New Jersey Muscles In On New Hampshire’s Bid To Preserve Online Gambling

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Attorneys for New Jersey are soon scheduled to file papers in protest of the January opinion from the Department of Justice that took a new look at The Wire Act and the extent to which it extends beyond just the prohibition of interstate sports betting. But the state isn’t waiting on that matter; Attorney General Gurbir Grewal also late last week filed an amicus brief in New Hampshire’s effort to see the new interpretation vacated.

And while about a dozen other state attorneys general also are weighing in on in the case, New Jersey has unique standing that could help sway the case in favor beyond just New Hampshire (which is more narrowly focused on preserving its online lottery sales).

“DOJ’s 2018 Opinion reversed its prior position, which it had adopted only seven years earlier in a 2011 Opinion, that the Wire Act applies solely to the use of the wires for sports-related gambling,” writes attorney Lawrence Lustberg for the state. “New Jersey seeks to participate in this matter because, in addition to having invested in a lottery like New Hampshire has done, New Jersey has also developed a thriving non-sports-related legal Internet gaming industry (“iGaming”) in response to the DOJ’s 2011 express authorization of such Internet gambling.

“This burgeoning iGaming industry annually yields hundreds of millions of dollars in private revenue and tens of millions of dollars to New Jersey’s economy in State taxes and fees. Absent judicial intervention, this iGaming industry may be forced to shut down and those revenues will disappear.”

A lot at stake for NJ

In 2013, New Jersey and Delaware each became U.S. pioneers in the legalization of online casino gaming, and New Jersey’s much larger population makes it the biggest potential victim in that respect of the DOJ reinterpretation.

“[I]t is clear that DOJ’s 2018 Opinion is entitled to no judicial deference whatsoever,” the 32-page filing continues. “The Court should vacate that Opinion not only because it is wrong and contrary to law for the reasons explained in Plaintiffs’ briefs, but also because it fails to adequately account for the reasonable reliance of States like New Jersey that have made immense investments of public and private resources based upon the DOJ’s previous interpretation of the Statute.

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“In addition, the 2018 Opinion violates such fundamental principles as the rule of lenity and the canon requiring a clear statement from Congress before the balance between federal and state regulation may be altered; those principles compel that the Court should not allow this extraordinary about-face in the Executive Branch’s interpretation of a criminal statute.”

A case of “nationwide significance”

The filing adds that it is “no overstatement to describe this case as one of great nationwide significance,” and that a federal judge should declare that the Wire Act does not cover non-sports-related gambling in any jurisdiction.

Former New Jersey state Senator Ray Lesniak expects New Hampshire to prevail based on previous court rulings in that district, but he has expressed concern that any finding will not clearly hold water in other districts — hence the need for New Jersey to file its own paperwork to the U.S. Third Circuit Court of Appeals.

The amicus brief estimates that iGaming in New Jersey has directly or indirectly created 3,374 jobs that led to $218.9 million in wages since the November 2013 legalization. Tax revenues in the first three years are estimated at $124.4 million, with an overall $35 million collected in licensing and other fees.

“Absent judicial intervention, New Jersey may be forced to shutter its iGaming industry, lest the operators and supporting partners risk federal felony prosecution, as well as civil liability,” the filing warns. “If this transpires, the financial loss to the State would be substantial. New Jersey’s State government, for example, would lose an estimated $60 million in tax revenue a year; New Jersey’s DGE would lose an estimated $6.7 million in fees annually; at least 300 jobs would disappear; companies that have established offices in New Jersey for the operation of online gaming would shut down, with additional job losses resulting; and the in-State private sector would lose their iGaming business to illegal offshore sites.”

Meanwhile, a prominent attorney for a group that opposes the spread of online gambling has just concluded in a five-page memo that the new DOJ opinion does not jeopardize the Powerball or MegaMillions intrastate lotteries. That’s because those games rely on the purchase of a physical ticket, unlike online lottery games such as offered by New Hampshire.

But Chuck Cooper, attorney for the Coalition to Stop Internet Gambling — widely reported to be doing the bidding of anti-online-gaming billionaire Sheldon Adelson of Las Vegas casino fame — added that he expects the DOJ by mid-June to start going after all interstate online gambling operations.

Photo by Iulian Valentin / 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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