DOJ Will Appeal NH Lottery Ruling On The Wire Act

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In a move that was seen as likely but not definite, the U.S. Department of Justice on Friday declared its intention to appeal a June ruling that the Wire Act of 1961 only applies to intrastate sports betting.

The case was filed by the New Hampshire Lottery, which objected to a DOJ revised opinion earlier this year finding that all sorts of online gambling — even, perhaps, in-state lotteries — could be subject to a ban.

DOJ’s actions regarding the Wire Act have produced rampant confusion over the past decade. One aspect this year was that because the federal government hadn’t acted against any party, the lawsuit was moot.

That angle also was rejected by U.S. District Court Judge Paul Barbadoro in his ruling.

The main gist of Barbadoro’s 60-pager ruling in June was this:

“In 2011, the Justice Department’s Office of Legal Counsel (“OLC”) issued a formal opinion declaring that the Wire Act only punishes activities associated with sports gambling.

“Last year, the OLC changed its mind. It now asserts that the Act also covers lotteries and other forms of gambling that do not involve sports. The New Hampshire Lottery Commission has long offered lottery games such as Powerball that necessarily use interstate wires.

“Fearing that these games, which produce substantial revenue for the State, will be deemed to be criminal activities under the OLC’s current interpretation of the Wire Act, the Commission filed a complaint in this court seeking both a declaratory judgment that the Act is limited to sports gambling and an order under the Administrative Procedure Act setting aside the OLC’s new interpretation … I agree with the plaintiffs.”

What a ‘mess’

Barbadoro actually called the Wire Act “a mess of a statute” during oral arguments this spring — and many agree. Of course, the fact that it was created more than three decades before widespread public awareness of the internet means that however well-crafted, it can’t be expected to serve well as federal law without some sort of updating.

Anti-gambling groups have tried, so far to no avail, to become intervenors in the case. Their claim is that DOJ has been too timid — focused, for instance, more on whether the case is yet worthy of the court’s time than on the exact, stilted language of the Wire Act.

That timidity had led to mild speculation that DOJ might be tempted to punt the case entirely. But in the end, it’s not surprising that they are defending the official federal government stance.

iDEA Growth, a trade group that represents various sectors of the mobile gaming industry, on Friday objected to the appeal in a statement.

“The Department’s action, while hardly unexpected, is certainly unwarranted,” said Jeff Ifrah, founder of iDEA Growth. “DOJ generally files appeals of adverse district court decisions as a matter of course.

“We hope that, rather than engaging in a protracted, expensive and ultimately unsuccessful legal fight, the Department will take this opportunity to negotiate a settlement which will focus the Wire Act and DOJ’s enforcement resources on the right targets — the unlicensed illegal offshore internet gambling operators who do not create jobs or tax revenue in the U.S. and do not appropriately protect consumers.”

A 2011 DOJ Opinion had concluded that sports betting was the issue in play in terms of the Wire Act. But in a new Opinion made in November 2018 and made public two months later, suddenly numerous forms of online gambling besides intrastate sports betting seemed to be in play.

The judge’s ruling here was quite blunt, and it will be interesting to see exactly on what grounds DOJ makes its appeal.

It’s worth noting that Judge Barbadoro has predicted that this case — like the New Jersey sports betting case before it — will wind up heading to the U.S. Supreme Court.

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John Brennan

John Brennan has covered NJ and NY sports business and gaming since 2002 and was a Pulitzer Prize Finalist in 2008, while reporting for The Bergen County Record.

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