Editor’s Note: New Jersey has been sued over gambling-related issues by various sports leagues twice: 2012 and 2014. The latter case is pending at the Supreme Court. New Jersey’s neighbor—Delaware—is the only other state to have been sued by sports governing bodies over sports betting on multiple occasions. In a two-part series, SportsHandle looks at both Delaware lawsuits. This first installment probes the 1976 federal case initiated by the NFL. Part two of the series will unpack the 2009 lawsuit against Delaware Governor Jack Markell started by the same five sports leagues who would later join forces to sue New Jersey.
The NFL’s legal tussle with Delaware Governor Sherman W. Tribbitt started swiftly.
“In August 1976…the Delaware State Lottery announced a plan to institute a lottery game based on games of the…NFL,” wrote Judge Walter King Stapleton the following year. “Immediately thereafter, the NFL and its twenty-eight member clubs filed suit” to stop the lottery.
A six-day long trial ensued. Later, Judge Stapleton ruled against the NFL on the league’s core “misappropriation” claim.
The result?
Delaware’s lottery game offering parlay-style bets on pro football was given a qualified green light. After a long mothball period, parlay bets on NFL games were brought back years later and the Delaware Lottery continues to be offer them today at racetracks and over 100 retailers.
With current debates over “integrity fees” and other topics in various statehouses, court documents from the Delaware case obtained by SportsHandle shed light on the impetus for some of the legal positions sports leagues are now taking as they lobby across the country for—and against—numerous sports gambling bills.
The NFL’s Lawsuit Starts
The NFL filed an initial complaint in federal court on August 17, 1976. Less than a month later, the league followed up with an amended complaint.
“The operation of a football gambling enterprise by the State of Delaware…would trade upon and use the business and assets of the NFL and its Member Clubs,” wrote league attorneys.
In all, the NFL made fourteen claims. Examples included the following:
▪ Deprivation of property “without due process of law, in violation of the 14th Amendment of the United States Constitution.”
▪ Civil rights claim “secured by the Constitution and laws of the United States, in violation of 41 U.S.C. §1983.”
▪ Misappropriation and unfair trading upon “the property rights, trademarks, goodwill and reputation of the NFL and its Member Clubs.”
▪ The “NFL’s forced association with gambling will alienate many of its patrons and thus lead to reduced attendance and a reduced television audience, both leading to loss of income.”
▪ The “NFL will be forced to spend additional money on investigative and security forces to guard against the increased danger to the integrity of the game.”
▪ “Delaware’s discrimination against the NFL has no reasonable relation to any differences between professional football and other sports.”
▪ Under “the Commerce Clause, a Delaware tax on the NFL is unconstitutional.”
The NFL closed by requesting that the judge permanently bar Delaware “from implementing or otherwise establishing a gambling scheme based on the playing and results of NFL football games.”
[Also see: What If One League Wants Sports Betting When Other Leagues Do Not?]
Delaware Responds
Delaware replied to the NFL’s amended complaint in a 10-page “answer and counterclaim.”
In paragraph-by-paragraph fashion, Delaware’s attorneys responded to each item in the NFL’s court filing. The highlights included the following:
▪ Delaware refuted the notion that “the NFL or its member clubs have any protectable property interest which requires the State of Delaware to seek their permission to operate its present lottery.”
▪ Delaware denied the assertion that its lottery “will have the effect of ultimately undermining the integrity of sport.”
Delaware’s submission to the court ended with a few claims of its own. For example, the state asserted an “unclean hands” argument. Delaware also alleged a conspiracy:
NBA and MLB Enter the Fray
No other sports league joined the NFL as a plaintiff. However, the two sports leagues currently lobbying in multiple states—the NBA and Major League Baseball—chimed in to support the NFL’s case.
Bowie Kuhn, baseball’s top executive, wrote the following:
Kuhn also attached a statement he made in 1975, highlighting what was at stake.
“I do not think I exaggerate one bit when I say that legalization could jeopardize the very existence of professional [b]aseball and other team sports,” wrote Kuhn.
NBA deputy commissioner Simon Gordine filed an affidavit too.
“The NBA has consistently opposed any legalized gambling on sporting events as detrimental to professional sports generally and injurious to the teams of the NBA specifically,” wrote Gordine on August 20, 1976.
Attached to Gordine’s affidavit was a statement from NBA commissioner Walter Kennedy that included a dire warning:
Judge Stapleton Decides the Case
In his August 11, 1977 decision, Judge Stapleton addressed every claim and counterclaim put forth by each side. He spent a considerable amount of time on the NFL’s “misappropriation” claim, an argument particularly relevant today in light of certain sports leagues—most notably the NBA and Major League Baseball—arguing in favor of “royalty” payment.
“[G]ambling on NFL games, unaccompanied by any confusion with respect to sponsorship, has not injured the NFL and there is no reason to believe it will do so in the future,” wrote Judge Stapleton. “The record shows that extensive gambling on NFL games has existed for many years and that this fact of common public knowledge has not injured plaintiffs or their reputations.
“The only tangible product of plaintiffs’ labor which defendants utilize in the Delaware Lottery are the schedule of NFL games and the scores…obtained from public sources.”
Judge Stapleton then looked to charter buses and popcorn salesmen to explain his rationale:
Judge Stapleton also ruled that the Delaware Lottery could not use trademarked team names in the offering of contests. He also dismissed Delaware’s affirmative defenses based on acquiescence and unclean hands.
Legacy of the 1976 Lawsuit
Judge Stapleton’s decision 42 years ago—which pre-dated the Professional and Amateur Sports Protection Act (PASPA) by over a decade—has played only a fleeting role in the long-running dispute between the five sports leagues (NCAA, NBA, NHL, NFL, and Major League Baseball) and New Jersey now at the Supreme Court.
For example, lawyers for New Jersey cited the case in 2014 when trying to fend off an application for a temporary restraining order filed by the leagues.
Moving forward—whether PASPA lives on or not after the Supreme Court rules—the 1977 Delaware case will likely stand for one of the first legal decision touching on whether sports leagues possess any property right in the sports gambling context.
