(CN) – The Third Circuit delivered a victory Tuesday to a New Jersey horse racing group that has sought millions in damages from the National Football League and other sports leagues in a long-running legal saga over sports gambling.
The ruling stems from a 2014 lawsuit in which the NFL and sports leagues sued then-Governor Chris Christie and the New Jersey Thoroughbred Horsemen’s Association, or NJTHA, challenging state laws allowing gambling at state-licensed casinos and horse racetracks.
The leagues sought an injunction against the state arguing that New Jersey was violating federal law, specifically the Professional and Amateur Sports Protection Act, or PASPA.
But in May 2018, the U.S. Supreme Court struck down PASPA, which had banned betting in most states. By that time, the leagues and New Jersey had been locked in the legal dispute for years.
As the case wound its way through the federal court system and ultimately the nation’s highest court, the NJTHA said in court filings that the leagues’ move was deceptive as they were profiting from sports gambling, and had secured a temporary restraining order “in bad faith.”
At oral arguments in July, the racing group told a three-judge panel of the Third Circuit that the leagues could be on the hook for as much as $150 million in damages.
It remains to be seen whether the horse racing group will secure a larger damages award after the Philadelphia-based appeals court vacated and remanded the case on Tuesday.
The 2-1 ruling concerned the more modest amount of $3.4 million – a bond that the leagues posted as security in the event that they lost the case. The horse racing group had argued that the league’s use of the law that the Supreme Court found unconstitutional had almost put its racetrack at Monmouth Park in Oceanport, New Jersey out of business.
In Tuesday’s ruling, the majority of the Third Circuit panel found that because the racing group had been improperly subjected to a restraining order for 28 days, that it was “wrongfully enjoined” under federal rules of procedure. Therefore, a federal judge should not have denied bond damages, the court ruled.
“Here, PASPA provided the only basis for enjoining NJTHA from conducting sports gambling, and the Supreme Court ultimately held that that law is unconstitutional. Therefore, NJTHA had a right to conduct sports gambling all along. We conclude that NJTHA was wrongfully enjoined and should be able to call on the bond,” Senior U.S. Circuit Judge Marjorie Rendell wrote.
U.S. Circuit Judge Theodore McKee joined Rendell in the majority.
U.S. Circuit Judge David Porter dissented, writing that although the Supreme Court had struck down PASPA, the temporary restraining order “was not based on PASPA’s constitutionality.”
“I disagree that the Supreme Court’s decision holding PASPA unconstitutional necessarily means that the NJTHA was wrongfully enjoined under the PASPA-based TRO issued four years earlier. This holding requires indulging the fiction—not available to the District Court that issued the TRO—that PASPA never existed at all,” Porter wrote.