In the Supreme Court of the United States

Transcription

1 No In the Supreme Court of the United States DEUCE MCCALLISTER, Governor of the State of Tulania; RONALD HUGHES, Director of the Tulania State Lottery Office, Petitioner, versus MAJOR LEAGUE BASEBALL; NATIONAL BASKETBALL ASSOCIATION; NATIONAL FOOTBALL LEAGUE; NATIONAL HOCKEY LEAGUE; MAJOR LEAGUE SOCCER; NATIONAL COLLEGIATE ATHLETIC ASSOCIATION; Respondents. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTEENTH CIRCUIT BRIEF FOR PETITIONER Team No. 1

2 QUESTIONS PRESENTED 1. Whether Tulania may reinstate a Sports Lottery to remedy its budget crisis as permitted by the grandfather clause of the Professional and Amateur Sports Protection Act? 2. Whether Tulania s proposed sports lottery organized under the 1974 Tulania Sports Lottery Act is authorized by the 1973 Lottery amendment to the Tulania Constitution. STANDARD OF REVIEW For the purposes of this review, the United States Supreme Court will review all matters de novo. (R. at 2). i

3 TABLE OF CONTENTS TABLE OF AUTHORITIES... iii STATEMENT OF THE CASE... 1 SUMMARY OF THE ARGUMENT... 3 ARGUMENT... 4 I. PASPA AUTHORIZES THE REINSTATEMENT OF THE TULANIA SPORTS LOTTERY UNDER THE STATUTORY GRANDFATHER CLAUSE a. The Plain Language of the PASPA Grandfather Clause Exempts Tulania s Proposed Sports Lottery from the Statute s Reach b. Tulania s Ability to Raise Revenues Should Not be Limited by Federal Statute Without a Clear Statement of Congressional Intent to Override the Federal-State Balance of Power c. Issues of Integrity and League Reputation are Resolved Within the Policy Balance Struck by the Tulania SLA and PASPA Are Not Appropriate for Judicial Review II. THE TULANIA CONSTITUTION PERMITS THE 2009 SPORTS LOTTERY BECAUSE UNDER THE AMERICAN RULE THE DOMINANT FACTOR IN EACH LOTTERY GAME IS CHANCE a. The Tulania Legislature Crafted a Specific Constitutional Amendment Authorizing Lotteries Prior to Enacting the SLA b. Courts Interpret Lotteries Based on the Statutory Construction Doctrine of Constitutional Avoidance Because the Legislature is Presumed to Not have Acted Unconstitutionally c. The Tulania Constitutional Amendment Should Not be Construed in Isolation but in Connection with the Tulania Sports Lottery Law and Proposed Sports Lottery Scheme 18 d. The Tulania Sports Lottery Games are All Dominated by Chance APPENDIX A... i ii

4 United States Supreme Court Cases TABLE OF AUTHORITIES Allied Stores of Ohio v. Bowers, 358 U.S. 522 (1959)...9 Atascadero State Hospital v. Scanlon, 473 U.S. 234 (1985) Gregory v. Ashcroft, 501 U.S. 452 (1991). passim Lawrence v. Tax Comm n of Miss., 286 U.S. 276 (1932) 9 Nixon v. Mo. Mun. League, 541 U.S. 125 (2004) 9 Pa. Dept. of Corrections v. Yeskey, 524 U.S. 206 (1998) 10, 12 Raygor v. Regents of the Univ. of Minn., 534 U.S. 533 (2002). 12 Russello v. United States, 464 U.S. 16 (1983).7 Salinas v. United States, 522 U.S. 52, 59 (1997)... 6, 12 United States v. Bass, 404 U.S. 336, 349 (1971)...11 Will v. Michigan Dep t of State Police, 491 U.S. 58 (1989) 9 Younger v. Harris, 401 U.S. 37 (1971)..11 Other Federal Cases Hayden v. Pataki, 449 F.3d 305 (2d Cir. 2006).10 Jansen v. United States, 369 F.3d 237 (3d Cir. 2004)...5 Johnson v. Phinney, 218 F.2d 303 (5th Cir. 1955)...15 Major League Baseball v. McCallister, no , slip op. (14th Cir. Nov. 23, 2010).passim Nason v. INS, 394 F.2d 223 (2d Cir. 1968).. 5 Paradissiotis v. Rubin, 171 F.3d 983 (5th Cir. 1999).. 6 United States v. Booker, 2003 WL (3d Cir. Feb ) 5 United States v. Marder, 48 F.3d 564 (1st Cir.1995) 15 Major League Baseball v. McCallister, no. 09-AC-0213, slip op. (S.D. Tul. Nov. 23, 2010)...passim iii

5 National Football League v. Delaware, 435 F.Supp (D.Del. 1977). passim State Cases Bell Gardens Bicycle Club v. Dept. of Justice, 42 Cal. Rptr. 2d 730 (Cal. Dist. Ct. App. 1995) 15 Citation Bingo, Ltd. v. Otten, 910 P.2d 281 (N.M. 1995)..15 City of Highland Park v. Oakland County Drain Comm r, 20 N.W.2d 253 (Mich. 1945)..17 Commonwealth v. Lake, 57 N.E.2d 923 (Mass. 1944).. 15 Commonwealth v. Laniewski, 98 A.2d 215 (Pa. 1953).. 21 Engle v. State, 90 P.2d 988 (Ariz. 1939)...18 Gandolfo v. La. State Racing Comm n, 78 So. 2d 504 (La. 1954) 18 Ginsberg v. Centennial Turf Club, 251 P.2d 926 (Colo. 1952)... 16, 17 Harris v. Mo. Gaming Comm n, 869 S.W.2d 58 (Mo. 1994)...15 Hotel Employees & Rest. Employees Int'l Union v. Davis, 981 P.2d 990 (Cal. 1999).. 15 In re Allen, 377 P.2d 280 (Cal. 1962)...15 Lashbrook v. State, 550 N.E.2d 772 (Ind. Ct. App. 1990) 15 Morrow v. State, 511 P.2d 127 (Alaska 1973).. 15 Oneida County Fair Bd. v. Smylie, 386 P.2d 374 (Idaho 1963) 18 Roberts v. Communications Inv. Club of Woonsocket, 431 A.2d 1206 (R.I. 1981) 15, 16 Rohan v. Detroit Racing Ass n, 22 N.W.2d 433 (Mich. 1946) 16, 17 Seattle Times Co. v. Tielsch, 495 P.2d 1366 (Wash. 1972)...16, 21 State ex Inf. McKittrick v. Globe-Democrat Pub. Co., 110 S.W.2d 705 (Mo. 1937).. 15 State ex rel. Dussault v. Kilburn, 109 P.2d 1113 (Mont. 1941) 15 State v. Dahlk, 330 N.W.2d 611 (Wis. Ct. App. 1983)...16 State v. Hudson, 37 S.E.2d 553 (W. Va. 1946). 16 State v. Stroupe, 76 S.E.2d 313 (N.C. 1953). 15 iv

6 Constitutional Provisions T UL. CONST. amend. XXI, 3 (1973) passim Federal Statutes 28 U.S.C (2006). passim. State Statutes Tulania Sports Lottery Act of passim Other Sources BLACK S LAW DICTIONARY (8 th ed. 2004).. 5 Michael W. McConnell, Federalism: Evaluating the Founder s Design, 54 U. CHI. L. REV (1987) N.Y. OP. ATT Y GEN. F.1 (1984) available at 1984 WL S. REP. NO (1991) available at 1991 WL , reprinted in 1992 U.S.C.C.A.N passim 138 CONG. REC. S12973 (June 2, 1992) (Sen. DeConcini)... 5, 11 v

7 STATEMENT OF THE CASE In 1973 the Tulania Legislature amended the Tulania Constitution to allow lotteries under state control for the purpose of raising funds. 1 Major League Baseball v. McCallister, no. 09-AC-0213, slip op. at (S.D. Tul. Nov. 23, 2010). Following the passage of this amendment, the Legislature acted in 1974 to pass legislation authorizing the creation of lotteries related to the outcome of any sporting event within or without the state. Id. at 20. Pursuant to this authorizing legislation Tulania instituted a sports lottery in 1976 which consisted of three separate games based on weekly National Football League (NFL) matchups. Id.; See also App. A (for explanation of game types and gambling vocabulary). These games paid on either a parimutuel or a fixed basis depending on the player s success. App. A. Tulania discontinued this sports lottery before the conclusion of the 1976 NFL season after Delaware s comparable sports lottery sustained significant monetary losses. McCallister, 09-AC-0213 at 20. In 1993 Congress passed the Professional and Amateur Sports Protection Act (PASPA), which attempted to prevent the spread of sports betting. Id. at 25; 28 U.S.C et seq. (2006). PASPA specifically provides exceptions for existing betting schemes. McCallister, 09- AC-0213 at 25; 28 U.S.C (2006). The relevant exception clause in this case is for existing state-sponsored sports-based lottery programs such as Tulania s 1976 sports lottery. McCallister, 09-AC-0213 at 25; See also 28 U.S.C. 3704(a)(1) (2006). Tulania currently faces a budget deficit of approximately $800 million for the 2010 fiscal year. McCallister, 09-AC-0213 at 23. In response to this looming deficit in March All references to the Tulania Constitutional Amendment utilize the 1973 date cited in the District Court for the Southern District of Tulania on p. 19 of the record. The Court of Appeals for the Fourteenth Circuit defers to the lower court s factual findings on p.4, thus despite a reference to this Amendment with a 1974 date on p.13 we will consistently utilize the 1973 date. 1

8 Tulania s Governor proposed a reinstatement of the sports lottery. Id. at 21. The Governor s proposal aims to take advantage of the estimated $ billion annual market in sports betting. Id. at 24. The Tulania Legislature passed the Governor s proposal which allows for the reestablishment of a sports lottery in order to raise revenues. Id. at 24. Tulania s proposed sports lottery involves a three game structure. The proposed games are Single Game Lottery based on a point spread, Total Lottery based on an over/under, and Parlay Lottery based on some combination of picking winners in multiple games and/or over/under bets. Id. at 21-22; See also App. A. These games pay fixed amounts based on the odds when the bet is placed. McCallister, 09-AC-0213 at The lottery focuses on NFL games but could be expanded to all other professional and collegiate sporting events. Id. at 24. The Respondents, The Leagues, have filed suit to prevent Tulania from implementing the sports lottery as a method to offset its crippling budget crisis. Id. at 24. The District Court found the proposed sports lottery fell within PASPA s grandfather exception as well as constituted a lottery consistent with the 1973 Lottery Amendment to the Tulania Constitution. Id. at 41. The Court of Appeals for the Fourteenth Circuit reversed on both counts. Major League Baseball v. McCallister, no , slip op. at 18 (14th Cir. Nov 23,2010). The Supreme Court of the United States granted a writ of certiorari on both issues. (R. at 1). 2

9 SUMMARY OF THE ARGUMENT Tulania s proposed Sports Lottery falls within PASPA s grandfather clause and is authorized under the Tulania Constitution. PASPA s general prohibition against the spread of sports betting exempts pre-existing state sponsored sports lotteries. A plain reading of the language of the statute indicates a congressional desire to exempt Tulania s lottery. Further, federalism dictates that a federal statute should not upset the federal-state balance of power unless there is a clear congressional intent to do so. Analysis of the legislative history informs both the plain meaning and the federalism analysis and clearly indicates a desire to defer to existing state sports lotteries. Thus, PASPA does not prohibit the administration of the proposed Sports Lotteries. The Tulania legislature amended the State Constitution to allow Lotteries in The Tulania legislature then authorized a state sports lottery in While the constitution does not define the term lottery, the American, or dominant factor, rule is the appropriate standard to apply. This rule is supported by the majority of jurisdictions which have considered the issue as well as the canon of constitutional avoidance. Under this rule, the Tulania Sports Lottery is dominated by chance because the underlying sporting events are dominated by chance as well as game s use of parlay and point spreads to further increase the role of chance in a player s success. 3

10 ARGUMENT I. PASPA AUTHORIZES THE REINSTATEMENT OF THE TULANIA SPORTS LOTTERY UNDER THE STATUTORY GRANDFATHER CLAUSE. A plain reading of PASPA allows states that conducted lotteries between 1976 and 1990 to administer a gambling program to the extent that the scheme was conducted during the relevant period. 28 U.S.C. 3704(a)(1) (2006). This construction is supported by the terms and structure of Under this exception, state lotteries existing or authorized under current state law were to remain unaffected by PASPA. Tulania conducted parlay betting on a minimum of three NFL games when it first instituted its sports lottery in See App. A. Tulania s proposed lottery scheme falls within PASPA s exception because it is authorized under the 1974 Tulania Sports Lottery Act (SLA). PASPA s grandfather clause retains the federal-state balance of power regarding state sponsored lotteries. 28 U.S.C 3702 (2006); 28 U.S.C. 3704(a)(1) (2006). Interpreting PASPA s to prohibit the Tulania sports lottery, absent an unmistakably clear expression of Congress intent, would upset the constitutional balance of federal-state powers. See Gregory v. Ashcroft, 501 U.S. 452, 460 (1991). The State legislators, acting in a representative capacity on behalf of their constituents, in 1973 amended the state constitution to allow lotteries, in 1974 enacted legislation to authorize sports lotteries and in 1976 implemented a sports lottery scheme. Facing the record budget deficit of 2010, the elected officials of Tulania deemed it beneficial to reinstate the sports lottery. The principles of federalism require and permit Tulania to implement its proposed lottery to raise revenues that will benefit the citizens of Tulania. 4

11 a. The Plain Language of the PASPA Grandfather Clause Exempts Tulania s Proposed Sports Lottery from the Statute s Reach. PASPA s grandfather clause broadly exempts a state sponsored lottery, sweepstakes, or other betting, gambling, or wagering scheme. 28 U.S.C. 3704(a)(1) (2006). States can implement a program 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, Id. PASPA does not include any limiting language within this exception nor define many of the relevant terms such as scheme, lottery or conducted. To preserve the federal state balance of power, scheme is best understood broadly to authorize lotteries allowable under programs existing between 1976 and S. REP. NO , at 9-10 (1991), available at 1991 WL , reprinted in 1992 U.S.C.C.A.N. 3553, ; 138 CONG. REC. S12973 (June 2, 1992). Several definitions of scheme exist which can inform the court s interpretation. BLACK S LAW DICTIONARY (8th ed. 2004) (defining scheme as [a] systematic plan, a connected or orderly arrangement, especially of related concepts. ); Jansen v. United States, 369 F.3d 237, 249 n. 4 (3d Cir. 2004) (identifying relevant factors in judging a scheme to include commonality of purpose... and similarity of modus operandi... ); United States v. Booker, 2003 WL , at *4 (3d Cir. Feb )); Nason v. INS, 394 F.2d 223, 227 (2d Cir. 1968) (defining scheme in the context of criminal intent as a specific, more or less articulated and coherent plan or program of future action... ). These definitions of scheme cannot be read to show a narrow, accepted single definition of scheme as they are inconsistent and factually dissimilar to the current case. Rather, they show a broad conceptual understanding of scheme as an organized, intentional course of conduct. 5

12 In 1974, Tulania enacted legislation allowing lottery games which affiliate the determination of the winners of a game with any racing or sporting event held within or without the state. McCallister, 09-AC-0213, at 20. Pursuant to this legislation Tulania instituted the 1976 sports lottery. See App. A. The 1973 Constitutional Amendment, 1974 SLA, and 1976 sports lottery program constitute a scheme. Taken together this course of conduct by the Tulania legislature indicates an intention to organize and pursue a sports lottery in an ongoing and expanding manner. Accordingly, Tulania s 1976 lottery constituted a scheme as defined in the 8th edition of Black s Law Dictionary and within the concepts which underlying judicial interpretations of the term. PASPA s grandfather clause requires that a lottery was conducted by that State during the relevant period. 28 U.S.C. 3704(a)(1) (2006). Whether a scheme was conducted by the State is related to whether the program at issue was state-sponsored. The statutory language, to the extent refers only to a condition that a State does or does not meet. Paradissiotis v. Rubin, 171 F.3d 983, 987 (5th Cir. 1999). To the extent does not limit the implementation of Tulania s new sports lottery to the specific system established in Such a limited construction of the phrase reduces Tulania s ability to institute a lottery, thereby upsetting the existing federal- State balance. See Salinas v. United States, 522 U.S. 52, 59 (1997) (holding that where a statute is subject to multiple interpretations, the proper judicial course is to resolve the construction in favor of the federal-state balance). The to the extent language should be interpreted to refer only to the existence of a State conducted lottery between 1976 and This construction allows Tulania to continue to pursue any scheme within the framework of the 1973 constitutional amendment, 1974 SLA and implementation in

13 Respondents read the statute as stating that Tulania may implement sports betting to the extent that States actually conducted a sports betting scheme between 1976 and McCallister, at 14. The word actually comes from a pre-enactment draft of PASPA. Id. When words of limitation are removed from a final draft of a bill this must indicate the legislature s intent to remove the limitation. Russello v. United States, 464 U.S. 16, (1983). The Respondents desire to read the statute from the context of a former draft cannot render Congress intentional deletion ineffective. Further, the conditional interpretation of to the extent also finds support in the cannon of parallel construction. In a parallel exception within PASPA, Congress uses the relevant phrase as a condition, not as a function of limitation. 28 U.S.C. 3704(a)(3) (2006). In reference to sports gambling in New Jersey, PASPA permits sports betting in municipal casinos to the extent that two statutory conditions are met. Id. A generally accepted canon of statutory interpretation requires courts to assume that Congress uses the same phrase in the same fashion throughout a single piece of legislation. McCallister, 09-AC-0213 at 28. Use of the phrase in both 3704(a)(1) and 3704(a)(3) regarding similar subject matters while utilizing similar syntax and construction requires an identical interpretation in both provisions. The parallel construction is reasonable in the context of the statute, internally consistent and effectuates Congress s intent to defer to Tulania s sovereign authority to raise revenues. Respondents acknowledge that PASPA permits Tulania to implement a sports betting operation that is substantively similar to the 1976 lottery. McCallister, at 13. Respondents attempt to create a requirement that Tulania s current program has no substantive changes that would offend the primary purpose of PASPA. Id. This substantive change standard finds no support in the text of the statue. 28 U.S.C et seq (2006). In fact, the 7

14 texts of the statutory exceptions in PASPA do not list any restrictions on the allowable types of sports or bets and specifically contemplate expansion of existing programs. Id. (PASPA allows for the extension of sports betting into municipal casinos in New Jersey.); See also S. REP. No , at 9-10 (1991) (revealing a Congressional intent to allow Tulania to expand its lottery to other sports.). Thus, the appropriate standard is whether the current program would have been authorized under the 1974 authorizing legislation. The current Tulania lottery falls within the grandfather clause because the proposed sports lottery is consistent with existing state law. b. Tulania s Ability to Raise Revenues Should Not be Limited by Federal Statute Without a Clear Statement of Congressional Intent to Override the Federal-State Balance of Power. The American system of government inherently creates a tension between the Federal and State governments as independent sovereign systems. Gregory, 501 U.S. at 460 ( As every school child learns, our Constitution establishes a system of dual sovereignty between the States and the Federal Government. ). The Supremacy clause requires that States sacrifice a limited amount of sovereignty to the Federal government within its enumerated powers. Id. ( [t]hrough the structure of its government, and the character of those who exercise government authority, a State defines itself as a sovereign. ). The concept of federalism limits this sacrifice of State sovereignty through rules of statutory construction, enumerated powers, traditional State functions and other doctrines. 2 2 Primarily, federalism ensures that a healthy balance of power between the States and the Federal Government will reduce the risk of tyranny and abuse from either front and has many other benefits within the American system of law. Gregory, 501 U.S. at 458 (arguing that federalism ensures a decentralized government that will be more sensitive to the diverse needs of a heterogeneous society, a system which increases opportunity for citizen involvement in democratic processes, and allows for more innovation and experimentation, as well as mak[ing] government more responsive by putting the States in competition for a mobile 8

15 The judicially recognized plain statement rule is one significant check on federal overbreadth. 3 Effectively, the rule is nothing more than an acknowledgment that the States retain substantial sovereign powers under our constitutional scheme, powers with which Congress does not readily interfere. Id. at 461. According to the Court, Congress may only express its intentions to alter the balance through the unmistakably clear language of the legislation. Id. (citing Atascadero State Hospital v. Scanlon, 473 U.S. 234, 242 (1985)). In determining whether the plain statement rule applies, this Court conducts a case-by-case inquiry regarding whether the State interest carries enough weight to invoke the rule. Will v. Michigan Dep t of State Police, 491 U.S. 58, 65 (1989). The ability to raise revenues and meet a Constitutional balanced budget requirement is a core state function. This Court has explicitly held that the State s authority to raise revenue is of the most plenary of sovereign powers. Lawrence v. Tax Comm n of Miss., 286 U.S. 276, 279 (1932); See also Allied Stores of Ohio v. Bowers, 358 U.S. 522, (1959)). Thus Gregory s plain statement rule applies in this case and the raising of revenues in a manner the States deems appropriate should not be limited or infringed without a clear statement. Whether Congress intends to curtail state sovereignty requires consideration of the statutory language, statutory exceptions and legislative history. See Nixon v. Mo. Mun. League, 541 U.S. 125, 141 (2004) (considering both statutory structure and legislative history to citizenry. ) (citing Michael W. McConnell, Federalism: Evaluating the Founder s Design, 54 U. CHI. L. REV. 1484, (1987)). 3 The Gregory Court faced a situation where a federal law was in direct conflict with a provision of the Missouri State constitution. In this situation where the Court could not reconcile the two bodies of law, the Court required a plain statement from Congress of their intent to overrule state law. Thus, without a clear Congressional intent alter the balance of federal-state power for the specific factually situation at issue the Court will interpret the statute to retain the existing balance of federal-state sovereignty. Gregory v. Ashcroft, 501 U.S. 452 (1991). 9

16 determine the legislative intent); See also Hayden v. Pataki, 449 F.3d 305, 325 (2d Cir. 2006) (en banc) (considering the text of the statute, the context of its enactment, [and] its legislative history to determine whether Congress intended an alteration of the federal balance. ); Pa. Dept. of Corrections v. Yeskey, 524 U.S. 206, 209 (1998) (considering whether there was a statutory exception that could cast the coverage of prisons into doubt in determining whether the ADA extended to state prisons) (emphasis omitted); See also Gregory, 501 U.S. at 467 (considering the breadth of statutory exceptions to determine the reach of the Age Discrimination in Employment Act). This holistic approach to determining statutory intent is appropriate in this case. PASPA s legislative history assists in determining whether the unmistakably clear standard is met. The Senate Judiciary Committee Report notes that 3407(a)(1) provides an exception for State sanctioned gambling procedures and allows Tulania to expand its operations to non-nfl games. The Report states: [The committee] has no wish to apply this new prohibition retroactively to [Tulania], Oregon or Delaware, which instituted sports lotteries prior to the introduction of our legislation.... Therefore, it provides an exemption for those sports gambling operations which already are permitted under State law Under paragraph (1) of subsection (a), [Tulania], Oregon and Delaware may conduct sports lotteries on any sport, because sports lotteries were conducted by those states prior to August 31, Paragraph (1) is not intended to prevent Oregon or Delaware [or Tulania] from expanding their sports betting schemes into other sports as long as it was authorized by State law prior to enactment of this Act.... S. REP. NO , at 9-10 (1991), available at 1991 WL , reprinted in 1992 U.S.C.C.A.N. 3553, (emphasis added). The Senate debates over the enactment of PASPA demonstrate an identical intent. Senator DeConcini, the primary sponsor of PASPA, stated: 10

17 The intent of the legislation is not to interfere with existing laws, operations or revenue streams. Therefore it provides an exemption for those sports gambling operations which already are permitted under State law... Let me make it clear that the grandfather provision only allows those States that have sports gambling authorized by State law to continue to do what they are doing now or could do under State law. 138 CONG. REC. S12973 (June 2, 1992) (Sen. DeConcini) (emphasis added). The Senate Judiciary Committee expressly stated that PASPA did not apply retroactively to reach gambling operations which are already permitted under state law. Id. The legislative history exhibits Congress willingness to respect the State laws. According to the legislative history, PASPA does not intend to raise any conflict with pre-existing State laws allowing for sports lotteries. Tulania s sports lottery conforms to the laws of Tulania, comprises a part of Tulania s operations and substantially affects Tulania s revenue streams. As a core state function Tulania s authority to raise revenues as it sees fit should not be infringed when the Congressional intent is clearly to preserve the existing balance of power. Therefore, under Gregory this court must construe PASPA to retain Tulania s sovereign abilities and resolve any ambiguity in Tulania s favor. Finally, under Gregory the Court must determine whether there is ambiguity in the statute in considering whether Congress intended to upset the existing balance of power. When Congress does not express its intent clearly, this Court will interpret the statute will so as not to offend the federal-state balance. United States v. Bass, 404 U.S. 336, 349 (1971) ( This congressional policy is rooted in the same concepts of American federalism that have provided the basis for judge-made doctrines. ) (citing Younger v. Harris, 401 U.S. 37 (1971)). Requiring a clear legislative statement assures that the legislature has in fact faced, and intended to bring into issue, the critical matters involved in the judicial decision. Bass, 404 U.S. at 349. This 11

18 Court will interpret a statute to preserve rather than destroy the States substantial sovereign powers. Yeskey, 524 U.S., at (1998) (quoting Gregory v. Ashcroft, 501 U.S. 452, (1991)); See also Raygor v. Regents of the Univ. of Minn., 534 U.S. 533, (2002); Salinas v. United States, 522 U.S. 52, 59 (1997). While Petitioner asserts that the language and exceptions of PASPA are clear, any ambiguity will also act in Petitioner s favor and all inferences should be resolved in favor of the State. See supra, at I.A. c. Issues of Integrity and League Reputation are Resolved Within the Policy Balance Struck by the Tulania SLA and PASPA Are Not Appropriate for Judicial Review. The Fourteenth Circuit raised fixing games as an additional public policy concern regarding the Sports Lottery. This concern implicates a situation in which players, coaches, or officials artificially influence the outcome of a sporting event so that their bet can prevail. McCallister, at 17. While fair competition is a legitimate concern for all sporting organizations, betting on the outcome of sporting events is not a new concept and does not significantly implicate this interest. Sporting organizations already have to deal with potential fixing of games based on a variety of motives, including existing betting operations, such as those in Nevada regardless of whether Tulania implements a sports lottery. Secondly, Respondents argue that Tulania s proposed lottery will threaten the integrity of the leagues. They fear the lottery will give the public a negative view of the sport franchises. Respondents contend that current fans will become distrustful and lose their genuine enthusiasm for traditional team allegiances. Instead, fans will only become involved in sports for the potential gambling profits. However, this is hypocritical as the leagues currently have substantial ties to gambling enterprises. Further, both legal and illegal gambling currently exists, without affecting the leagues images. 12

19 Finally, these issues have been considered and balanced in the enactment of both the Tulania SLA and PASPA. If the fixing of games or integrity issues arise these are not state constitutional or statutory issues. These are an internal issue for the individual sporting organizations. To the extent that they are cognizable public policy considerations, the legislature is the appropriate body to address these concerns while the Courts must act within existing laws. This case deals only with allowing the lottery games contemplated in Tulania s proposed sports lottery in light of the balance struck by the Tulania SLA and PASPA. II. THE TULANIA CONSTITUTION PERMITS THE 2009 SPORTS LOTTERY BECAUSE UNDER THE AMERICAN RULE THE DOMINANT FACTOR IN EACH LOTTERY GAME IS CHANCE. The Tulania Constitution provides a specific exemption to the State s broad prohibition against all forms of gambling. In 1973 the State Legislature amended the Constitution to authorize [l]otteries under State control for the purpose of raising funds. McCallister, 09-AC at 19. Two competing theories exist for defining a lottery, the American and English rules. The current judicial trend, the canon of constitutional avoidance and Tulania s course of conduct all dictate adoption of the American rule. Under this rule, the court will be able to reconcile the 1974 SLA and the 1973 Lottery amendment in order to effectuate the goals of the Tulania legislature. Under the American rule, analyzing chance as an element of a lottery focuses on whether skill or chance dominants success in the lottery, not success in the underlying contest. It is not disputed that some skill is involved in learning about particular teams for a sporting event and how to play the games in the Sports Lottery. However, as the NFL has accepted, when looking at the outcome of the underlying sporting event, chance is the dominant factor because so many unknown variables affect the play of a game. In addition, no amount of knowledge can outweigh 13

20 the uncertain nature of te sporting events. Thus the skill in placing a wager has no effect on the outcome of the sporting event, nor guarantees success in the lottery. a. The Tulania Legislature Crafted a Specific Constitutional Amendment Authorizing Lotteries Prior to Enacting the SLA. Tulania amended their Constitution in 1973 to authorize [l]otteries under State control for the purpose of raising funds. McCallister, 09-AC-0213 at 19. This amendment modifies the Tulania Constitution s prohibition on [a]ll forms of gambling. McCallister, at 13. This provision in the Constitution is currently valid and has not been amended since Tulania amended the Constitution specifically to allow for subsequent State legislation authorizing lottery games. (R. at 2). In 1974, Tulania enacted legislation that established a lottery system to affiliate the determination of the winners of a game with any racing or sporting event held within or without the State. McCallister, 09-AC-0213 at 20. The legislature s course of conduct evidences a clear intent to authorize the sports lottery within the meaning of the constitutional amendment. The term lottery is not defined in the Tulania Constitution. McCallister, 09-AC-0213 at 35. However, courts have consistently evaluated lotteries under three essential elements: prize, consideration, and chance. National Football League v. Delaware, 435 F.Supp. 1372, 1383 (D. Del. 1977). The only disputed element in this case is chance. Two competing theories explain the importance of the chance element involved in lottery games. First, under the English rule a lottery would consist of a distribution of prize money based on nothing but chance. Id. at The chance element under this rule is equivalent to that of drawing lots and skill cannot play any part in the ultimate outcome of the lottery. Id. The second rule is referred to as the American rule, or dominant factor rule. In NFL the court defined the rule saying, 14

21 [I]t is not necessary that this element of chance be pure chance, but it may be accompanied by an element of calculation or even of certainty; it is sufficient if chance is the dominant or controlling factor. Id. Under the American rule some skill may be involved in playing the lottery so long as chance remains the dominant factor controlling the outcome. The Tulania Courts have not adopted either the English or American rule. While not binding, many other state and federal jurisdictions have adopted the dominant factor rule. 4 4 See United States v. Marder, 48 F.3d 564, 569 (1st Cir. 1995) ( for there to be a lottery, chance must predominate over skill in the results of the game... ); Johnson v. Phinney, 218 F.2d 303, 306 (5th Cir. 1955) ( the authorities are in general agreement that if [chance] is present and predominates in the determination of a winner, the fact that players may exercise varying degrees of skill is immaterial; and the game or device is a lottery ); Morrow v. State, 511 P.2d 127, 129 (Alaska 1973) ( We think that a game should be classified as one of skill or chance depending on the dominating element, not on the presence or absence of a small element of skill. ); Hotel Employees & Rest. Employees Int'l Union v. Davis, 981 P.2d 990, 996 (Cal. 1999) (defining chance whether winning and losing depend on luck and fortune rather than, or at least more than, judgment and skill. ); In re Allen, 377 P.2d 280, 281 (Cal. 1962) (en banc) ( The test is not whether the game contains an element of chance or an element of skill but which of them is the dominating factor in determining the result of the game. ); Bell Gardens Bicycle Club v. Dept. of Justice, 42 Cal. Rptr. 2d 730, (Cal. Dist. Ct. App. 1995) ( In determining whether a particular game or scheme is a lottery, the test in California is whether the game is dominated by chance, not whether the winner of the game is determined solely by chance. ) (emphasis omitted); Lashbrook v. State, 550 N.E.2d 772, 775 (Ind. Ct. App. 1990) ( [c]hance rather than skill must therefore be the dominant factor controlling the award in a lottery. ); Commonwealth v. Lake, 57 N.E.2d 923, 925 (Mass. 1944) ( by the weight of authority a game is now considered a lottery if the element of chance predominates... ); Harris v. Mo. Gaming Comm n, 869 S.W.2d 58, 62 (Mo. 1994) (en banc) ( a lottery is a form of gambling in which consideration is paid for an opportunity at a prize, where skill is absent or only nominally present. ); State ex Inf. McKittrick v. Globe-Democrat Pub. Co., 110 S.W.2d 705, 713 (Mo. 1937) (en banc) ( a contest may be a lottery even though skill, judgment, or rescarch [sic] enter thereinto in some degree, if chance in a larger degree determine the result. ); State ex rel. Dussault v. Kilburn, 109 P.2d 1113, 1115 (Mont. 1941) ( the test to be applied in determining the character of the game [is] whether the element of skill predominated over the element of chance. ); Citation Bingo, Ltd. v. Otten, 910 P.2d 281, 283 n. 2 (N.M. 1995) (defining lottery as a scheme wherein, for a consideration, the participants are given an opportunity to win a prize, the award of which is determined by chance, even though accompanied by some skill. ); State v. Stroupe, 76 S.E.2d 313, 316 (N.C. 1953) (... most courts have reasoned that there are few games, if any, which consist purely of chance or skill, and that therefore a game of chance is one in which the element of chance predominates over the element of skill ) (quoting 135 A.L.R. 106 (2010)); Roberts v. Communications Inv. Club of Woonsocket, 431 A.2d 1206, 1211 (R.I. 1981) ( a scheme 15

22 Indeed, of the 16 states which have considered this issue, the overwhelming majority have elected to follow the American rule. See supra n.4. Because a majority of jurisdictions addressing the chance theories have adopted the dominant factor rule, and there are no indications the rule is against public policy, this Court should adopt the dominant factor rule to evaluate the chance component in evaluating lotteries. b. Courts Interpret Lotteries Based on the Statutory Construction Doctrine of Constitutional Avoidance Because the Legislature is Presumed to Not have Acted Unconstitutionally Whenever possible, courts will construe a legislative enactment to avoid any constitutional issues. When more than one interpretation of a statute is possible, courts will look to constitutional language to ensure that the documents are read consistently. When two plausible interpretations exist and only one interpretation is constitutional the court should utilize the canon of constitutional avoidance. 5 This canon is best described in Ginsberg v. Centennial Turf Club stating this cardinal rule of statutory construction as follows: constitutes a lottery when an element of chance dominates the distribution of prizes, even though such a distribution is affected to some degree by the exercise of skill or judgment. ); Seattle Times Co. v. Tielsch, 495 P.2d 1366, 1369 (Wash. 1972) (en banc) ( Chance within the lottery statute is one which dominates over skill or judgment. ); State v. Hudson, 37 S.E.2d 553, 558 (W. Va. 1946) ( where... chance predominates, even though skill or judgment may enter to some extent in the operation of a particular scheme or device, the scheme or device is a lottery. ); State v. Dahlk, 330 N.W.2d 611, 617 (Wis. Ct. App. 1983) ( [c]hance rather than skill must therefore be the dominant factor controlling the award in a lottery. ). 5 The canon of constitutional avoidance has several underlying justifications. First, courts presume that a legislature enacts laws that do not violate their own constitution. This assumption prevents the judiciary from needing to make unnecessary constitutional holdings. Secondly, avoiding constitutional interpretation maintains separation of powers between the government branches. The responsibility of the judiciary is to interpret laws within the existing framework of law, unnecessary constitutional decisions shift policymaking powers to the judiciary. Finally, related to separation of powers, courts do not want to disturb constitutional construction out of respect for the efforts of the legislative branch. Thus, when two plausible alternatives exist, adopting the legal reasoning which avoids a constitutional issue is more appropriate then unnecessarily striking down statutes on constitutional grounds. See also Rohan v. Detroit Racing 16

23 If the statute may be reasonably subject to two different constructions, one of which would result in invalidity and the other in validity, it is the duty of our court to harmonize it with the Constitution by adopting that construction which does not invalidate the work of the legislative branch of government. 251 P.2d 926, 928 (Colo. 1952). This canon of constitutional avoidance dictates adoption of the dominant factor rule in this case in order to validate the SLA. Rohan v. Detroit Racing Ass n, 22 N.W.2d 433, 438 (Mich. 1946) ( [a] statute will be presumed to be constitutional by the courts unless the contrary clearly appears; and in the case of doubt every possible presumption not clearly inconsistent with the language of the subject matter is to be made in favor of the constitutionality of the legislation. (citing City of Highland Park v. Oakland County Drain Comm r, 20 N.W.2d 253, 258 (Mich. 1945)). The dominant factor rule will allow this court to avoid interpretation of constitutional issues by reconciling the SLA with Tulania s 1973 constitutional amendment. In the present case, the doctrine of constitutional avoidance explains the inconsistent application of the English and American rules in different state and federal jurisdictions. The Fourteenth Circuit primarily relied upon non-binding state Attorney General opinions to support their conclusion that the English rule should apply. McCallister, at 14. A closer examination of the case law reveals a consistent underlying logic behind the adoption of both the English and American rules. Cases dealing with defining lotteries support the constitutional avoidance doctrine rather than favoring one rule over another. In two horse racing cases, each court held that horse racing was not a lottery because both state Constitutions expressly prohibited the creation of lotteries. Ginsberg, 251 P.2d at 929; Rohan, 22 N.W.2d at 438. Thus, Ass n, 22 N.W.2d 433, 435 (Mich. 1946); Ginsberg v. Centennial Turf Club, 251 P.2d 926 (Colo. 1952). 17

24 in this specific context Courts have evidenced a preference for reconciling the legislative enactment with the given constitutional prohibitions rather than a preference for a given rule. The additional cases the Fourteenth Circuit cited are inapposite in this instance. These cases can be factually distinguished or are based on incomplete legal analysis. Oneida County Fair Bd. v. Smylie does not apply to the present case because the odds for the horse races were set based upon the money bet, not by a fluid odds-maker. 386 P.2d 374, 376 (Idaho 1963). Because the odds being set in the proposed Tulania Sports Lottery are not a function of the total money played, this case is irrelevant to the present analysis. Further, two additional courts erroneously conflated the skill element in playing the particular lottery game with the skill involved in predicting the outcome of the sporting event. Gandolfo v. La. State Racing Comm n, 78 So. 2d 504, 510 (La. 1954); Engle v. State, 90 P.2d 988, (Ariz. 1939); See infra II.C. These horse racing cases cannot apply to the present case when they stand upon faulty reasoning. Rather, the proper interpretation, which courts consistently invoke, is that of constitutional avoidance allowing the court to presume that the legislature enacts laws that are constitutional. c. The Tulania Constitutional Amendment Should Not be Construed in Isolation but in Connection with the Tulania Sports Lottery Law and Proposed Sports Lottery Scheme Independent of the rule this court adopts, the Fourteenth Circuit cites a number of policy considerations which are separate from the element of chance. The Fourteenth Circuit held that because gambling is generally prohibited, the lottery exemption should be interpreted narrowly. McCallister, at 14. The court below argued that public policy considerations against gambling are evident by the prohibition in the State s Constitution. Id. The court then suggested that if the State meant to exempt all forms of sports betting, the Constitutional amendment should have authorized wagering upon the outcome of future contingent events. Id. The court 18

25 failed to recognize that their proposed exemption would swallow up the entire gambling prohibition in the State Constitution. Taken logically, there is no gambling activity that is not based upon the outcome of some future contingent event. In its attempt to limit the lottery exemption, the Fourteenth Circuit created an absurd condition that would satisfy their reasoning but would overrule the existing Constitution. The State legislature carefully carved out an exemption for state operated lotteries precisely because the State did not want to amend their Constitution with such vague and broad language. The state did not intend to effectively negate the gambling prohibition. The intent of the Legislature is further evidenced by the 1974 lottery enabling statute that was limited to racing and sporting events. While there are valid public policy considerations regarding the gambling prohibition in the State Constitution, these factors cannot overcome the clear and limited language of the 1973 lottery amendment. d. The Tulania Sports Lottery Games are All Dominated by Chance Tulania s proposed Sports Lottery consists of three games. Each game must be evaluated under the dominant factor rule to determine whether chance is the dominant factor determining the distribution of prize money. This element of chance can be seen in both the underlying game and success in the proposed sports lottery. Previous case law from Delaware is highly persuasive as the games and constitutional provisions involved are strikingly similar. Multiple factors go into any sporting event such that a significant element of chance is present in the outcome of the underlying sporting event that is the subject of the Tulania sports lottery. In 1976, Delaware started a football lottery known collectively as Scoreboard. National Football League v. Delaware, 435 F.Supp. 1372, 1376 (D. Del. 1977). Scoreboard 19

26 involved three different games that were based on scheduled NFL games and were almost identical to the 1976 Tulania Sports Lottery. See App. A. In the NFL case, the Plaintiff NFL admitted that results of football games are a function of myriad factors such as the weather, the health and mood of the players and the condition of the playing field. NFL, 435 F.Supp. at The majority of these factors are both unknown and unknowable to the general public, thus minimizing any element of skill present in Tulania s proposed sports lottery. While players in the Delaware and Tulania sports lotteries can use their own research and make educated predications about the outcome of any game, the actual outcome of any sporting event is dominated by chance. Id. The Fourteenth Circuit conflated the skill associated with predicting the outcome of a sporting event with the skill involved in choosing how to play any of the games in the Sports Lottery. McCallister, at The Fourteenth Circuit correctly found that some sports bettors gather and analyze information, sometimes in significant quantities, about the nuances of the sports on which they bet. McCallister, at 15 (citing 84 N.Y. OP. ATT Y GEN. F.1 at 10 (1984) available at 1984 WL ). However, the court too quickly concluded that one s knowledge of a betting game indicates that the result of the sporting event is dominated by skill. The lottery participants can study as much information as they would like about the sporting event, the players, weather, field, and any other conditions, to inform their bet. This background knowledge does not change how the particular sporting event will be played or the player s chances of success. Separate from the uncertain outcome of the underlying contest the Tulania sports lottery injects additional chance into a given player s success through use of a point spread or money line. This critical element was present in the 1976 Tulania games and in all of the proposed 20

27 Tulania Sports Lottery games. See App. A. In NFL, the district court found that both parlay games and point spreads inject[ed] a further element of chance. NFL, 435 F.Supp. at A parlay game increases the element of chance by compounding the chance present in each underlying contest. The court explained that under parlay games, the element of chance that enters each game is multiplied by a minimum of three and a maximum of fourteen games. Id. Other jurisdictions have found that parlay games are dominated by chance. See Commonwealth v. Laniewski, 98 A.2d 215, 217 (Pa. 1953) (holding that a football pool where players were required to select at least three football games per week was a lottery dominated by chance.); Seattle Times Co. v. Tielsch, 495 P.2d 1366, (Wash. 1972) (en banc) (holding that a newspaper pool requiring players to select twenty correct games per week to be a lottery dominated by chance.) The higher degree of chance associated with pools or parlay games would be present in the Tulania Sports Lottery based upon the number of games that the player chooses to combine. The second component of the Tulania Sports Lottery, as with the Delaware Touchdown and Touchdown II games, is a point spread. As discussed in Appendix A, the purpose of the point spread is to equalize the bets that are made such that wagers for either team attract players. In NFL, the court found that the basic purpose of the point spread adds an additional chance element beyond the physical and mental conditions that affect the actual play of a particular sporting event. 435 F.Supp. at Therefore the use of a point spread for individual games, or the point spread as part of a parlay game exponentially increases the element of chance in the Tulania Sports Lottery such that chance becomes the dominant factor in the outcome of any game. 21

28 The court below attempted to explain that chance could not dominate any lottery game using an example of eleven strangers competing against eleven NFL champions. McCallister, at 16. The court failed to recognize how this circumstance would actually be played under the Tulania Sports Lottery. Surely, a team of eleven individuals would not be favored against a team of NFL champions, and the point spread would be set accordingly in order to bring the outcome of the bet closer to an even chance. See App. A. Players seeing this matchup would use their knowledge to decide if they thought the champions could win by at least that margin before deciding to play. Separately, if the game took place during a sudden severe snowstorm, and the NFL champions suffered several injuries these unknown factors would likely affect the outcome of the sporting event and could not be reflected in a pre-set point spread. These unknown factors show how the results of both the sporting events and the lottery games are independently dominated by chance. The appropriate rule for the court to apply in this instance is the American or dominant factor rule. This rule is supported by the majority or courts considering the issue. This rule allows the court to avoid making unnecessary constitutional decisions. Finally, the rule allows the court to defer to the Legislature s clear desire to authorize and implement a Sports Lottery within the confines of the Tulania Constitution. Under this rule, chance is clearly the dominant factor in determining the winner of the Tulania Sports Lottery. This is shown by the predominant role chance plays in the underlying sporting event as well as the method of administration, parlay and point spreads, which multiply the role chance plays in success in the lottery. 22