Move Over, New Hampshire: New Jersey May Become Leader Of The Pack Again In Legal Gambling Fight

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A Department of Justice legal opinion made public in January titled “Reconsidering Whether the Wire Act Applies to Non-Sports Gambling” roiled the entire U.S. legal gambling industry. The opinion opened the door to the possibility that The Wire Act of 1961 could be applied to virtually all gambling — not just sports bets placed across state lines, as had been concluded by the same department just eight years earlier.

A lawsuit filed by the New Hampshire Lottery in February pushed back on the DOJ’s opinion.

But a pair of filings on Tuesday may have torpedoed legal gambling supporters’ hopes that the New Hampshire lawsuit could restore order.

And that in turn may lead to New Jersey once again heading the nationwide charge for legal gambling expansion, says former state Senator Ray Lesniak.

DOJ seeks to clarify

The New Hampshire case had drawn dozens of “amicus” — or “friends of the court” — briefs from dozens of states and others who wanted a quick legal resolution to clarify that lotteries, whether in-state or national versions such as Powerball or MegaMillions, were not jeopardized by the DOJ’s new take.

But U.S. Deputy Attorney General Rod Rosenstein issued a memorandum on Tuesday that clarified that “Department of Justice attorneys should refrain from applying [The Wire Act] to State lotteries and their vendors, if they are operating as authorized by State law, until the Department concludes its review.

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“If the Department determines that the Wire Act does apply to State lotteries or their vendors, then Department of Justice attorneys should extend the forbearance period for 90 days after the Department publicly announces this position. This would allow State lotteries and their vendors a reasonable time to conform their operations to federal law.”

This is good news for the New Hampshire Lottery, and really all U.S. lotteries — and bad news for those who hoped this was the avenue for a broad legal showdown against that January opinion.

Riding on the wave of the fresh memorandum, the DOJ issued its own memo to the U.S. District Court of New Hampshire just hours later:

“Because Plaintiffs do not have a current credible fear of prosecution, Plaintiffs lack standing to challenge [DOJ’s] interpretation of The Wire Act,” reads part of the 32-page filing. “Any challenge is premature.”

The conclusion, then, is that the New Hampshire Lottery “lacks standing” — that is, there is no threat, although if a subsequent DOJ Opinion puts the lottery back in jeopardy, the case can be revisited.

Game over for New Hampshire Lottery?

While I am not a lawyer, it sure reads to me as if the New Hampshire case is moot. Lesniak — who is a lawyer — agrees.

Lesniak says that his state’s attorney general mistakenly put his eggs in the New Hampshire Lottery basket.

“The state has been whistling in the dark and wasting time,” said Lesniak, who has predicted such an outcome, while also saying that even a best-case scenario would have been a ruling that only applied to New Hampshire.

Lesniak adds that he believes that the DOJ is playing “rope-a-dope,” fending off potential blows such as the lottery lawsuit while “keeping a dark cloud over internet gaming.” The fact that most states offer lotteries and that it is not a controversial topic means that the DOJ was wise to knock those lotteries out of this legal fight, Lesniak said.

So now what for the U.S. legal gaming industry?

“We need to file for a declaratory judgment in federal court that objects to the [January] DOJ opinion that serves to jeopardize our online gaming law,” Lesniak said. “We can’t lift that dark cloud until we go directly to the Third Circuit [Court of Appeals].”

Such a move, which would have to come about with an agreement among Governor Phil Murphy, state Senate President Stephen Sweeney, and the state attorney general’s office, would put New Jersey in a familiar role as national leader on gaming issues.

Aside from its pioneer status regarding casinos, lotteries, horse racing, and online casino gaming, New Jersey voters also passed a statewide referendum in 2011 that authorized the Garden State to offer legal sports betting at the state’s racetracks and Atlantic City casinos.

New Jersey looms as DOJ foe

That 2011 referendum led to the alphabet soup coalition of NFL, NCAA, MLB, NBA, and NHL to sue the state in 2012, setting off a legal saga that finally ended last May when the U.S. Supreme Court vacated the Professional and Amateur Sports Protection Act of 1992.

The result has been new legal sports betting in New Jersey and six other states, with more than a dozen legislatures mulling their options.

Lesniak, now retired but still actively following the legal gambling melodrama, may be asked by state officials to file the paperwork needed to take on the federal fight that New Hampshire may not get a chance to lead.

And unlike the New Hampshire Lottery, no DOJ revised opinion is likely to remove New Jersey’s standing. There is widespread belief that online casino gaming, staunchly opposed by Las Vegas billionaire Sheldon Adelson, is exactly the target DOJ is really after in this recent opinion.

New Jersey, Delaware, and Nevada have an interstate online poker compact that clearly seems to be in legal jeopardy — with Pennsylvania looming as a key fourth state once regulations are finalized there.

It would be somewhat fitting if New Hampshire’s lack of standing opened the door here, because nearly a decade ago, it was Lesniak (and Sweeney) who lost the first round of the New Jersey sports betting battle on those same grounds.

Photo by Shutterstock.com

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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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