MMA Battles Through the New York State Legislature; New Jersey “Craps Out” in Seeking Gambling Expansion; Eleventh Circuit Sacks the Crimson Tide

March 2013

New Jersey "Craps Out" in Seeking Gambling Expansion
A United States District Court issued a permanent injunction blocking New Jersey's effort to legalize sports betting. In January 2012, Governor Christie signed a state law permitting wagering on professional and collegiate sports (other than games involving New Jersey colleges or college games played in New Jersey) at New Jersey racetracks and Atlantic City casinos. Sports organizations, including the NCAA, NFL, NBA, NHL and Major League Baseball, along with the United States government, argued that the state law would undermine the integrity of professional sports. The opponents further argued that the state law was barred under the Professional and Amateur Sports Protection Act of 1992 ("PASPA"), a federal law that gives just four states (i.e., Nevada, Delaware, Montana and Oregon) the right to engage in sports wagering. New Jersey argued that PASPA was unconstitutional on the ground that it violated states' sovereign rights. New Jersey further argued PASPA unfairly "grandfathered" Nevada, Delaware, Montana and Oregon.

In issuing the permanent injunction, the court ruled that to the extent New Jersey disagreed with PASPA, its remedy is not through the passage of a state law or through the judiciary, but rather through the repeal or amendment of PASPA in Congress. The permanent injunction prohibits New Jersey from sponsoring, operating, advertising, promoting, licensing or authorizing a lottery, sweepstakes or other betting, gambling or wagering scheme based on amateur or professional games.

New Jersey has appealed the case to the United States Third Circuit Court of Appeals in Philadelphia. A spokesperson for Governor Christie stated, "we believe firmly in the principles of our position on sports betting and that the federal ban is inequitable, violates New Jersey's rights as a state and is unconstitutional. Even the trial judge has noted that he was not likely the final arbiter in the matter. We are confident that the federal court of appeals will conclude that New Jersey should be treated equally with other states."

Nat'l Collegiate Ath. Assn. v. Christie, 12-4947 (U.S. Dist. Ct. N.J. Feb. 28, 2013)

Mixed Martial Arts Battling its Way Through the New York State Legislature
Mixed martial arts ("MMA") is once again on a path toward becoming a legalized professional sporting activity in New York. The New York State Senate, by a vote of 47 to 14, approved a bill permitting single discipline MMA competitions in New York State. The bill has been sent to the New York State Assembly for a vote. Similar bills have been approved by the New York State Senate over the past three years, but have been blocked by the New York State Assembly. Unlike prior years, however, Assembly Speaker Sheldon Silver stated, with respect to the current bill, that he sees legalization of MMA as a professional sport as inevitable. Further, Governor Cuomo has made statements indicating that he may be receptive to the legalization of MMA.

MMA has grown from a violent curiosity into a popular spectator sport and has attracted viewers on pay-per-view, cable and to a lesser extent, network television. MMA was first televised in the United States on a pay-per-view basis in 1993 as a test to determine which of the following combat styles was the most effective: boxing, wrestling, karate, jiu-jitsu, judo, Muy Thai or basic brawling. New York and Connecticut are the two remaining states that have not legalized MMA.

New York State Senate Bill No. 2755

Knowing When to Hold 'Em and When to Fold 'Em is More Than Luck
In a case that would have made Kenny Rogers' "The Gambler" smile, the United States District Court for the Eastern District of New York vacated the conviction of the operator of "Texas Hold 'Em" poker games held in the back room of a warehouse in Staten Island, New York. The operator was arrested for operating an illegal gambling operation in violation of the Illegal Gambling Business Act (the "IGBA"), a federal law that makes it a federal, criminal offense to operate a gambling business. In vacating the conviction, the court reasoned that the IGBA did not extend to the operator by reason of poker being a game of skill, rather than a game of chance. Games of chance, such as lotteries and roulette, are won by the luckiest among a group of players, whereas in poker the winner is often times the player with the most skill. The ruling marked the first time a federal court has directly considered poker's status.

The court, noting that its decision was limited to the application of the IGBA, stated that the operator could still be prosecuted in New York state court. New York Penal Law Section 225 defines gambling as "any contest, game, gaming scheme or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor." Nonetheless, the court's decision has been widely hailed by advocates of decriminalizing poker and is expected to further help spur the growth and popularity of poker.

U.S. v. DiCristina, 11-CR-414 (E.D.N.Y. Aug. 21, 2012)

Court Sacks the Crimson Tide
While the University of Alabama has been virtually unbeatable on the football field, the United States Eleventh Circuit Court of Appeals dealt the University a rare defeat in a case involving the use of its trademarks by the artist Daniel A. Moore. The court found that Moore's images of the Crimson Tide football team were protected by the First Amendment.

In 1979, Moore, a 'Bama alum, began painting scenes of important Crimson Tide football events. The University did nothing to protest Moore's works until the 1990s, when he signed a dozen licensing agreements with the University to produce and market officially licensed products for the University. These licensing agreements restricted Moore's use of any logos or images that the University thought should be protected by its trademark, including the colors of the Crimson Tide's football uniforms. At the same time, however, the University permitted Moore to sell unlicensed paintings and other works.

However, in 2002, the University advised Moore that he would have to license and pay royalties on all of his Crimson Tide-related works because they featured the University's trademarks. When the sides could not reach an agreement, the University filed suit claiming that Moore had breached existing licensing agreements and also violated the federal trademark act by infringing on the University's trademark rights in its football uniforms. The University argued that Moore's works were more commercial than expressive and thus entitled to a lower degree of First Amendment protection.

The lower court found that the licensing agreements did not specifically exclude the depiction of the uniforms, that the University's colors "were not especially strong marks on the trademark spectrum," and that Moore had a First Amendment right to paint Crimson Tide football events. The court agreed with the lower court's decision that Moore's works were protected by the First Amendment. The court, however, also determined that the licensing agreements were too vague to decide whether the football uniforms and team colors could be considered trademarked items. As a result, the court ruled that the issue should be decided by reference to the parties' course of conduct. In finding for Moore, the court noted that the University had displayed unlicensed works by Moore in its athletic department office and had granted Moore press credentials to take photographs for use as source material for paintings, many of which were never licensed. The parties' course of conduct was found to clearly indicate that they did not intend for Moore to need permission on each occasion that he used the football uniforms and team colors in his works.

Univ. of Alabama Bd. of Trustees v. New Life Art, Inc., No. 09-16412 (U.S. Cir. Ct. of App., 11th Cir., June 11, 2012)

For more information on this or other sports matters, please contact:

Irwin A. Kishner at [email protected] or +1 212 592 1435
Daniel A. Etna at [email protected] or +1 212 592 1557

© 2013 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.