Russello v. United States, 464 U.S. 16, 23 (1983). In Russello, the Court construed the word interest broadly in one section because another section using the word limited it with narrow 9

language. Id. In refusing to construe the two sections identically, the Court said, we refrain from concluding here that the differing language in the two subsections has the same meaning in each. We would not presume to ascribe this difference to a simple mistake in draftsmenship. Id. The plain meaning of the statutory phrase to the extent that the scheme was conducted limits Tulania to conducting the same scheme that was actually conducted during the grandfather period. It does not mean that Tulania can conduct any sports lottery as long some game was actually conducted and other games were authorized, because Congress used different language to say exactly that in a subsequent section. See 28 USCS 3704(a)(2). In section (a)(2), Congress exempted a State lottery where both--(a) such scheme was authorized by a statute as in effect on October 2, 1991; and (B) a scheme described in section 3702 actually was conducted in that State at any time during the period beginning September 1, 1989, and ending October 2, 1991. Id. (emphasis added). Pursuant to Russello, section (a)(1) cannot not mean the same thing as (a)(2) because Congress used different language and we would not presume to ascribe this difference to a simple mistake in draftsmenship. Russello, 464 U.S. at 23. The more broad grant under (a)(2) does not apply to (a)(1), and (a)(1) requires that the scheme was conducted during the grandfather period, rather than merely authorized or contemplated. This unambiguous language is not called into question simply because Tulania offers alternative interpretations. A statute can be unambiguous without addressing every interpretive theory offered by a party. Salinas v. United States, 522 U.S. 52, 60 (1997). The language here is not ambiguous because it is used in the context of an exception to a broad ban on state-run sports betting. Where a statute is a broad ban based on a policy choice, exceptions should be read narrowly. City of Edmonds v. Oxford House, Inc., 514 U.S. 725, 732 (1995) (citing Commissioner v. Clark, 489 U.S. 726, 739 (1989)). If Congress intended to say that when a 10

State had sports betting games in the past, it could run any sports betting scheme in the future without limitation, it would have said so. Instead, with the purpose of stopping the spread of state-run sports lotteries, Congress limited the exception only to the extent the scheme was conducted by the State during the grandfather period. This narrow exception does not allow Tulania to now authorize a comprehensive sports gambling scheme, and the language of the statute is not ambiguous simply because alternative meanings of the words exist. B. PASPA s Purpose and Statutory History Preclude Tulania from Operating the Proposed Sports Betting Scheme. Even if PASPA s language were ambiguous, its purpose and legislative history favor preclusion, and courts cannot disrupt this Congressional policy choice. If the plain language of a statute is ambiguous, courts construe it to give effect to its Congressional intent, found in the legislative history. Disabled in Action of Pa. v. Se. Pa. Transp. Auth., 539 F.3d 199, 210 (3d Cir. 2008). Courts should avoid interpreting statutes in a way that conflicts with Congressional intent and produces odd or absurd results. Id. (quoting Public Citizen v. United States Dep t of Justice, 491 U.S. 440, 454 (1989)). PASPA s purpose is clear. It was enacted to prohibit sports gambling conducted by, or authorized under the law of, any State or other governmental entity. S. Rep. No. 102-248. Giving Tulania free reign to offer any and all sports betting, beyond what it previously offered during the grandfather period, is inconsistent with this stated purpose. The grandfather clause exception was a political compromise, enacted to preserve sports betting in states where they were integral to the state s laws or economy. As explained by Senator Deconcini, instead of trying to have the Government run roughshod over a State that has built its economy around [sports betting], we exempted them. 138 Cong. Rec. S7274-02. This compromise functions narrowly to reflect the committee s policy judgment that sports gambling should be strictly contained. S. Rep. No. 102-248. The exception permits Tulania to 11

conduct only the betting games offered during the 1976 NFL season. If it allowed Tulania to go beyond this, it would give the State a monopoly on all sports betting against the forty-six states not included under the exception. Because Tulania s economy did not depend on sports betting when the statute was enacted, allowing such a competitive advantage to Tulania conflicts with Congress s policy choice. Tulania s assertion that this measure is now needed to support its economy is irrelevant. The answer to State budgetary problems should not be to increase the number of lottery players or sports bettors, regardless of the worthiness of the cause. S. Rep. No. 102-248. The legislature did not intend for the exception to be a loophole, recognizing that to prohibit sports gambling on one hand and to approve potential expansion on the other is really inconsistent and... not good policy. 138 Cong. Rec. S7274-02. Rather than expanding the scope of permitted activity, the exception here operates narrowly to maintain the status quo. While Tulania points to inconsistencies in the Congressional record that suggest a different interpretation, these inconsistencies should be resolved in favor of the statute s plain meaning. Ambiguity in the legislative history should be construed to give effect to Congress s intent and the plain meaning of the words used. Salinas, 522 U.S. at 58. In Salinas, the court relied on the plain meaning of the words in a statute, despite contrary legislative history. Id. The court stated, only the most extraordinary showing of contrary intentions in the legislative history will justify a departure from [the statutory language]. Id. (quoting United States v. Albertini, 472 U.S. 675, 680 (1985)). No extraordinary showing of contrary intentions exists here. While the Congressional record includes statements that the exception includes games that were permitted, the record similarly includes statements that the exception applies to only games that were conducted. 12

138 Cong. Rec. S7274-02. Since the statute uses the word conducted, any inconsistency in the legislative history should be resolved in favor of the text. Because Congress intended PASPA to stop the spread of gambling, it would be inapposite to allow a broad exception that deviates from this plain language. The judiciary does not have the discretion to change Congress s intended meaning for PASPA, regardless of whether it believes the statute is unfair or ineffective. When Congress has acted within their constitutional authority and articulated a policy choice in a statute, courts cannot override this policy choice. United States v. Oakland Cannabis Buyers Cooperative, 532 U.S. 483, 497 (2001). In Oakland Cannabis, the Court refused to interpret a statute banning the sale of marijuana to include an exception for medical necessity. Even though the court recognized that public policy concerns weigh in favor of the exception, a court cannot override Congress s policy choice, articulated in a statute, as to what behavior should be prohibited. Id. Congress has the power to ban sports gambling and did so with PASPA. The Court does not have the authority to disrupt Congress s policy choice. Although Tulania argues that the statute is ineffective because illegal sports gambling has spread, this argument belongs before the legislature, not the court. Like the policy in Oakland Cannabis, the Congressional policy here cannot be circumvented simply because Tulania asserts that it is ineffective in stopping the spread of gambling. C. The Plain Statement Rule Does Not Permit Tulania s Sports Betting Scheme. Even if this Court applies the plain statement rule, PASPA precludes Tulania from offering a comprehensive sports betting scheme. Where the plain statement rule applies, it dictates that unless Congress conveys its purpose clearly, it will not be deemed to have significantly changed the federal-state balance. Here, the plain statement rule does not apply 13

because the statute is unambiguous and does not affect an essential state function. But even if it does apply, it is met because Congress intended for the statute to apply to the States ability to run sports betting schemes. 1. The Rule Does Not Apply. The plain statement rule does not apply to PASPA. The rule only applies where (a) the statute is ambiguous, Salinas, 522 U.S. at 60, or (b) the statute goes beyond an area traditionally regulated by the states... [to affect] a decision of the most fundamental sort for a sovereign entity. Gregory v. Ashcroft, 501 U.S. 452, 460 (1991). As explained in sections A and B supra, the statute is not ambiguous. However, if this court decides that PASPA s words are ambiguous, the plain statement rule does not apply because any state decision to sell a service to consumers is constrained by federal law and is not a decision of the most fundamental sort for a sovereign entity. Id. While Tulania enjoys the power to raise revenue, the decision to raise revenue by selling a service to gamblers is not an essential state decision that invokes the plain statement rule. The plain statement rule does not apply in every situation where the law curtails the states ability to act; it only applies where the law would affect a decision of the most fundamental sort for a sovereign entity. Gregory, 501 U.S. at 560. In Gregory, the Court applied the plain statement rule where the statute would have otherwise precluded the States from establishing qualifications for government officials. It held that establishing these qualifications is a decision of the most fundamental for states, because it is one way a State defines itself as a sovereign. Id. The rule has similarly been applied where a statute would affect state police powers or subject states to civil liability. See Raygor v. Regents of the Univ. of Minnesota, 534 U.S. 533, 543 (2002) (waiver of state immunity is a historic State power); Pennsylvania Dept. of Corrections v. 14

Yeskey, 524 U.S. 206, 209 (1998) (state prison management is a traditional and essential state function). Unlike the fundamental sovereign powers at issue above, the plain statement rule does not apply where the statute does not affect an essential state function. Oxford House, 514 U.S. at 732. Oxford House involved a land-use restriction defining single-family residences by family composition. In holding that this restriction falls outside the Fair Housing Act exception, the Court declined to apply the plain statement rule from Gregory because the State s decision the ability to restrict land use by family compositions was not a decision of the most fundamental sort for a sovereign entity. Id. at n.5. See also White Mountain Apache Tribe v. Bracker, 448 U.S. 136 (1980) (plain statement rule was not applied where state taxation of Indian tribes was preempted by federal law). Here, Tulania s decision to conduct sports betting games to raise revenue is not one that invokes the plain statement rule. It does not rise to the level of the most fundamental sort and is unlike the power to organize state government involved in Gregory. States have never enjoyed the absolute power to raise revenue by any method. Congress was aware of this when enacting PASPA, and recognized that sports gambling offers a potential source of revenue for the States, but so do other destructive activities that could be regulated or taxed. 138 Cong. Rec. S7274-02. These destructive activities must be prevented because the line between right and wrong is not sustainable if any profitable activity, however, socially destructive, is seized upon to generate revenue for the States. Id. Tulania s decision to offer sports betting is subject to PASPA s federal limitation on raising revenue and is akin to the State s decision in Oxford House to use zoning as a method for regulating family composition. This decision does not invoke the plain statement rule because it is not one of the most fundamental sort for states. 15

To hold otherwise would mean that Congress is subject to this rule every time they want to prevent the States from selling a product or service that is harmful to the public. 2. Even if the Rule Applies, it is Satisfied. Even if this Court decides that the plain statement rule applies to PASPA, the rule is met because Congress unambiguously intended to affect the States power to run sports betting schemes. Where the plain statement rule applies, it is met when it [is] plain to anyone reading the Act that it covers the State action at issue. Gregory, 501 U.S. at 467. The rule protects state sovereignty in areas where Congress may unintentionally affect state power, and it ensures that the legislature has in fact faced, and intended to bring into issue, the critical matters involved in the judicial decision. United States v. Bass, 404 U.S. 336, 337 (1971). The plain statement rule is satisfied where the language of the statute includes the State action in question and it is clear that Congress intended to affect the State power. Pa. Dep t of Corr. v. Yeskey, 524 U.S. 206, 209 (1998). In Yeskey, the language of the statute specifically included State prisons, thus Congress made it clear that it intended for the Americans with Disabilities Act to affect the State power to administrate prisons. Id. Compare with Gregory, 501 U.S. at 467 (the exception calls into question whether the State power to appoint state judges was covered under the act at all). If the plain statement rule applies, it is met here because it is plain to anyone reading PASPA that Congress intended to cover the states ability to conduct sports betting schemes. Congress intended to affect the States; the entire focus of PASPA is state-run sports betting schemes. Like Yeskey, the language of the act specifically includes the State power to run sports betting lotteries. While Tulania contends that this case is like Gregory, the issue here is not whether PASPA applies to the five states under the exception, but how it applies. An issue of 16

how a statute applies is not a concern of the plain statement rule. The rule requires only that Congress clearly intended the statute to apply at all. Here, Congress intended the statute to apply to state-run betting schemes and precludes Tulania from operating its proposed scheme. II. THE SPORTS LOTTERY ACT VIOLATES TULANIA S CONSTITUTION. The Sports Lottery Act ( SLA ) violates Tulania s Constitution because its betting games are not lotteries and fall outside the limited exception to unconstitutional gambling. The Tulania Constitution prohibits [a]ll forms of gambling. MLB II, at 13. Tulania passed a constitutional amendment in 1974 authorizing lotteries under State control for the purpose of raising funds. Id. Tulania must demonstrate that the SLA betting games fit within the lottery exception. See FTC, 334 U.S. at 44-45. A lottery has three elements: prize, consideration, and chance. Affiliated Enter. Inc. v. Waller, 5 A.2d 257, 259 (Del. Super. Ct.1939). The elements of prize and consideration are met, and this Court needs to consider only the element of chance in the SLA betting games. MLB I, at 20. This Court can assess the presence of chance in either of two ways: using the pure chance rule, sometimes referred to as the English rule, or using the dominant factor rule, sometimes referred to as the American Rule. Nat l Football League v. Governor of Delaware, 435 F. Supp. 1372, 1385 (D. Del. 1977). Under either rule, Tulania s SLA betting games are unconstitutional because they are not games of chance due to the skill involved. Bettors use research, judgment, and discretion in placing their bets; this skill gives bettors the opportunity to control the outcome of betting games. Although the games are unconstitutional under either rule, this Court should apply the pure chance rule here to be consistent with Tulania s public policy and canons of construction. 17

A. The SLA Games Do Not Qualify as Lotteries. The SLA betting games are not lotteries under the Constitution s limited exception because they involve bettors use of skill. Under the pure chance rule, if skill plays any part in determining the winner, the game is not a lottery. People ex rel. Ellison v. Lavin, 179 N.Y. 164, 169-170 (1904). Under the dominant factor rule, a game may still be a lottery insofar as chance is controlling. Id. Under either rule, the SLA games are not lotteries because skill is used by bettors and can control the outcome of a sports betting game. 1. Bettors use Skill to Make Their Wagers. The SLA betting games are not games of chance because of the way bettors place their bets. To determine the character of the game, courts look to how bettors place their wager. State ex rel. Dussault v. Kilburn, 109 P.2d 1113, 1115 (Mont. 1941). Because bettors play sports betting games by using research and judgment, rather than haphazardly betting, chance does not predominate. Bettors can use skill in the SLA betting games by exercising judgment in placing their wagers. When the bettor may exercise judgment and discretion in making his wager, the game involves skill. Gandolfo v. La. State Racing Comm n, 78 So. 504, 510 (La. 1954). In Louisiana, the court determined that betting on horse racing was not a lottery. Id. at 505. Because bettors base their bets on reason, judgment, and sagacity, considering factors such as the condition, speed, endurance of the horse and the skill and management of the rider, rather than luck, it was a game of skill. Id. at 510 (quoting Rohan, 314 Mich. 326 (Mich. 1946)). Another court similarly concluded that betting on horse and dog racing was not a lottery because chance did not predominate. Ginsberg v. Centennial Turf Club et al, 251 P.2d 926, 929 (Colo. 1952). Chance 18

did not control because, rather than arbitrarily placing wagers, bettors applied skill by using facts such as previous records of the animal and the jockey, Ginsberg, 251 P.2d at 929. Here, the SLA betting games involve skill because they enable bettors to use judgment and discretion in placing bets. In the absence of precedent on sports betting games, as is the case here, a court may look to horse and dog racing cases for guidance. See Rohan, 314 Mich. at 346. Horse racing, like foot racing, boat racing, football, and baseball is a game of skill and judgment and not a game of chance. Id. Similar to the betting schemes in Gandolfo and Ginsberg, the sports betting games here permit bettors to make informed judgments on their wagers based on their understanding of betting lines and information such as competing teams records, starting rosters, and home-field advantage. Rather than leaving a wager merely to chance, bettors in SLA sports betting games can use skill and judgment in placing bets. In Delaware s identical betting games, it was not a coincidence that bettors who wagered heavily, on a bad line caused massive losses for the State. MLB I, at 21. Because bettors may exercise judgment in placing bets, the presence of skill precludes the SLA games from qualifying as constitutionally permissible lotteries. 2. In the SLA Games, Skill Outweighs the Presence of Chance The SLA sports betting games are not games of chance because there is more skill than chance. Where a bettor enhances his ability to win a bet, he applies skill. W. Va. Op. Atty. Gen. 8 (1991). In the SLA games, bettors have several opportunities to use skill, giving them a competitive advantage and allowing them to adroitly manipulate the outcome of the sports betting game. A betting game is characterized by chance where skill does not affect the probability of winning. No one can be a better lottery player than anyone else. Harris v. Mo. Gaming 19

Comm n, 869 S.W.2d 58, 62-63 (Mo. 1994) (en banc). In Rohan, betting on horse racing was not a lottery because a lottery requires that [prizes] be awarded by chance. Rohan, 314 Mich. at 346 (emphasis added). Like in horse racing, the element of chance in sports betting, may be and is eliminated to a very considerable extent by the skill, careful preparation, and the foresight of the competitors. Oneida County Fair Bd. v. Smylie, 386 P.2d 374, 384 (Idaho 1963) (citing People ex rel. Lawrence v. Fallon, 4 App. Div. 82, 39 N.Y.S. 865 (1896)). Even in NFL, the court noted that a football expert actually picked winners, to some extent, more effectively than other bettors and would have won the betting games several times. NFL, 435 F. Supp. at 1384. Here, like Rohan, bettors can use skill to enhance prospects of winning. Both involve games where bettors use skill, such as research, and their judgment and discretion, to decide which competitor will win the sporting event. The SLA sports betting games do not usually reward lucky bettors, but rather reward bettors who effectively apply their skill. See NFL, 435 F. Supp. at 1384. The district court here astutely recalled how a bad line doomed Delaware s state-run lottery and public funds. MLB I, at 21. Delaware s experience with an identical sports betting scheme is evidence that skill can be effectively applied to control the outcome of a betting game. MLB II, at 16. There, bettors skillfully capitalized on a bad line in placing their wagers, causing massive losses for the State. Id. This grave failure caused Tulania to discontinue its previous sports betting scheme. Id. Unlike the sports betting games here, some games do involve significant chance, such as pyramid schemes. See State v. Dahlk, 330 N.W.2d 611, 617 (Wis. Ct. App.1983). In pyramid schemes, participants win when they enroll people into the scheme and win more if the people they enrolled subsequently enroll others. See Id. The Dahlk court distinguished pyramid schemes 20

from sports betting to determine that chance predominated because, there aren t statistics available [and] research to employ, like in sports betting. Dahlk, 330 N.W.2d at 617 (emphasis added). Unlike Dahlk, where participants do not have the opportunity to apply skill, the bettors in Tulania s sports betting games have a wealth of information readily available to determine the likely winner of a sporting event. In short, the outcome of pyramid scheme bets are beyond the bettors control. In re Advisory Opinion to the Governor, 856 A.2d 320, 328-29 (R.I. 2004). A bettor s opportunity to control the outcome of a bet is sufficient to determine that a game is not predominated by chance, even if the bettor ultimately loses. See Engle v. State, 90 P.2d 988 (Ariz. 1939). Just because the more skilled bettor may lose his bet, a betting game of skill is not turned into one predominated by chance a race or other contest is by no means a lottery simply because its result is uncertain. Ellison, 179 N.Y. at 171 (quoting People ex rel. Lawrence v. Fallon, 152 N.Y. 12 (1897)). Unlucky occurrences such as an unexpected puff of wind, or an unseen gravel in the way, which alter the natural course of the game and cause the more skilled bettor to lose, do not mean the game is predominated by chance. Engle, 90 P.2d at 992. (quoting State v. Gupton, 30 N.C. 271 (N.C. 1848)). If a court held otherwise, only games of chance would exist. Id. Inattention is the party s fault, and not his luck. Id. Some courts have incorrectly overlooked this logic. For example, the court in NFL looked at one expert s bets and found chance predominated because the application of skill did not always result in winning. See NFL, 435 F. Supp. at 1385. However, the NFL court conceded we do not know anything about football expertise of those who actually played Scoreboard. NFL, 435 F. Supp. at 1385; see also Commonwealth v. Laniewiski, 98 A.2d 215, 249 (Pa. Super. 1953) (looking only to whether skilled bettors won or lost to determine whether chance predominated). The court only assessed whether the bettor won the game, rather than 21

considering the advantage the skilled bettor has upon placing the wager. As Engle makes clear, this is an incomplete analysis. See Engle, 90 P.2d at 988. Instead of considering only the success of a bet, this Court should weigh a skilled bettor s competitive advantage when placing a bet. In Tulania s SLA games, skilled bettors can and often do gain a competitive advantage in betting by applying specialized knowledge of the betting game and research on a given sporting event. The betting lines under the SLA, point spreads and money lines, provide opportunities for skilled bettors to apply their skill to manipulate the outcome of the betting game, by recognizing that a line is poorly structured. This was the case in Delaware, where skilled bettors virtually looted the State s coffers. MLB I at 21. The SLA betting games allow a bettor to apply skill in placing a wager and enhance his chances of winning by doing so. They are not games of chance and do not qualify as lotteries under the limited state-lottery exception to Tulania s constitutional prohibition on gambling. B. This Court Should Apply the Pure Chance Rule in Light of Tulania s Public Policy and the Canons of Construction This court should apply the pure chance rule because it is consistent with both public policy and canons of construction. Absent clear definition of the term lottery, courts look to a State s public policy to determine which rule applies. See e.g. Opinion of the Justices, 385 A.2d 695, 700 (Del. 1978). Gambling has been prohibited in Tulania since its Constitution was ratified, reflecting the State s strong public policy against gambling. MLB II, at 13. Though the application of either rule here eliminates gambling by invalidating the SLA, the pure chance rule is in line with this public policy because it permits fewer games to constitute lotteries. Keeping this public policy in mind, this Court should apply the pure chance rule because it allows Tulania s lottery exception to be construed narrowly, consistent with rules of constitutional construction. This Court has long recognized that exceptions to general 22

prohibitions must be narrowly construed. Opinion of the Justices, 385 A.2d 695, 701 (Del. 1978) (citing U.S. v. Allen, 163 U.S. 499 (1895)). A narrow interpretation of an exception is appropriate to avoid the danger of the exception becoming so broad as to swallow the rule. N.Y. Op. Atty. Gen. 84-F1 (1984). The Delaware Supreme Court recognized in an Advisory Opinion that broad construction of its state-lottery exception is absurd. Opinion of the Justices, 385 A.2d 695, 702 (Del. 1978). There, the Court assessed the constitutionality of legislation authorizing pool or pari-mutuel wagering on jai-alai games. Id. The proposed statute was narrowly construed because otherwise it would have provided unlimited authorization for the State, under the guise of a [state lottery], to operate an expansive system of sports betting in the face of the general constitutional ban against all forms of gambling. Id. In another instance, a constitutional exception to the State s gambling ban permitting bingo was narrowly construed to exclude instant bingo. State ex rel. Stephan v. Parrish, 887 P.2d 127 (Kan. 1994). There, the court reasoned that it must interpret an exception narrowly because the law did not grant the legislature carte blanche in adopting such definitions. Id. Tulania incorrectly asserts that the predominant factor rule should apply here. However, the predominant factor rule more aptly applies when upholding a general rule, rather than an exception. E.g. Morrow v. Alaska, 511 P.2d 127 (Alaska 1973). Most applications of the predominant factor rule broaden the meaning of lottery under penal codes to uphold a state s anti-gambling policy. 3 In Morrow, a Defendant was charged with violating a lottery ban for conducting a betting scheme on football games. Id. There, the Court expressly applied the predominant factor rule because, in that context, choosing otherwise could have led to large- 3 In applying the predominant factor rule, the District Court below relied primarily on cases that broadly prohibited gambling schemes under penal codes. E.g. People ex. rel. Ellison, 71 N.E. at 753; U.S. v. Marder, 48 F.3d 564 (1st Cir. 1995); Citation Bingo, Ltd. v. Otten, 910 2P.d 281 (N.M. 1995). 23

scale evasion of the statutory purpose, inconsistent with policy. Id. at 128. Here, the situation is reversed. Whereas Morrow applied the broad construction of lottery under the State s penal code to limit the expansion of gambling, this Court should apply a narrow construction to achieve the same objective. Id. Under the SLA, it would be both inconsistent with the State s anti-gambling public policy and injudicious to apply the predominant factor rule without considering the effect of adopting that rule. N.Y. Op. Atty. Gen. 84-F1 (1984). Fitting sports betting within a constitution s lottery definition relies on broadened court definitions of the term in cases involving prosecutions under the penal code. Id. If the Court does so here, it would produce a dangerous result. Specifically, the ingenuity of criminals to devise new gambling methods, so long as such methods remain prosecutable as illegal lotteries, defines what the state may mount as a legal lottery. Such transformation of forbidden criminal behavior into permissible state action would require an alchemy unknown to the legal arts. Id. Tulania s proposed sports betting games provide ample opportunity for bettors to apply skill by using knowledge and judgment to take advantage of a scheme allegedly aimed at generating revenue for Tulania. The application of skill enhances a bettor s prospects of winning and enables him to control the outcome of a sports bet. The only presence of chance here is the risk of Tulania s governor subjecting his constituents to the same misfortune endured in Delaware decades ago. As such, the Fourteenth Circuit s decision that Tulania s Sports Lottery Act violates the Tulania Constitution should be upheld. 24