August 31, 2009 5:04 PM

Delaware Will Not Become the East Coast Vegas

Posted by Zach Lowe

Today is a good day for Kenneth Nachbar of the Delaware-based firm Morris, Nichols, Arsht & Tunnell, the lawyer for the National Football League and its pro sports league brethren recruited to fight Delaware's proposed sports gaming lottery. The U.S. Court of Appeals for the Third Circuit emphatically struck down Delaware's proposal, echoing in large part the exact arguments Nachbar had been making for months, according to the Associated Press and the court ruling. 

"It's about as clear an adoption of our position as would be possible," Nachbar tells us.

All along, Nachbar has argued in various courts that the proposed lottery would violate a 1992 federal law banning sports betting except in very narrow circumstances. Nachbar, an M&A attorney by trade who had to bone up on sports law to prep for the case, was surprised earlier this month, when a federal trial court denied the NFL's motion for an injunction to stop the lottery from going into effect on Sept. 1--just in time for the start of football season. 

Nachbar was adamant that the district court had misinterpreted that 1992 federal law--the Professional and Amateur Sports Protection Act. The law prohibits sports betting in states except for games that already existed between 1976 and 1990. During that time, Delaware sponsored a limited form of gambling allowing residents to make so-called parlay bets that depended on the outcome of multiple NFL games. Players were not allowed to bet on individual games or on any sports other than the NFL. 

But Delaware Gov. Jack Markell's proposed sports lottery would have allowed residents to bet on individual games in any sport, college or pro, excluding only college games involving Delaware-based universities, court records show. In asking a federal trial court for an immediate injunction, Nachbar argued that federal law only allowed Delaware to implement the same gaming contests that existed in that window between 1976 and 1990--not any new games. 

He was admittedly puzzled when the district court denied that request for injunction by claiming there were facts in dispute about what types of gambling, exactly, Delaware allowed prior to 1990. Nachbar and the leagues argued the facts were clear and appealed to the Third Circuit. 

And victory doesn't get much more clear-cut than this ruling from the Third Circuit: "Contrary to the District Court's supposition, we have reviewed the record and cannot find any material issues of fact in dispute." In other words: We know exactly what Delaware permitted between 1976 and 1990, and only those exact games are allowed now. 

Delaware retained the five-lawyer boutique Bouchard, Margules & Friedlander to argue the case at the district and appellate levels, but the state, realizing it had a fight on its hands, recently hired Richards, Layton & Finger to assist Bouchard, according to state records. 

It was not enough. The state could ask the Third Circuit for an en banc hearing or appeal to the U.S. Supreme Court, but Nachbar says he considers such steps unlikely. So for now, Delaware can only implement a very limited sports gambling lottery involving complex NFL parlays.

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