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Jonathan ZaunFebruary 22, 2019
February 22, 2019

Wire Act: NJ Senate Threatens to Sue DOJ

Five weeks have passed since the U.S. Department of Justice (DOJ) decided to put a federal ban over online gambling back in place, and already individual states are in open revolt over that interpretation of the Wire Act.

The DOJ’s Office of Legal Counsel issued a controversial memo on January 14, clarifying its interpretation of a federal law known as the Wire Act of 1961. By ruling that the Wire Act’s prohibition on interstate sports betting conducted over the telephone outlawed online poker and casino games as well, the DOJ reversed its own 2011 opinion which allowed states to regulate the iGaming industry as they see fit.

New Hampshire used the 2011 opinion allowing iGaming to set up an online lottery ticket sales program in 2017, which the state defended by filing suit against the DOJ last week.

And unless the DOJ acts quickly to reverse course on its latest Wire Act opinion – one almost universally derided as an egregious legal overreach in violation of states’ rights – New Jersey is preparing to file a lawsuit of its own.

New Jersey Senate President Draws Clear Legal Line in Sand

In a letter dated February 13, Stephen Sweeney – who serves as president of the New Jersey state Senate – promised to take the DOJ to court if the 2019 opinion isn’t rescinded:

“If the OLC 2019 Wire Act Opinion is not rescinded, I have authorized former Senator Raymond Lesniak to file suit in U.S. District Court on behalf of the New Jersey Senate for a Declaratory Judgment that the 2019 OLC Opinion is arbitrary and capricious and that the statutory prohibitions of the Wire Act are uniformly limited to gambling on sporting events or contests.”

Addressed to Deputy Attorney General Rod Rosenstein, the letter sent by Sweeney begins by outlining New Jersey’s path to legalized and regulated iGaming, which began in February of 2013 after then Governor Chris Christie signed legislation into law. As Sweeney recounts, that legislation included language specifically limiting all aspects of the Garden State’s iGaming industry to Atlantic City:

“All equipment used by a licensee to conduct Internet wagering, including but not limited to computers, servers, monitoring rooms, and hubs, must be located … within the territorial limits of Atlantic City.”

This caveat is crucial considering the original Wire Act only “outlaws the interstate transmission of information that assists in the placing of a bet on a sporting event.”

While online casino and sports betting in New Jersey operates on a purely intrastate basis, Sweeney goes on to insist that the DOJ’s decision casts unnecessary doubt over New Jersey’s interstate online poker player pool sharing compact with Nevada and Delaware.

Wire Act: Gaming Attack Dog and Legal Mind Lesniak at the Ready

Former state senator Ray Lesniak retired in 2018 – following 40 years as an influential New Jersey lawmaker – but before he did the attorney spearheaded efforts to legalize sports betting on the state level.

Lesniak’s legislation eventually wound up reaching the U.S. Supreme Court in Murphy v. NCAA, a case which wound up producing the landmark 6-3 decision to strike down a federal ban on sportsbooks outside of Nevada.

As a staunch supporter of statewide gaming rights, Lesniak has been tabbed by Sweeney to take the lead on any future litigation against the DOJ.

When the new Wire Act opinion was initially revealed to the public, Lesniak issued a statement insisting he was ready and willing to defend New Jersey’s iGaming industry:

“It looks like I will have to go to court again to straighten out the Justice Department’s overreaching on states’ rights, just as I did with sports betting.

This opinion is outrageous. If Congress won’t fix it, I will through the judicial process.”

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