Get the popcorn ready.
The state of New Jersey issued a scathing press release on Tuesday indicating that it is all in on fighting back against the Trump Administration Department of Justice’s recent Wire Act legal opinion that puts state-sanctioned gambling in the crosshairs. The Garden State has demanded that the Trump Administration either withdraw the new opinion or “guarantee that DOJ will not bring enforcement actions against companies in our states that are acting lawfully under state statutes.”
New Jersey Attorney General Gurbir Grewal penned a letter to the Department of Justice to express New Jersey’s “objection” to the Wire Act memo.
“The Justice Department’s latest action is wrong on the law and wrong for New Jersey,” said AG Grewal. “For five years, our gaming industry and our regulators have relied on the Justice Department’s promises to develop a strong online gaming industry that generates hundreds of millions of dollars, and is key to Atlantic City’s vitality. With the stroke of a pen, the Justice Department is trying to take that all away. I’m committed to standing up for New Jersey and challenging this misguided opinion.”
Pennsylvania Attorney General Josh Shapiro has joined Grewal in the fight. Pennsylvania legalized online gambling in 2017, but the Keystone State has yet to allow its casinos to those launch games. A spring launch was anticipated prior to the Wire Act memo.
Governor, regulator also weigh in
New Jersey online gambling was legalized under Gov. Chris Christie, who is ironically a supporter of the Trump Administration. Current Gov. Phil Murphy isn’t pleased.
“Our growing online gaming industry is a key component in revitalizing Atlantic City and strengthening New Jersey’s economy,” Murphy said in a statement. “This unexpected opinion from the U.S. Department of Justice not only jeopardizes the future of our casinos and gaming industry, but also threatens the jobs of thousands of New Jerseyans. I am pleased to see that Attorney General Grewal is committed to challenging the Justice Department’s unreasonable interpretation of the Wire Act.”
The New Jersey Division of Gaming Enforcement, the regulatory body that oversees all aspects of gambling, also chimed in with support of Grewal’s move.
“New Jersey has regulated online gaming for five years and has developed the most successful regulatory model in the world,” said David Rebuck, director of the DGE. “The state is fully committed to maintaining and ensuring the highest regulatory standards for New Jersey’s evolving online gaming industry, including the most recent addition of sports wagering.”
Freedom of Information Act request
In addition to New Jersey’s demand that the opinion be rescinded, the state is seeking more information on the reversal of the 2011 Obama DOJ opinion that the Wire Act only applied to sports wagering. Specifically, it wants to know what role lobbying had to do with the memo.
“Press reports indicate that pressure to reconsider the legality of online gaming followed lobbying efforts by Sheldon Adelson and affiliated lobbyists,” said the presser from Grewal’s office.
Adelson, one of the richest men in the world, is the owner of Las Vegas Sands Corp.
“After Adelson’s Coalition to Stop Internet Gambling was unable to persuade Congress to address the issue, then-U.S.-Attorney General Jeff Sessions agreed to look into it,” continued Grewal. “The New Jersey FOIA request seeks information on any communications involving Adelson, his lobbyists, the White House, and DOJ regarding the relevant federal law and online gaming.”
New Jersey’s top law enforcement official isn’t mincing his words.
Grewal said that “media reports make clear that pressure to reconsider the opinion came from out-of-state casinos and their lobbyists,” adding that “that is not a good enough reason to reverse course and undermine the online gaming industry. We want to know who Justice Department officials spoke with, and why they decided to change their minds.”
Last month, @TheJusticeDept reversed its longstanding position and cast doubt on the legality of online gambling in NJ, PA, and elsewhere. This mysterious about-face jeopardizes jobs and state tax revenue. Today, we're pushing back – and demanding answers. https://t.co/LDz9PgcN3a pic.twitter.com/RWSrqGKVMH
— AG Gurbir Grewal (@NewJerseyOAG) February 5, 2019
Significance of NJ AG’s letter
No state with online casino gaming, online poker, or online lottery sales has indicated that operations will be shuttered, even temporarily. The DOJ memo was merely a legal opinion and doesn’t carry with it the force of law. The opinion would have to be enforced by federal prosecutors.
Potential enforcement will happen in April, at the earliest.
The state of Michigan has indicated that it will be calling the feds’ bluff here, as online gambling is a states’ rights issue. Michigan is on the cusp of legalizing online casinos.
New Jersey controls nearly 100% of the nationwide online casino market, so the Garden State leading the charge here is necessary and a good sign for other states. It’s also an important step to reassure payment processors and banks that online gambling is legal and will be defended against federal overreach.
The DOJ memo’s most immediate threat is spooking companies involved in payments to exit the online betting space. Grewal’s letter should help calm nerves.