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September 29, 2009 12:58 PM

Another (Final?) Blow to Delaware's Gambling Plan

Posted by Zach Lowe

The U.S. Court of Appeals for the Third Circuit dealt what is likely to be the final blow to Delaware's plan for a state-sponsored gambling lottery that would have allowed residents to make bets on individual games in several sports. 

On Tuesday the full court denied the state's request to rehear a panel decision reached last month that stuck down the plan as a violation of a 1992 law that bans sports gambling with limited exceptions. 

As we wrote last month, the panel's decision echoed arguments Kenneth Nachbar of Morris, Nichols, Arsht & Tunnell made on behalf of the National Football League. Nachbar was not immediately available for comment. 

The denial leaves Delaware officials with just one option: Asking the U.S. Supreme Court to hear the case. It appears they won't take that step. 

"We realize asking the Supreme Court to grant a petition for certiorari is a significant thing," says Michael Barlow, lead counsel to Delaware Gov. Jack Markell. "We are unlikely to pursue it."

That would be a nice victory for Nachbar, an M&A attorney who had to bone up on sports gambling law when the NFL asked him to handle the case instead of the league's usual litigation counsel at Covington & Burling. (Those lawyers are busy with other league matters, including a major antitrust case the high court has already accepted).

Nachbar argued in court papers that a 1992 federal law prohibits sports gambling except in states that allowed gambling between 1976 and 1990, and that any current legalized gambling must be limited to the type of gambling the state allowed during that time frame. 

Delaware was one of four states that allowed sports betting between 1976 and 1990, but only on the outcomes of multiple NFL games. The state never permitted gambling on other sports.

The governor's proposal would have allowed betting on individual games in several professional and college sports. A federal trial court initially denied the NFL's motion for an injunction against the program, but the Third Circuit panel overturned that ruling last month. 

The state took the matter very seriously, hiring the five-lawyer boutique Bouchard Margules & Friedlander to assist Barlow early in the litigation and retaining Richards, Layton & Finger when it became clear the case was becoming a tough fight. 

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