DOJ to Appeal Wire Act Lawsuit Defeat

We all hoped they would just go away. Just stop. But we knew they would be back. On Friday, the Department of Justice filed a Notice of Appeal of the US District Court for the District of New Hampshire’s Wire Act ruling from June. In that ruling, US District Judge Paul J. Barbadoro said that the DOJ’s 2018 opinion on the Wire Act was invalid.

The issue goes back to late 2011, when the DOJ’s Office of Legal Counsel (OLC) issued an opinion on the Wire Act, saying that it only made interstate online sports betting illegal, not all online gambling. Before then, though any reasonable person would read the Wire Act as only applying to sports betting, the DOJ had operated as if all internet gambling was illegal. This revised opinion opened the doors for states to launch their own online gambling industries. Last year, somewhat out of the blue, the DOJ, now under the Trump Administration, issued a new opinion, saying that all online gambling was illegal.

Shortly after the opinion was made public early this year, it was reported that the re-examining of the Wire Act was done largely at the behest of Las Vegas Sands Corp. CEO Sheldon Adelson, a staunch opponent of online poker and online gambling in general. He has said he wants to protect children and problem gamblers, but it is widely known that he wants to protect his own gaming interests, that he doesn’t want added competition.

The New Hampshire Lottery Commission (NHLC), in turn, sued the DOJ. The NHLC believed that the new interpretation of the Wire Act was so broad that it could outlaw multi-state lotteries such as Powerball and Mega Millions, as well as online lottery sales. The DOJ filed a motion to dismiss, which Judge Barbadoro denied:

In summary, I deny the Government’s motion to dismiss for lack of jurisdiction because the plaintiffs have established standing, and the Government has not met its burden to show that the case is moot. I grant the plaintiffs’ motions for summary judgment and deny the Government’s cross-motion for summary judgment.

I hereby declare that § 1084(a) of the Wire Act, 18 U.S.C. § 1084(a), applies only to transmissions related to bets or wagers on a sporting event or contest. The 2018 OLC Opinion is set aside.

The DOJ said it would appeal, so this was expected, even if we all hoped they were just spouting hot air. The DOJ is not likely to win its appeal, but the fact that there is an appeal means that there is still a threat to online poker. Plus, this continues to make gaming companies and states slow their plans to expand online gambling in fear of running afoul of the law.

Judge Barbadoro not only knew this was coming, but in his ruling, he said he expected the case to go all the way to the United States Supreme Court.

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