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DOJ appeals iGaming decision
Gambling News
Jonathan ZaunAugust 23, 2019
August 23, 2019

DOJ Appeals Wire Act Decision After iGaming Ban Defeated

Despite a federal judge ruling decisively against the agency’s attempt to frame the federal Wire Act as a full ban of interstate online poker and casino games (iGaming), the U.S. Department of Justice (DOJ) has elected to appeal the decision.

In a notice dated August 16, DOJ leadership officially submitted a Notice of Appeal to U.S. District Judge Paul Barbadoro. The three-page document informed Barbadoro that the DOJ plans to file an appeal in a joint case against the agency won earlier this year by the New Hampshire Lottery Commission (NHLC) and online lottery software provider NeoPollard Interactive LLC.

That appeal will be filed with the U.S. First Circuit Court of Appeal, whose jurisdiction includes New Hampshire, the state where Barbadoro’s district court ruling was originally handed down back in June.

History of the DOJ’s Wire Act Interpretation

The Wire Act of 1961 is a federal law written to prohibit the transmission of sports wagers, and relating bookmaking business, using telephonic means to cross state lines.

Until 2011, the Wire Act was loosely interpreted as a full ban on all forms of online gambling enterprise, including sportsbooks, poker rooms, and casinos. But under guidance by the DOJ’s Office of Legal Counsel (OLC), a memo issued that year clarified that the Wire Act’s scope is limited to sports betting only.

This initial OLC opinion on the Wire Act paved the way for individual states to regulate the iGaming industry’s poker and casino verticals as they see fit. Over the interim, Nevada, New Jersey, and Delaware have allowed legal online poker and/or casino gambling sites to launch, while Pennsylvania and West Virginia have laws on the books waiting to be implemented.

By November of last year, however, the newly installed DOJ regime headed up by then-Attorney General Jeff Sessions bowed to the decades-long lobbying influence of billionaire casino owner Sheldon Adelson. Seeking to protect his land-based gambling interests, Adelson – who runs the Las Vegas Sands Corp. casino empire – parlayed his patronage of conservative causes into a revised Wire Act opinion from the OLC.

In a memo drafted last November and issued to federal prosecutors in January of this year, the DOJ and its OLC reversed course by determining that the Wire Act constitutes a ban on all forms of interstate iGaming.

In February, on his first day after taking office, current Attorney General Bill Barr and the DOJ were faced with a lawsuit filed by the NHLC  – alongside more than a dozen other state lottery programs – and backend online provider NeoPollard Interactive. As alleged by the NHLC and NeoPollard Interactive, expanding the Wire Act’s scope to prohibit interstate iGaming threatened states’ lucrative system of selling lottery tickets and other games over the internet.

The resulting case was decided in Barbadoro’s district court, where the judge repeatedly rejected assertions by DOJ attorneys before issuing a conclusive ruling against the agency:

“I hereby declare that § 1084(a) of the Wire Act… applies only to transmissions related to bets or wagers on a sporting event or contest. The 2018 OLC Opinion is set aside.”

iGaming Industry Advocates Fire Back

Given the current DOJ’s allegiance to Adelson – who donates several million dollars annually to Republican Party members like Sessions and Barr – the appeal comes as no surprise to stakeholders in the Wire Act debate.

In a statement issued by the New Hampshire Lottery, executive director Charles McIntyre pointed to the rigorous rejections put forth by Barbadoro in the judge’s original ruling:

“Judge Paul Barbadoro’s 63-page ruling was thoughtful, comprehensive and most importantly, correct.

With billions of dollars in critical revenue for education in the balance, Judge Barbadoro’s ruling is clearly consistent with the intent of the law, allowing states to offer legal gaming products to support important causes.

We respectfully disagree with the DoJ’s decision to appeal this ruling and we will happily respond and prevail.

iDEA Growth, a lobby group working on behalf of iGaming industry operators, issued a press release in which founder Jeff Ifrah dismissed the DOJ’s appeal as a lost cause.

“The Department’s action, while hardly unexpected, is certainly unwarranted.

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.”

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