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The Constitutionality of Mobile Sports Wagering in New York State

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The Constitutionality of Mobile Sports Wagering in New York State G THE B IN EN V C R H E S A N 8 D 8 B 18 AR CE WWW. NYLJ.COM SIN VOLUME 263—NO. 22 MONDAY, FEBRUARY 3, 2020 Outside Counsel The Constitutionality of Mobile Sports Wagering in New York State BY MYLAN L. DENERSTEIN, AKIVA SHAPIRO AND LEE R. CRAIN s the 2020 legislative session in New York state gets under way, one of the topics on the agenda is sure to be whether New York will for the first Atime allow New Yorkers to engage in mobile sports betting. In that context, some may ask whether the Legislature has the power to legalize mobile sports wagering, in light of the restrictions on gambling set forth in our state’s Con- stitution. Ultimately, though, applying the normal methods of constitutional interpretation, we conclude that the state Constitution does not bar mobile for “casino gambling at no more than in Murphy v. Nat’l Collegiate Athletic sports wagering in New York state. The seven facilities as [it may] authorize[] Ass’n, 138 S. Ct. 1461, 1481 (S. Ct. 2018), Legislature is free to authorize it here. and prescribe.” N.Y. Const. art. I, §9. It the U.S. Supreme Court invalidated The constitutional question focuses expressly delegated to the Legislature the relevant federal statute, effectu- on Article I, §9, which regulates gam- the task of implementing relevant laws ating that change in federal law. As a bling in New York state. In 2013, the relating to wagering, which the Legis- result, the New York state Legislature Legislature passed an amendment to lature did the same day it passed the is now free to authorize sports betting Article I, §9 (later ratified by the vot- amendment by adopting a statute that in accordance with PML §1367. ers). The constitutional amendment conditionally legalized “sports wager- While New York law now approves authorized the Legislature to provide ing” in New York state, see N.Y. Rac. of sports wagering as a result of the Pari-Mut. Wag. & Breed. Law (PML) change in federal law, it does not §1367. Because sports wagering was yet authorize mobile sports wager- MYLAN L. DENERSTEIN is a litigation partner and co-chair of the public policy practice group at Gibson, at that time forbidden by federal law, ing, unlike the laws of an increasing Dunn & Crutcher. She previously served as coun- the Legislature conditioned the legal- number of states. The governing stat- sel to New York State Gov. Andrew Cuomo. AKIVA SHAPIRO is a litigation partner and LEE R. CRAIN ization of sports wagering on a change ute, PML §1367 provides that sports is a litigation associate at the firm. in federal law. PML §1367(2). Last year, wagers may only be accepted “from MONDAY, FEBRUARY 3, 2020 persons physically present” “in a sports sports, moreover, has long been rec- sports wagering could comply with wagering lounge located at a casino.” ognized as a form of gambling under Article I §9. Specifically, the Legislature §1367(3)(b), (d) (emphasis added). New York law. And if there were any could determine that mobile sports Thus, under current law, sports bet- doubt, the fact that the very Legisla- wagering occurs not at the situs of the ters in New York are permitted to place ture that passed the Amendment also device that requests the placement of bets only in person at currently autho- passed legislation authorizing (non- a wager—e.g., a smartphone or lap- rized casinos, even as other states, mobile) sports wagering confirms that top—but rather at the location of the including New Jersey, have authorized Legislature and the voters understood server at which that bet is received online sports betting. that sports wagering fell within the and placed. If all such servers were The question is whether the Consti- contours of “casino gambling.” See located “at” an authorized casino gam- tution allows the Legislature to also Upstate New York Gaming Economic bling “facility,” mobile sports wagering authorize mobile sports gambling. Development Act of 2013, Assemb. B. would comply with the Constitution’s Based on the text of Article I, §9, any 8101, 200th Leg. 1st Sess. (N.Y. 2013). locational requirement, consistent exercise of the Legislature’s authority The contemporaneous passage of the with the Constitution’s express text, to permit gambling—including mobile historical backdrop, purpose, and its sports betting—must comply with two Under current law, sports bet- broad delegation of authority to the conditions: first, thing authorized must Legislature. The Constitution empow- constitute “casino gambling” (a term ters in New York are permitted ers the Legislature with vast authority not defined in the Constitution itself), to place bets only in person at in determining where casino gambling and second, that casino gambling can currently authorized casinos, even occurs. That power in turn permits the only occur “at” one of the facilities as other states, including New Legislature to declare that a mobile “authorized and prescribed by the Jersey, have authorized online sports wager occurs at the server Legislature.” Mobile sports wagering located “at” one of the “facilities” the can meet both of these conditions. sports betting. The question is Legislature has authorized. First, it is clear that sports wagering whether the Constitution allows And in fact, defining mobile sports falls under the term “casino gambling” the Legislature to also authorize wagering as occurring at a server and therefore may be authorized by mobile sports gambling. located “at” an authorized gambling the Legislature both as matter of the facility is consistent with historical Constitution’s text and original mean- constitutional amendment authorizing understandings of how gambling is ing. The 2014 version of Black’s Law casino gambling alongside enabling consummated. Gambling has long Dictionary—roughly contemporane- legislation conditionally authorizing been treated as a form of a completed ous with the adoption and enactment sports betting makes clear that the contract involving at least two par- of the relevant constitutional provi- drafters and voters of the constitu- ties. See generally Intercontinental sion—broadly defines “gambling” tional amendment understood that Hotels (Puerto Rico) v. Golden, 15 as “[t]he act of risking something of the amendment’s reference to “casino N.Y.2d 9, 13 (1964). General contract value, esp. money, for a chance to win gambling” included sports wagering. law principles hold that a contract a prize.” Gambling, Black’s Law Diction- Second, the Legislature can draft forms when and where it is accepted. ary (10th ed. 2014); see also, e.g., De La legislation that ensures that mobile This centuries-old rule springs from Cruz v. Caddell Dry Dock & Repair Co., sports wagering occurs “at” already- the notion that acceptance marks the 21 N.Y.3d 530, 534 (2013) (relying on authorized “facilities” in New York moment in space and time at which dictionary definitions in constitutional state, as the Constitution requires. See the “meeting of the minds” between interpretation). Similarly, New York N.Y. Const. art. I, §9 (permitting “casino the parties happens. See Mactier’s Penal Law §225.00(2) defines “gam- gambling at no more than seven facili- Adm’rs v. Frith, 6 Wend. 103, 118 (N.Y. bling” to include “stak[ing] … some- ties as authorized and prescribed by 1830); see also Amelia Rawls, Con- thing of value upon … a future con- the legislature”). If the Legislature tract Formation in an Internet Age, 10 tingent event not under [the bettor’s] authorized mobile sports gambling Colum. Science & Tech. L. Rev. 200, control or influence … .” Wagering on run out of authorized casinos, mobile 205 (2009) (explaining that New York MONDAY, FEBRUARY 3, 2020 was the first state to adopt this rule). That server at an authorized casino City. The “cards” are played on that Indeed, it is blackletter law that a “con- would receive that offer and accept table in Atlantic City, and the wager tract is created at the place where the it, consummating in that moment a is placed on and accepted at that acceptor speaks or otherwise com- wagering contract whose locus is at table. No activity other than the pletes his manifestation of assent.” the physical location of the server. transmission of information to and Restatement (Second) of Contracts Consequently, the Legislature could from the players along common §64 cmt. c. (1981). constitutionally legalize mobile sports carriage lines takes place outside Even though technology has, wagering “at” casinos if the servers of Atlantic City[.] for more than a century, enabled were located in the casinos, in accor- Id. at (k). Applying this reasoning, new means for parties to enter into dance with longstanding common law the New York Legislature could prop- contracts, the rule that a contract principles. erly authorize casinos to receive offers is formed where accepted has held In fact, New York’s legislation could of bets over the Internet if the servers fast. See, e.g., Kay v. Kay, 2010 WL look a lot like New Jersey’s, whose receiving them are physically located 2679897, at *3 (Sup. Ct. Nassau Cty. “at” the casinos. 2010) (“[W]hen acceptance of a con- In sum, legislation authorizing tract is sent between two states, the Legislation authorizing mobile mobile sports wagering will be con- place of contracting is deemed to be sports wagering will be sistent with New York’s Constitution so the state from which the acceptance consistent with New York’s long as the sports wagers are deemed was sent.”); United States v. Bush- Constitution so long as the sports consummated at servers located “at” wick Mills, 165 F.2d 198, 202 (2d Cir. legislatively authorized casinos in this 1947) (“[T]he buyer telephoned an wagers are deemed consummated state.
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