203 A.3d 160
N.J. Super. Ct. App. Div.2019Background
- In 1998 the New Jersey Legislature implemented the Off-Track and Account Wagering Act (OTAWA) to authorize and regulate an Account Wagering System (AWS) to accept pari‑mutuel wagers from qualifying New Jersey residents.
- OTAWA permits New Jersey residents (18+) to establish AWS accounts and place wagers "without having to be physically present at a New Jersey racetrack or off‑track facility," but contains multiple provisions referring to wagers placed or accepted "within this State."
- Petitioner Lewis Stein, a New Jersey resident and AWS account holder, attempted to place wagers while temporarily located out of state and was blocked by the AWS under a longstanding Commission license condition requiring wagers be placed from within New Jersey.
- Stein petitioned the Racing Commission for rulemaking to permit account wagering while temporarily outside New Jersey (and alternatively to permit NJ residents to open accounts with out‑of‑state/national systems for use while outside NJ). The Commission denied the petition based on legal advice that OTAWA establishes an intrastate system.
- Darby Development and TVG submitted comments opposing the intrastate restriction as commercially harmful; the Commission nonetheless concluded the statutory language and legislative intent support an intrastate AWS.
- Stein appealed, arguing (1) OTAWA does not bar out‑of‑state placement, and (2) an intrastate restriction violates the Commerce Clause. The Appellate Division affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether OTAWA prohibits NJ residents from placing AWS wagers while physically outside NJ | Stein: OTAWA contains no express prohibition; placement via phone/internet allowed, so out‑of‑state wagers should be permitted | Commission: statutory language ("within this State" in multiple provisions) and license conditions establish an intrastate AWS | Held: OTAWA confines placement/acceptance of account wagers to persons "within this State;" Commission interpretation upheld |
| Whether the Commission abused rulemaking discretion by denying petition | Stein: Commission should initiate rulemaking to allow out‑of‑state wagering | Commission: followed statutory scheme and consistent enforcement history; denial was supported by legal advice | Held: Denial not arbitrary or unreasonable; Commission acted within discretion |
| Scope of N.J.S.A. 5:5‑142(k) ("deemed made to a place within this State") and other cross‑provisions | Stein/Darby: §142(k) and §144 suggest wagers placed remotely can be treated as made in NJ, permitting out‑of‑state placement | Commission/AG: §142(k) applies narrowly to messages/orders on behalf of permit holders, not to account holder placement; other provisions require wagers/acceptance be within State | Held: §142(k) does not override intrastate limitations; the statute reads as creating an intrastate AWS |
| Whether intrastate restriction violates the Commerce Clause | Stein: ban discriminates against interstate commerce by privileging in‑state wagering | State: law regulates only New Jersey's AWS and in‑state wagering; it is non‑protectionist, addressing legitimate local interests | Held: No Commerce Clause violation; law is directed to legitimate local concerns and any interstate effect is incidental |
Key Cases Cited
- Granholm v. Heald, 544 U.S. 460 (2005) (state laws that differentially treat in‑state and out‑of‑state economic interests raise Commerce Clause concerns)
- Pike v. Bruce Church, 397 U.S. 137 (1970) (balancing test for incidental burdens on interstate commerce)
- New Energy Co. of Ind. v. Limbach, 486 U.S. 269 (1988) (negative Commerce Clause prohibits economic protectionism)
- DiProspero v. Penn, 183 N.J. 477 (2005) (statutory interpretation focuses on legislative intent and plain language)