Thank you for Logging in. We will begin shortly. 2016: A YEAR TO HOLD EM OR FOLD EM

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1 Thank you for Logging in. We will begin shortly. 2016: A YEAR TO HOLD EM OR FOLD EM

2 Using The Online Classroom All Attendee phone lines are muted. Questions may be submitted via the chat room on the bottom right hand side of your screen. Questions will be answered as time allows.

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6 OUR SPEAKERS Adam Berger, Esq. Chair, NJSBA Casino Law Section Duane Morris LLP (Cherry Hill) Dennis Drazin, Esq. Advisor, Monmouth Park Race Track Drazin & Warshaw, PC (Red Bank) Christopher Soriano, Esq. Past Chair, NJSBA Casino Law Section Duane Morris LLP (Cherry Hill) Lynne Levin Kaufman, Esq. Vice-Chair, ABA Gaming Law Committee Past Chair, NJSBA Casino Law Section Member, Board of Directors of the International Association of Gaming Advisors Cooper Levenson (Atlantic City)

7 2016: A Year To Hold em Or A Year To Fold em December 9, Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP. Duane Morris Firm Offices New York London Singapore Philadelphia Chicago Washington, D.C. San Francisco Silicon Valley San Diego Shanghai Taiwan Boston Houston Los Angeles Hanoi Ho Chi Minh City Atlanta Baltimore Wilmington Miami Boca Raton Pittsburgh Newark Las Vegas Cherry Hill Lake Tahoe Myanmar Oman Duane Morris Affiliate Offices Mexico City Sri Lanka Duane Morris LLP A Delaware limited liability partnership

8 Threats From Other Gaming Markets In addition to the internal economic pressures facing Atlantic City, the state s casinos are facing increasing pressures from neighboring states: Additional supply of casinos (New York and Pennsylvania) Prospective types of gaming offerings (Pennsylvania) New casino developments and expansion projects (New York and Pennsylvania) All of which take gaming revenue away from Atlantic City, while at the same time emphasizes New Jersey s need to innovate its gaming offerings.

9 New York Casino Developments Prior to December, New York maintained 9 Video Lottery Facilities (racinos) and 6 tribal casinos (Oneida, Seneca and St. Regis tribes) In 2014 and 2015, New York held competitive bidding processes for 4 upstate full-scale casinos licenses. One license in each upstate region (Southern Tier, Capital and Catskills) and one wild card license.

10 New York Casino Developments Gaming Facility Licenses awarded to: Tioga Downs (Nichols) Empire Resorts (Monticello) del Lago (Waterloo, Seneca County) Rivers (Schenectady) New York Constitution authorizes 4 upstate casinos (already awarded) and 3 downstate casinos (New York City region) New legislation would be required. Under current legislation, downstate licenses cannot be awarded within 7 years of award of initial licenses (early 2016). If licenses awarded sooner, current licensees get refund (likely prorated) of license fee.

11 New York Casino Developments Key features of New York s gaming law: Permits slot machines and table games Tax on table games is 10% Tax on slot machines varies by region (37%, 39%, 45%) Each property will offer a hotel Tioga Downs already open, Rivers and del Lago to open in early 2017 and Empire must open within 2 years of license award (2018)

12 New York Casino Developments Support by some legislators to legalize Internet poker Internet poker bill failed in last legislative session, but there appears to be momentum to pass in future sessions. As previously contemplated would only allow poker, not other casino games to be played over the Internet. This would create a potential opportunity for New Jersey (i.e., to pool players and create greater liquidity for Internet poker).

13 Pennsylvania Casino Developments Pennsylvania booked casino expansion into current fiscal year budget (approximately $100 million). Categories of expansion considered: Internet gaming Airport gaming Video gaming terminals at bars and restaurants Slot parlors at off-tracking betting sites Legislature failed to pass any expansion measure in summer/fall sessions.

14 Pennsylvania Casino Developments Pennsylvania legislature expected to take up measures again in spring session. As with New York, Internet gaming would present opportunities for New Jersey (shared markets, increased jackpots and increased liquidity) Additional recent developments and prospective developments: Sands Bethlehem expansion (not formally announced until after New Jersey referendum) Philadelphia Live Casino (currently before State Supreme Court) Category 1 license (prospective re-award of Lawrence County license) Category 3 license (additional resort casino license can be awarded as early as 2017)

15 Maryland Developments In Other States MGM National Harbor casino set to open Massachusetts Awarded 3 commercial casino licenses and one tribal license. One casino (slot parlor) has commenced gaming operations. Tribal casino development is in jeopardy currently due to federal court decision. Connecticut Prospective third casino in state (joint venture between Mohegan Sun and Foxwoods). Current court challenge to the casino.

16 Atlantic City Takeover In February 2016, S1711, the Municipal Stabilization and Recovery Act was introduced in the Legislature. After amendment, the legislation was passed on May 26, 2016 and signed by the Governor the next day. The legislation has been codified at N.J.S.A. 52:27BBBB-1 et seq.

17 Atlantic City Takeover Under the Act, the Director of the Division of Local Government Services in the Department of Community Affairs may determine that a municipality is a municipality in need of stabilization and recovery. If the Director makes that determination, he recommends to the Commissioner of the DCA that the municipality be subject to the Act. The Commissioner makes the final decision.

18 Atlantic City Takeover Once a municipality is subject to the Act, it has 150 days to propose a five-year recovery plan. DCA can accept or reject the plan. DCA s standard is whether the recovery plan is likely to achieve financial stability.

19 Atlantic City Takeover If DCA determines plan is likely to achieve financial stability, the plan must be implemented. If DCA determines the plan is not likely to achieve financial stability, then the Local Finance Board can remove certain powers from the city and place them in the Director of Local Government Services.

20 Atlantic City Takeover These powers include any of the functions, powers, privileges and immunities of the governing body of that municipality set forth in any statute, regulation, ordinance, resolution, charter, or contract to which the municipality is a part related to the fiscal condition or financial rehabilitation and recovery of that municipality. These powers include abolishing any municipal board or commission; vetoing the governing body s minutes; selling property; and canceling contracts.

21 Atlantic City Takeover Atlantic City was deemed subject to the Act on June 6, It submitted its five year plan to the DCA on October 25, The DCA has rejected the plan, invoked the Act, and appointed an individual to exercise the powers under the Act.

22 Lynne Levin Kaufman, Esquire (609)

23 Ballot Question: North Jersey Casino Referendum Do you approve amending the Constitution to permit casino gambling in two additional counties in this State? At present, casino gambling is allowed only in Atlantic City in Atlantic County. Only one casino in each of the two counties would be permitted. Each casino is to be located in a town that is at least 72 miles from Atlantic City. The amendment would allow certain persons to apply first for a casino license.

24 Referendum Defeat The North Jersey Casino referendum failed by approximately 1.5 million votes, the largest ever defeat of a referendum. Trivia: What was the second largest referendum defeat and when? - Plan to building a professional stadium in the Meadowlands How much was spent on the North Jersey Casino referendum? - More than $24 million. - Most money ever spent on a referendum.

25 Dueling Lobbyists North v. South - Our Turn NJ - No North Jersey Casinos Coalition and Trenton s Bad Bet Proponents argued that since (i) gaming was surrounding NJ; (ii) gaming expansion in New York was looming; and (iii) Atlantic City casinos were closing, North Jersey casinos could bring in millions of dollars of tax revenue and provide thousands of jobs to New Jersey residents. The revenue and jobs would otherwise be lost. Opponents argued the North Jersey referendum would cause even more AC casinos to close with tens of thousands of people losing jobs and the tax benefits would not offset the loss. They also cited a dramatic trickle down economic impact. They believed that as there is so much regional competition already, New York and other recent expansions would not have a significant negative impact. Many unaddressed issues in referendum such as exactly where the casinos would be built and the tax rate.

26 Interesting Statistics Some interesting statistics from opponents of North Jersey casinos: Taking the $2.5 billion figure, if expansion in Pennsylvania, NY, and Mass is factored in, there was still only expected to be a marginal decline in revenue to $2.45 billion. Market saturation is the reason But those figures change if North Jersey casinos are added

27 Certain Predictions if North Jersey Casinos Were Permitted $691 million gaming revenue decline At least three casino closures Total job losses of 28,000 30,000 (that was prior to Taj Mahal closure) Lost regional economic output between $1.5 $2 billion Large state toll reductions Significantly reduced Boardwalk spending

28 So are we Holding or Folding for AC? AC has a reprieve for now, but many believe that the issue will not disappear and we will see another referendum in a few years. Putting aside whether there should be North Jersey casinos, where is AC now and what is the AC gaming industry poised to do?

29 Best year $5.2 billion Last year $2.6 billion Plenty of blame to put on many: - AC government - Municipal agencies - State agencies - Casinos - Investors Where is Atlantic City Now? AC Revenue Cut In (slightly more than) Half Over 10 Year Period

30 AC had East Coast Monopoly Gradual competition Bigger Picture Regarding Decline Followed by regional expansion boom in past 10 years Wall Street is not Easy Street Revel anomaly Lack of Reinvestment in some older properties cost prohibitive nature of reinvestment Market adjustment

31 State Takeover Naughty or Nice? Casinos do not fall under City management State takeover does not impact relationship with DGE Casinos do depend on Atlantic City for essential services fire, police, trash for example But State involvement could result in reduced expenses through renegotiated contracts Also could serve as basis to stop the negativity and Atlantic City can focus on growth

32 Question: Hold Em Is the casino industry responding to the reprieve from North Jersey gaming? Answer: Yes

33 Internet Gaming: Revenues Rise Initially there were lofty unrealistic goals Led to disappointment There is very good news: - October alone had a 29% increase in Internet gaming win over last year - $16.7 million v. $12.9 million for year so far % increase for year so far Land-based tie ins New types of Internet games - virtual sports - live dealer Social games

34 Skill-based Gaming - General Millennial reluctance toward traditional casino games - Social interaction wanted - Ability to control outcome NJ first to have skill-based games on casino floor Regulations - Skill-based gaming means any Division approved casino game where game outcome is dependent in whole or in part upon a player s physical dexterity and/or mental ability. - Must have not less than 83% payout if skill is just a component - But if no RNG or if the game is all skill then no minimum hold percentage

35 Skill-based Gaming Other Regulatory Features All must be permanently displayed Purchased enhancements are allowed May play against computerized or house-sponsored opponent Once initiated, a casino cannot alter the function based on skill to make an event more or less likely to occur May have an adaptive feature to increase payback percentage Skill-based gaming can be both land-based and on-line All must be disclosed

36 Daily Fantasy Update Last fall largest national television advertiser Legal scrutiny UIEGA exception NY & Nevada actions Many states followed either banning or proposing regulation. - Two types of Regulation: Scrutiny v. $$$ As explained, PASPA impact of regulations Mainstream acceptance of DFS Leagues and Media Investment. As such, a solution was needed.

37 New Jersey Impact How does this impact NJ gaming: - Current Fantasy Regulations - Casino lounges - Another way to reach out to customer - Preliminary step to Sports Betting - Note Nevada firm position regarding licensing and DFS

38 esports Dictionary Definition: A multiplayer video game played completely for spectators, typically by professional gamers 20 year old industry Although for many years considered to be only popular in Asia, North American and European popularity is growing. Live streams can attract 100,000 viewers - League of Legends - Counter-Strike Global Offensive 112 Major esports events in million gamers $121 million North American Revenue

39 Can you bet on esports? esports Nevada - Regulation Gaming Policy Committee (1) Wagering on events other than athletic events (2) Just agreed that only needed to tweak regulations (3) William Hill/Downtown Casino New Jersey - On-line component - Betting on skilled games

40 Internet Café, Bill Update Bill cleared Assembly Gaming Committee on Monday Monmouth Park and Meadowlands could partner with Atlantic City Casinos and create Internet Cafes David Drazin is the persons to answer questions

41 Sports Betting The Professional and Amateur Sports Protection Act ( PASPA ) A Most Unusual Statute

42 What Does PASPA Prohibit? a government entity to sponsor, operate, advertise, promote, license, or authorize by law or compact 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 on one or more performances of such athletes in such game. (28 USC 3702)

43 Important Point PASPA DOESN T ACTUALLY BAN SPORTS BETTING

44 In fact, it has exceptions: PASPA does not apply where: a lottery, sweepstakes, or other betting, gambling, or wagering scheme [was operated], to the extent that the scheme was conducted by that State or other governmental entity at any time during the period beginning January 1, 1976, and ending August 31, 1990

45 More Exceptions such scheme was authorized by a statute as in effect on October 2, 1991; and actually was conducted in that State at any time during the period beginning September 1, 1989, and ending October 2, 1991, pursuant to the law of that State or other governmental entity

46 The New Jersey Window Through complicated statutory wording, New Jersey had one year to implement sports betting in its casinos. It didn t.

47 Skip Ahead to Delaware in 2009 Delaware, which had a NFL parlay card system in the 1980s, tried to implement full scale sports betting The Third Circuit said no. Commissioner v. Markell, 579 F.3d 293 (3d Cir. 2009). To the extent must be narrowly construed.

48 New Jersey s Recent Battle In 2011, New Jersey adopted a constitutional amendment allowing the Legislature to amend the Casino Control Act to authorize sports betting. The Legislature did so and the Division of Gaming Enforcement was set to authorize the casinos to offer sports betting.

49 New Jersey s battle The professional sports leagues sued, saying this violates PASPA. New Jersey then challenged the constitutionality of PASPA. The Third Circuit concluded that PASPA was constitutional.

50 New Jersey s battle NCAA v. Christie, 730 F.3d 208 (3d Cir. 2013) Anti-commandeering principle that Congress cannot force a state legislature to do something e.g., New York v. United States, 505 U.S. 144(1992)(either arrange for disposal of radioactive waste or take ownership of it) Congress may not simply commandeer the legislative process...by directly compelling them to enact and enforce a federal scheme

51 New Jersey s battle PASPA does not require a state to actually do anything - it is hard to see how Congress can commandeer a state..if it does not require it to do anything at all. But we do not read PASPA to prohibit New Jersey from repealing its ban on sports wagering. Both choices leave much room for the states to make their own policy.

52 Round 2 So New Jersey repeals its ban on sports wagering.in part. N.J.S.A. 5:12A-7 (10/17/14): The [criminal statutes] are repealed to the extent they apply or may be construed to apply at a casino or racetrack in this State by persons 21 years of age or older situated at such location

53 Nope. After going through the District Court and the Third Circuit en banc, the Court held that this partial repeal does not comport with PASPA. NCAA v. Christie, No (3d Cir. Aug. 9, 2016) To the extent that in Christie I we took the position that a repeal cannot constitute an authorization, we now reject that reasoning.

54 En Banc Decision To be clear, a state s decision to selectively remove a prohibition on sports wagering in a manner that permissively channels wagering activity to particular locations or operators is, in essence, authorization under PASPA. However, our determination that such a selective repeal of certain prohibitions amounts to authorization under PASPA does not mean that states are not afforded sufficient room under PASPA to craft their own policies.

55 En Banc decision Court s only example was that a state could repeal prohibitions on friendly wagers Dissent: This shifting line approach to a State s exercise of its sovereign authority is untenable. The bedrock principle of federalism that Congress may not compel the States to require or prohibit certain activities cannot be evaded by the false assertion that PASPA affords the States some undefined options when it comes to sports wagering.

56 End of the road? New Jersey has petitioned for cert. More to come?

57 Writ of Cert Petitioner NJTHA respectfully petitions for a writ of certiorari to review the en banc judgment of the United States Court of Appeals for the Third Circuit. Defining the conflicting powers of the government of the Union and of its members, as marked in that constitution, has always been acknowledged to be this Court s important constitutional duty. M Culloch v. Maryland, 17 U.S. 316, (1819); id. at (noting that [o]n the Supreme Court of the United States has the constitution of our country devolved this important duty ). In the decision below, however, the court of appeals failed to follow this Court s modern Tenth Amendment and federalism precedents established in New York v. United States, 505 U.S. 144 (1992), Printz v. United States, 521 U.S. 898 (1997), and National Federation of Independent Business v. Sebelius, 132 S. Ct (2012).

58 Constitutional and Statutory Provisions Involved The Commerce Clause of the United States Constitution provides: The Congress shall have Power * * * [t]o regulate Commerce with foreign Nations, and among the several States and with the Indian Tribes.

59 Constitutional and Statutory Provisions Involved (cont.) U.S. Const. Art. I, Sec. 8, Cl.3. The Supremacy Clause of the United States Constitution provides: This Constitution and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

60 Constitutional and Statutory Provisions Involved (cont.) U.S. Const. Art. VI, Cl. 2. The Tenth Amendment to the United States Constitution provides: The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

61 Constitutional and Statutory Provisions Involved (cont.) U.S. Const. Amend. X. The most relevant provision of PASPA (28 U.S.C. 3702) provides in pertinent part: It shall be unlawful for - (1) a governmental entity to * * * license, or authorize by law or compact or (2) a person to sponsor, operate, advertise, or promote, pursuant to the law or compact of a governmental entity, a lottery, sweepstakes, or other betting, gambling, or wagering scheme based * * * on one or more competitive games in which amateur or professional athletes participate * * * or on one or more performances of such athletes in such games. The full text of PASPA, 28 U.S.C et seq., is reproduced at Pet. App. H.

62 Constitutional and Statutory Provisions Involved (cont.) New Jersey s law repealing certain of its laws prohibiting sports betting at specific venues in the State, N.J. Stat. Ann. Section 5:12A-7 et seq. ( 2014 Act ), is reproduced at Pet. Appx. H.

63 Statement of the Case The NJTHA adopts and incorporates by reference the entirety of the Statement of the Case of the State Defendants that is set forth in their Petition for Writ of certiorari filed on or about this date in connection with the same August 9, 2016 judgment as this Petition. To that Statement of the Case, the NJTHA respectfully adds the following.

64 Statement of the Case (cont.) The NJTHA has more than 3,000 members, consisting of thoroughbred horse owners and horse trainers from around the world. Nat l Collegiate Athletic Ass n v. Christie, No , Docket Entry ( D.E. ) (D.N.J. Dec. 13, 2012). The NJTHA is also the licensed operator and permit holder of Monmouth Park Racetrack, a thoroughbred racetrack located in Oceanport, New Jersey ( Monmouth Park ). Id. 29.

65 Statement of the Case (cont.) Monmouth Park is an integral part of all aspects of the equine industry in New Jersey. Id. 30. If Monmouth Park is forced to close it will mean the death of the thoroughbred racing industry in New Jersey. Id. 31.

66 Statement of the Case (cont.) Wagering on New Jersey Thoroughbred and Standardbred horse races in New Jersey has waned in recent years resulting in the loss of jobs as well as causing economic distress to the equine industry in New Jersey, especially to Monmouth Park. Id. 32. The NJTHA believes that sports betting is an essential component of the NJTHA s overall plan to make Monmouth Park an economically self-sustaining Thoroughbred Racetrack, better able to compete with racetracks in surrounding States that are bolstered by casino revenues. Id. 33.

67 Statement of the Case (cont.) The New Jersey equine industry is critical to New Jersey s economy and the preservation of open space in New Jersey. Id. 34. In a Report, prepared by Karyn Malinowski, Ph.D. of the Rutgers Equine Science Center, it was concluded that if racing-related and breeding farms in New Jersey were to cease operations it would have a $780 million negative annual impact, put 7,000 jobs in danger, eliminate $110 million in tax revenues, and leave over 163,000 acres of open space vulnerable to future development. Id.

68 Statement of the Case (cont.) The competitive disadvantages created by PASPA s exemption, in favor of four (4) States (especially Nevada and neighboring Delaware), from PASPA s prohibition against State authorized by law sports wagering has combined with other factors to put the New Jersey horse industry, and Monmouth Park in particular, at such a severe disadvantage that the economic viability of the New Jersey horse industry and Monmouth Park has been and continues to be seriously damaged. Id. 35.

69 Statement of the Case (cont.) The only business revenue stream that can save Monmouth Park at the present time is revenue from sports betting. Nat l Collegiate Athletic Ass n v. Christie, No , D.E (D.N.J. Oct. 22, 2014). In anticipation of being able to offer sports betting in New Jersey, the NJTHA entered into an agreement with the leading sports betting company in the world, William Hill. Id. 6 and Ex. A.

70 Statement of the Case (cont.) Monmouth Park, through the NJTHA, is the founding member of a private regulatory body called The Independent Sports Wagering Association ( TISWA ). Id. 7; Nat l Collegiate Athletic Ass n v. Christie, No , D.E (D.N.J. Oct. 13, 2014). TISWA is designed to provide integrity and protect the public with respect to sports betting. Nat l Collegiate Athletic Ass n v. Christie, No , D.E (D.N.J Oct. 22, 2014).

71 Statement of the Case (cont.) Monmouth Park estimates that it is losing over one million dollars every week because of its inability to offer sports betting due to the Third Circuit s judgment regarding the 2014 Act. Nat l Collegiate Athletic Ass n v. Christie, No , D.E and Ex. A (D.N.J Oct. 22, 2014).

72 Statement of the Case (cont.) While Monmouth Park suffers this significant injury, the Leagues continue to reap enormous profits on daily fantasy sports wagering based on performances of players in the Leagues sports contests where the Leagues are actively promoting such betting and/or owning daily fantasy betting platforms that are now authorized by law in numerous states despite the fact that PASPA may prohibit daily fantasy wagering. See Nat l Collegiate Athletic Ass n v. Christie, No , D.E. 53 (D.N.J. Nov. 17, 2014); D.E (D.N.J. Nov. 14, 2014); D.E (D.N.J. Nov. 13, 2014).

73 The Federal Question Presented In September 2013, the United States Court of Appeals for the Third Circuit upheld the Professional and Amateur Sports Protection Act (PASPA), 28 U.S.C. Sec et seq., against a constitutional commandeering challenge by construing its proscription against States authoriz[ing] sports wagering by law as a narrow prohibition reaching only the affirmative authorization by law of gambling schemes, and not repeals by States of sports wagering prohibitions. See Nat l Collegiate Athletic Ass n v. Gov. of N.J. (Christie I), 730 F.3d 218, 233 (3dCir. 2013). However, after New Jersey repealed certain of its prohibitions on sports wagering as applied to specific venues in the State, the en banc Court reversed course and broadly interpreted PASPA as making it unlawful for New Jersey to enact such a repeal. The Court further held that it was constitutional for federal law to dictate in this manner the extent to which States prohibit sports wagering.

74 The Federal Question Presented (cont.) The question presented is: Does a federal statute that prohibits adjustment or repeal of state-law prohibitions on private conduct impermissibly commandeer the regulatory power of States in contravention of New York v. United States, 505 U.S. 144 (1992), and Printz v. United States, 521 U.S. 898 (1997)?

75 Reasons for Granting the Writ (cont.) The NJTHA adopts and incorporates by reference the entirety of the Reasons for Granting the Petition of State Defendants that is set forth in their Petition of the State Defendants that is set forth in their Petition for Writ of Certiorari filed on or about this date in connection with the same August 9, 2016 judgment as this Petition. To those Reasons for Granting the Petition, the NJTHA respectfully adds the following.

76 Reasons for Granting the Writ (cont.) A. The Third Circuit s Flouting Of This Court s Anti-Commandeering Precedents Deprives The NJTHA And The People Of New Jersey Of The Political And Individual Liberties That Federalism Is Designed To Protect.

77 Reasons for Granting the Writ (cont.) The Petition for Certiorari filed by the State Defendants which the NJTHA fully supports and incorporates by reference demonstrates that the Court of Appeals flouted this Court s anticommandeering precedents by requiring the State of New Jersey to keep in place criminal prohibitions that the State has chosen to lift.

78 Reasons for Granting the Writ (cont.) While the State of New Jersey correctly objects to this violation of its sovereignty, our federalism does not merely protect the States, but also secures to citizens the liberties that derive from the diffusion of sovereign power. New York v. United States,505 U.S. 144, 181 (1992) (Quoting Coleman v. Thompson, 501 U.S. 722, 759 (1991) (Blackmun, J., dissenting)). The liberties protected by federalism are both political and individual.

79 Reasons for Granting the Writ (cont.) Politically, federalism allows States to respond, through the enactment of positive law, to the initiative of those who seek a voice in shaping the destiny of their own times without having to rely solely upon the political processes that control a remote central power. Bond v. United States, 564 U.S. 211, 221 (2011). Individually, federalism protects the liberty of all persons within a State by ensuring that laws enacted in excess of delegated governmental power cannot direct or control their actions. Id. at These are not abstract matters for the NJTHA and its more than 3,000 members, which find themselves deprived by the Third Circuit s decision of both their political and individual liberties.

80 Reasons for Granting the Writ (cont.) The NJTHA operates Monmouth Park Racetrack, a New Jersey institution since 1870 and an integral part of all aspects of the State s tourist and equine industry. Foreseeing that Monmouth Park s economic survival depends on sports wagering, and that its closure would endanger the entire equine industry in New Jersey (including thousands of jobs and thousands of acres of open space), the NJTHA joined with citizens across New Jersey to change the state law prohibiting sports betting. It did so not once, but twice the second time in reliance on the assurances that the Third Circuit, the Leagues, and the United States provided to explain their rejection of NJTHA s first efforts. These exercises of political liberty have been nullified because the Third Circuit reversed course and held that the content of New Jersey law can be dictated by the national government, in derogation of the will of the people of New Jersey and their elected representatives.

81 Reasons for Granting the Writ (cont.) Monmouth Park is not free to offer sports wagering to its customers. And Monmouth Park s customers are not free to engage in sports wagering. Why? Not because the Congress of the United States has exercised its power to regulate interstate commerce to directly prohibit Monmouth Park and its customers from engaging in sports betting. Congress has passed no federal law that directly prohibits sports betting at Monmouth Park. And not because the Legislature of New Jersey has exercised its police power to prohibit that activity. To the contrary, the State Legislature has repealed the prior state law prohibiting sports betting at Monmouth Park.

82 Reasons for Granting the Writ (cont.) Monmouth Park and its customers are not free to engage in sports betting because federal judges have decreed that the prior State law prohibition against sports betting must remain in place as New Jersey law, despite an Act of the New Jersey Legislature repealing that prohibition. Thus, if the NJTHA offered sports wagering at Monmouth Park, it would face the risk of prosecution by New Jersey State officials, in a New Jersey State court, for a violation of New Jersey State law not because of decisions made by the New Jersey Legislature and Executive, but because State officials are under a federal injunction not to give effect to the State Legislature s repeal of State law.

83 Reasons for Granting the Writ (cont.) The NJTHA would find itself defending a charge that it violated a State law that remained State law only because of a federal compulsion in the form of a federal injunction, and prosecuted by State executives forced to prosecute only because of a federal injunction. Such commandeering of State laws conflicts with New York v. United States, 505 U.S. 144 (1992), and such conscription of State law enforcement officials to carry out a federal mandate violates Printz v. United States, 521 U.S. 898 (1997). Each violation results in the unconstitutional deprivation of the political and individual liberties protected by our federalism.

84 Reasons for Granting the Writ (cont.) In conflict with the Third Circuit s decision, the highest courts in several States have recognized that the national government lacks the constitutional authority to require States to freeze in place State law prohibitions. Reed-Kaliher v. Hoggatt, 347 P.3d 136, 141 (Ariz. 2015); Ter Beek v. City of Wyoming, 846 N.W.2d 531, 538 (Mich. 2014); State v. Nelson, 195 P.3d 826, 834 (Mont. 2008). In these decision, the Supreme Court of Arizona, the Supreme Court of Michigan, and the Supreme Court of Montana each relied on anti-commandeering principles to uphold the validity of State laws removing, for qualified patients, prior State law prohibitions of marijuana. See also Conant v. Walters, 309 F.3d 629, (9 th Cir. 2002) (Kozinski, J., concurring) ( much as the federal government may prefer that California keep medical marijuana illegal, it cannot force the state to do so.... If the federal government could make it illegal under federal law to remove a state-law penalty, it could then accomplish exactly what the commandeering doctrine prohibits: The federal government could force the state to criminalize behavior it has chosen to make legal. ).

85 Reasons for Granting the Writ (cont.) Under the Third Circuit s interpretation of the United States Constitution, all of these State Court decisions are wrong. Under the Third Circuit s reasoning, Congress has the constitutional power to prohibit States from selectively removing State law prohibitions on private conduct. The Third Circuit, unlike those State Courts, failed to recognize that while State law cannot create a defense to a federal prosecution, a State remains free to prohibit as little private conduct as it chooses under its own law.

86 Reasons for Granting the Writ (cont.) This Court alone can make the Constitution uniform across the nation. Martin v. Hunter s Lessee, 14 U.S. 304, 348 (1816) (noting that without this Court s appellate jurisdiction the constitution of the United States would be different in different states, producing truly deplorable public mischiefs ). The Third Circuit failed to see that the Constitution, properly interpreted, leaves the people of New Jersey as free to exercise their liberties and partially remove New Jersey s prior State law prohibiting sports gambling as it leaves the people of Arizona, Michigan, and Montana free to partially remove their prior State law prohibitions on marijuana.

87 Reasons for Granting the Writ (cont.) This Court should grant certiorari and make this promise of liberty-enhancing federalism uniform throughout the country.

88 Reasons for Granting the Writ (cont.) B. The Third Circuit s Decision Has Nationwide Significance Because It Casts A Long Shadow Over Numerous State Laws And Regulations Authorizing Daily Fantasy Sports Wagering.

89 Reasons for Granting the Writ (cont.) The Petition for Certiorari filed by the State Defendants references the many States that have expressed interest in repealing their prohibitions on sports wagering. The Third Circuit s decision upholding PASPA and interpreting it in a manner that prevents selective repeals of State Laws prohibiting sports betting impacts the efforts of these States.

90 Reasons for Granting the Writ (cont.) The Third Circuit s decision also calls into question the laws and regulations of numerous States that have enacted regimes regulating daily fantasy sports betting. Daily fantasy sports betting ( DFS ) involves wagering on performances by players in the Leagues games as opposed to betting on the final scores of the Leagues games. The two industry leaders in DFS, Fan-Duel and DraftKings, processed a combined $3 billion in fees in connection with such games. There are currently nine states that have laws authorizing daily fantasy wagering on athletic performances New York, Massachusetts, Virginia, Colorado, Kansas, Missouri, Tennessee, Mississippi, and Indiana.

91 Reasons for Granting the Writ (cont.) The provisions of PASPA apply both to wagering on the outcome of sports games as well as wagering on the performances of the athletes in such games. See 28 U.S.C ( It shall be unlawful for a governmental entity to * * * license, or authorize by law * * *, or a person to sponsor, operate, advertise, or promote, pursuant to law * * * of a governmental entity, a lottery, sweepstakes, or other betting, gambling, or wagering scheme based * * * on one or more competitive games in which amateur or professional athletes participate * * * or on one or more performances of such athletes in such games. ) (emphasis added). Accordingly, all States that are currently licensing or authorizing by law daily fantasy sports (as well as the DFS operators in those States) are, under the Third Circuit s decision, at some risk under PASPA.

92 Reasons for Granting the Writ (cont.) The Third Circuit s decision creates uncertainty as to whether the efforts of the numerous States that have licensed and/or authorized DFS by law may violate PASPA. A determination by this Court as to whether PASPA is constitutional or not eliminates that uncertainty across the nation. Whether PASPA is a constitutional statute should not be left in the hands of the Leagues. They have already shown that they seek to enforce PSDPS only when it suits their economic interests. It is emphatically the province of this Court, not the Leagues, to decide whether PASPA is constitutional or not. See Marbury v. Madison, 5 U.S. 137 (1803). Under PASPA, the only entities that have the authority to commence suit to enjoin a violation of PASPA are the United States and the sports organization whose competitive game is alleged to be the basis of such violation. 28 U.S.C As evidenced by this action, the United States is not independently seeking to enforce PASPA. And the Leagues have no interest in seeking to enforce PASPA with respect to DFS because the Leagues are significantly involved in DFS indeed, the Leagues have equity stakes in DFS operators such as FanDuel and DraftKings.

93 Racing Racing in New Jersey is regulated as set forth in N.J.S.A. 5:5-1, et seq. Racing in New Jersey is at Monmouth Park, The New Meadowlands Race Track, and Freehold Raceway. Monmouth Park has a Thoroughbred race meet which runs from May through the end of September, and the Meadowlands runs a Thoroughbred race meet in October and part of November. Standardbreds race meets are run at the New Meadowlands Race Track and Freehold Raceway. Pari-mutuel Wagering is authorized in New Jersey. In an effort to increase revenue, New Jersey has established the following legally permissible wagering opportunities for the purpose to enhancing revenue for racing purses and operations, all regulated by the New Jersey Racing Commission. Amongst the efforts to increase wagering in New Jersey, the State has enacted Legislation to permit Off Track Wagering (OTW) sites.

94 Off Track Wagering 15 OTW parlors are permitted throughout the State. There currently exists OTW s in Woodbridge, Hillsborough, Toms River, Vineland, Bayonne, and Glouster.

95 Account Wagering System (ADW) The Account Wagering System is licensed by the New Jersey Sports and Exposition Authority with its agent manager, Darby Development LLC, who has engaged TVG to provide the platform for wagering. The Account Wagering System is governed by a participation agreement were revenue is shared by the project participants with 35 percent distributed to Monmouth Park, 35 percent to the Meadowlands, and 30 percent to NJAW (Freehold Raceway). Account wagering authorizes on-line wagering for customers who are New Jersey residents to bet through the Internet, Smart Phones, and I-Pads, and self-service machines at racetracks. The Internet address is: 4NJBets.com

96 Exchange Wagering Exchange Wagering is the most recent vehicle to permit New Jersey residents to engage in two types of wagering. Fixed Odds Wagering where bets are matched by people who either want to back or lay wagers against that horse. In-Race Wagering. Wagering is governed by both the New Jersey Statute 5:5-1, et seq and is also governed by the Interstate Horse Racing Act.

97 Bars and Restaurants Pilot Program Establishes the rights to place up to 20 machines in the aggregate at 12 existing bars and restaurants in the Northern part of New Jersey.

98 Horse Racing in New Jersey Horse Racing in New Jersey is attempting to expand opportunities for alternative gaming revenue since it is the only State in the Northeast Region and one of the few states in the country that do not permit race tracks to supplement their revenue streams through casino gambling, slots, or other vehicles to offer alternative forms of gambling.

99 Horse Racing in New Jersey (cont.) There has been a long-standing struggle between the casino industry and the racing industry around the question of expanding casino gambling outside the borders of Atlantic City. The most Referendum which would have authorized two casinos in North Jersey was defeated 78 to 22 percent in the November elections and there will undoubtedly be efforts to both bring the question back in another form next year or in subsequent years and to enact additional forms of Legislation to permit alternative gaming revenue to benefit the race tracks.

100 Horse Racing in New Jersey (cont.) The efforts to bring alternative gaming to race tracks under consideration include, but are not limited to, a new Referendum for the voters to vote their position on expansion of gaming in 2017 or in subsequent years. The same question cannot be brought back for voter approval for three years; however, a new question in a different form can be put on the ballot in There are currently drafts in several different forms which would enable the voters to address this question in 2017.

101 Slot Machines at Race Tracks This effort would require a new approach to gaming expansion in the form of slot machines at racetracks or a mixture of casinos and slots in different locations and could be placed on the ballot in 2017 if passed by the Legislature and signed by the Governor.

102 VLT Machines VLT machines, also known as Video Lottery Terminals, can be authorized by the Legislature and Governor without voter approval, but could result in a legal challenge. VLT machines would have to be offered through the Lottery system, but tracks could receive a revenue share.

103 Instant Racing Instant Racing is a form of wagering on previously recorded racing. The current AG and OLS opinions would require a VTL Referendum.

104 Internet Cafes Internet Cafes could be permitted at race tracks through Legislation and Governor approval. The casinos currently offer on-line Internet Gaming, provided that the servers are located in Atlantic City. The public can place bets through the Internet throughout the State based on the law concluding that as long as the server is located in Atlantic City, the wager was placed in Atlantic City, no matter where the user is located in New Jersey. There has been no legal challenge to that concept as of this date. The Legislature has the ability to pass Legislation if signed into law by the Governor, which would permit race tracks and casinos to enter into an agreement for a casino to offer Internet Cafes at race tracks with the racing industry receiving a revenue share.

105 Thank you The webinar has ended. The program handbook, relevant CLE forms and additional materials for this program can be accessed at: Please hang up your telephone now. Thank you for attending.

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109 DENNIS A. DRAZIN Location: Red Bank, New Jersey Phone: Me Areas of Practice Personal Injury Medical Malpractice Product Liability Toxic Torts Litigation Percentage 100% of Practice Devoted to Litigation Certified Legal Specialties Civil Trial Law, New Jersey Supreme Court Bar Admissions New Jersey, 1975 New York, 1981

110 Education The Dickinson School of Law, Carlisle, Pennsylvania J.D Ohio State University, Columbus, Ohio B.A Representative Cases Kenney v. Scientific, Inc., 497 A.2d 1310 (N.J.Super.L. 1985) Professional Associations and Memberships New Jersey State Bar Association, Member, 1976 Present Monmouth County Bar Association, Member, 1976 Present Federal Bar Association, Member, 1976 Present American Bar Association, Member, 1976 Present LEGAL, Board of Trustees, 1990 Present Association of Trial Lawyers of America, Board of Governors,

111 LYNNE LEVIN KAUFMAN Partner Location: Atlantic City, New Jersey Phone: (Direct) Fax: Whether it s traditional casino law or the new frontier of Internet Gaming, Lynne Levin Kaufman is at the forefront. Joining Cooper Levenson in 1998, she made partner in 2000, and continues to stay on the cutting edge of all aspects of gaming law. Practicing gaming law full-time since 1988, Lynne has extensive experience in licensure, financings, casino acquisitions and sales, compliance, investigations, new game and gaming equipment approvals for casino companies, gaming suppliers, technology vendors and lenders worldwide. Lynne advises and provides the gaming expertise in documentation with respect to public debt offerings, bank financings and periodic reportings. Lynne's clients also depend on her to guide them in Internet gaming, mobile gaming, pari-mutuel betting, skilled gaming, and promotional sweepstakes and contests.

112 Practice Highlights Lynne provided input into the latest statutory reforms to the New Jersey Casino Control Act and drafted statutory amendments, which were adopted. She served as counsel in all gaming matters to Atlantic City s newest casinos, from the predevelopment and pre-construction stages until opening. She has performed the same role for large casino companies entering new jurisdictions where she also was involved in drafting proposed statutory language and regulations. Prior to joining Cooper Levenson, Lynne spent almost 10 years as in-house counsel for a major casino company where she handled regulatory, commercial, operational, SEC compliance and financial matters. She also worked in the corporate and securities law department of a large Philadelphia law firm where she received her introduction to casino public stock and debt offerings. Lynne is the Vice-Chair of the Gaming Law Committee of the American Bar Association, a past Chair of the Casino Law Section of the New Jersey State Bar Association, a member of the Board of Directors of the International Association of Gaming Advisors, and a member of the Gaming Law Committee of the Pennsylvania Bar Association. Lynne was also a member of the Gaming Transition Committee for Pennsylvania Governor Ed Rendell. She has appeared as a seminar speaker at the International Association of Gaming Advisors Conference, Global Gaming Expo, American Bar Association Gaming Law Minefield Conference, East Coast Gaming Congress and New Jersey State Bar Association Annual Conference and has authored numerous publications. Lynne was selected for inclusion among The Best Lawyers in America 2015 in the area of Gaming Law in New Jersey. Credentials Member, Gaming Law Committee of the Pennsylvania Bar Association Past Chair, Casino Law Section of the New Jersey State Bar Association Member, Board of Directors of the International Association of Gaming Advisors Member, Gaming Transition Committee for Pennsylvania Governor Ed Rendell Seminar moderator, International Association of Gaming Advisors Conference Seminar speaker and moderator, Global Gaming Expos Seminar speaker, American Bar Association Gaming Law Minefield Conference Seminar speaker, East Coast Gaming Congress Seminar speaker, New Jersey State Bar Association Annual Conference Seminar moderator, C5 US Online Gaming Law Sept Seminar moderator, WrB, World Regulatory Briefing, 2013 and 2014 Seminar moderator, ICE Totally Gaming Conference, London 2014 Seminar moderator, 14th Annual Saratoga Institute on Racing & Gaming Speaker on numerous webinars

113 Community Lynne is an involved community member who has served on the boards of numerous civic and charitable organizations. Education A graduate of the University of Pennsylvania (B.A., cum laude, 1982) and Villanova University School of Law (J.D. 1985), Lynne was admitted to the bar in Pennsylvania in 1985, and New Jersey and the United States District Court, District of New Jersey in 1986.

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