Nearly one month to the day after the Department of Justice (DOJ) announced its intent to renew a federal ban of online gaming, organizations like New Hampshire Lottery that are serious stakeholders in the debate have gone on the offensive.
The DOJ’s Office of Legal Counsel drafted an opinion titled “Reconsidering Whether the Wire Act Applies to Non-Sports Gambling” on November 2 of 2018, but the memo wasn’t made public until January 14.
The central issue under consideration by the DOJ concerns the scope of a federal law known as the Wire Act of 1961. The Wire Act outlaws the use of telephonic communication to conduct bookmaking and/or wagering related to sports betting across state lines.
Because online casinos and poker rooms originally relied on dial-up connections, the Wire Act was deemed applicable to any form of online gambling until 2011. In December of that year, the Office of Legal Counsel issued an opinion clarifying that the law – which crucially targets “any sporting event or contest” – only applies to sports betting.
That ruling paved the way for statewide legalization of iGaming, with Nevada, New Jersey, and Delaware regulating online poker and/or casino gaming in 2013, and New Hampshire launching online lottery ticket sales in 2017.
The legality of those intrastate iGaming industries is now in doubt, however, following the DOJ’s controversial decision to reverse its own 2011 opinion.
New Hampshire Lottery Files Suit to Stop Wire Act Opinion
William Barr was sworn in as the newest U.S. Attorney General on January 14, and one day later, he was served with his first lawsuit as head of the DOJ.
In a civil suit listing Barr and the DOJ as defendants, the New Hampshire Lottery Commission (NHLC) is asking the U.S. District Court to grant an injunction to stop the latest Wire Act opinion from taking effect. Currently, the DOJ has granted iGaming states and operators a 90-day window to go fully intrastate, so prosecutions could theoretically begin as early as April 15.
According to the NHLC, the latest Wire Act opinion directly contradicts a variety of precedents established on both the state and federal level:
“To the extent the 2018 Opinion seeks only to enjoin the sale of lottery tickets directly over the internet, this action would be inconsistent with the prior actions of the New Hampshire Legislature, the United States Congress, federal court decisional law, and the prior opinion of the Department of Justice.
The NHLC relied on each of these legal authorities in launching an iLottery platform.”
The suit cites two cases previously decided by federal circuit courts, both of which ruled that the Wire Act applies only to sports betting activities.
And the U.S. Supreme Court also gets a mention, after its ruling in Murphy v. NCAA found that the law applies “only if the underlying gambling is illegal under state law.”
Lucrative Lottery Funding Put at Risk by Online Ban
Charles McIntyre – who serves as executive director of the NHLC – told the New Hampshire Union Leader that the DOJ’s revised stance unlawfully prohibits the state from selling lotto tickets and other games online:
“The New Hampshire Lottery has a responsibility to support education in New Hampshire.
Just last year, the New Hampshire Lottery generated $87.5 million in net profits, all of which supports education in New Hampshire, and we expect to generate more than $90 million for education this year. This reversal by DOJ puts that support for education in question.”
Specifically, McIntyre contends that the loss of iLotto would cost New Hampshire between $4 million and $6 million during 2019.
In a press release issued to coincide with the court filing, New Hampshire Governor Chris Sununu declared his support for the NHLC lawsuit:
“Today New Hampshire is taking action to protect public education in New Hampshire.
The opinion issued by DOJ puts millions of dollars of funding at risk, and we have a responsibility to stand up for our students.”