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MLB’s “Sign Stealing” Report Highlights Supervisory Compliance Obligations of General Managers and Field Managers

On January 13, 2020, Major League Baseball published the findings of its investigation into the Houston Astros’ use of electronic equipment to steal signs during the 2017 and 2018 seasons (the “Report”). The Report details how the Astros utilized video feeds at their home ballpark to decode and transmit their opponents’ signs in order to provide their batters with an advantage. Commissioner Rob Manfred also imposed lengthy suspensions on both the team’s general manager Jeff Luhnow and field manager A.J. Hinch for creating an environment that allowed this conduct to occur, fined the Astros $5 million, and took away their top two draft picks in the next two player drafts. The fallout from the Report also led the Boston Red Sox and the New York Mets to part ways with their respective managers, former Astros bench coach Alex Cora and former Astros player Carlos Beltran.

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And They’re Off: Supreme Court Strikes Down PASPA, Leaving States Free to Legalize Sports Wagering

Time to Read: 1 minutes Practices: Sports

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On May 14, 2018, in Murphy v. NCAA, No. 16–476 (2018), the Supreme Court held that the Professional and Amateur Sports Protection Act (“PASPA”), which barred states from legalizing sports wagering within their borders, violates the Tenth Amendment of the Constitution. In addition to striking down PASPA’s core provision, 28 U.S.C. § 3702(1), the Court also concluded that the provision is not severable from the remainder of the statute, thus invalidating PAPSA in its entirety. 

PASPA’s core provision prohibited states from legalizing sports gambling, but the Act also included grandfather provisions for jurisdictions that already had schemes in place. Consequently, under PASPA, states could not change their minds to allow sports gambling. Another provision of PASPA prohibited private persons from conducting sports gambling “pursuant to the law or compact” of a state. Writing for the Court, Justice Alito rejected the distinction between compelling states to enact legislation and forbidding states from enacting certain laws. Both, he writes, conflict with the anti-commandeering principles of the Tenth Amendment.

Contrary to what some in the mainstream media have reported, the Supreme Court’s decision does not legalize sports wagering. Rather, it shifts to each individual state the decision whether to legalize sports wagering within its borders, as well as how to regulate whatever wagering it chooses to allow. The opinion also leaves open the possibility that Congress may constitutionally enact new laws regulating interstate wagering pursuant to its Commerce Clause powers. Sports leagues and other sports entertainment companies will need to account for this fluid, multi-jurisdictional legal and regulatory environment when considering the impact of the Court’s decision on their businesses.

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