On Monday, Americans who enjoy online poker and casino games scored a significant victory after U.S District Court Judge Paul Barbadoro provided a Wire Act decision rejecting the Department of Justice (DOJ) arguments supporting a federal ban on interstate iGaming industries.
Latest Wire Act Decision
Barbadoro found that the DOJ’s Office of Legal Counsel (OLC) erred last November, when it published a new opinion regarding the scope of the Wire Act of 1961.
The Wire Act is a federal law written to prohibit the transmission of sports betting related business across state lines using telephonic means. The Wire Act debate has rolled on since November 2, 2018 when the Department of Justice (DOJ) reversed a 2011 opinion. The OLC subsequently concluded that the law applies to all forms of gambling accessed online via interstate means, and not just sports betting.
However, Barbadoro disagreed, writing in the conclusion of his ruling that the Wire Act can only be reasonably interpreted as a ban on sports wagering and related business:
“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.”
Background on the Wire Act Debate
Under the Obama Administration’s DOJ, the OLC published an earlier Wire Act opinion in 2011 to clarify that the law specifically targeted sports betting.
This guidance enabled states to legalize and regulate online poker and casino games, and since 2013 four states – Nevada, New Jersey, Delaware, and Pennsylvania – have launched iGaming industries. Last year saw the first interstate poker player pool sharing compact take effect, with the WSOP.com sites in Nevada and New Jersey combining players on a shared platform.
But under guidance from wealthy Trump Administration benefactor Sheldon Adelson – who previously failed to secure Congressional approval for his “Restore America’s Wire Act” (RAWA) initiative – the DOJ reversed itself with January’s opinion.
That sudden expansion of the Wire Act’s scope threatened the legal legitimacy of interstate player sharing agreements. It also prompted Pennsylvania to preemptively amend its recently authorized iGaming laws by confining all operational elements to intrastate status.
While those efforts to avoid prosecution were simplified by the small list of iGaming legal jurisdictions and their relatively limited operators, states which participate in online lottery ticket sales weren’t as lucky.
Online Lottery Operators Secure Landmark Ruling
Within a month of the new OLC memo being made public, the New Hampshire Lottery Commission (NHLC) filed civil suit listing Attorney General William Barr and the DOJ as defendants.
At that time, Governor Chris Sununu pointed to an expanded Wire Act’s potential to impact revenue generated by the NHLC’s online ticket sales.
“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.”
Online lotto sales are restricted to an intrastate basis, but operators often utilize servers and technological components physically located in other states. Doubts over the DOJ’s intent to enforce the Wire Act by restricting online lottos lingered during the lawsuit’s early stages, forcing the agency to issue a clarification in which the OLC pledged to “review those questions.”
That wasn’t enough for the NHLC, nor the more than a dozen state lottery organizations which joined the suit. Barbadoro has now agreed that online lottery sales cannot be impeded by the Wire Act:
“(States) faced the choice between risking criminal prosecution, winding down their operations, or taking significant and costly compliance measures that may not even eliminate the threat.”
Barbadoro also took issue with a DOJ Wire Act decision based on parsing the grammar and punctuation of the legislation to arrive at its desired conclusions:
“That these two gambling statutes were passed the same day sends a strong contextual signal concerning the Wire Act’s scope. The Paraphernalia Act demonstrates that when Congress intended to target non-sports gambling it used clear and specific language to accomplish its goal.
In other words, when Congress wished to achieve a specific result, ‘it knew how to say so.’”
For its part, New Hampshire Lottery celebrated the Wire Act decision, with Executive director Charlie McIntyre issued the following statement:
“We are extremely pleased with the court’s decision, which represents a victory for the New Hampshire Lottery, state lotteries across the country and the revenue they provide to their communities.”