How will feds react to NJ online gambling?
Earlier today I reported that New Jersey’s Senate has passed a bill legalizing and regulating intrastate (and international) online gambling. It seems likely that the bill will become law before the end of the year. As soon as I had posted the article, I found myself wondering how the federal government would respond.
Though the current administration hasn’t taken a clear stance on online gambling, for years the federal government has been against it. In 2006, the passage of UIGEA served as a de facto ban on internet gambling. Though the law doesn’t actually make online gambling illegal, that hasn’t stopped the Department of Justice from treating online gambling like a crime and prosecuting the “offenders.”
With that in mind, how would the federal government react to a state passing a law to legalize and regulate an activity that in their minds (incorrectly) is illegal by federal law? Legally, the federal government has no authority over any state laws that do not involve interstate commerce or violate the U.S. Constitution. Neither is the case here. Though the feds have no jurisdiction over New Jersey’s legislation, that didn’t stop the DOJ from interfering with Arizona’s completely legal immigration law. The DOJ filed a lawsuit to stop the law from taking effect, claiming that because it mirrors current federal law, it would interfere with the federal government’s ability to enforce their own law. That of course is ridiculous, because there are hundreds of state and local laws that mirror federal laws and the whole reason Arizona had to pass their own immigration law is because the feds weren’t enforcing their own.
The federal government also unconstitutionally stepped in when Arizona decided to require someone seeking in-state (reduced) tuition at a college to prove they are a U.S. citizen as well as an Arizona resident. They have done the same in other states in many different situations. I would not be the least bit surprised if the federal government seeks an injunction against the New Jersey online gambling law on the grounds that it violates federal law. Just as Arizona’s immigration law is a rebuke of federal immigration enforcement, New Jersey’s online gambling law would rebuff UIGEA. Despite the lack of constitutional standing to do so, it is entirely within the character of the feds to step in.
All of that would be problem enough if New Jersey was only allowing intrastate online gambling. However, the bill would also allow people from overseas to play at the Atlantic City online casinos. That opens up a whole new set of problems, because the law would then involve international commerce. The federal government does not have exclusive right to regulate international trade, but only they are allowed to sign treaties with foreign bodies. The Constitution prohibits states from signing any such treaties. Therefore, groups like the World Trade Organization cannot deal with New Jersey in an official capacity. The WTO currently has trade agreements with the federal government, but that would not apply to New Jersey’s online gambling industry, because it would not be governed by the U.S. government.
What all of this means is that if New Jersey does pass a law regulating online gambling, that won’t be the end of challenges from anti-gambling sectors. Instead, it will be the beginning of a whole new debate about the sovereignty of the state of New Jersey.
