Department of Justice Files Notice of Appeal in Wire Act Lawsuit Defeat

  • DOJ reversed 2011 opinion, said Wire Act makes all interstate online gambling illegal
  • New Hampshire Lottery Commission sued DOJ in February
  • Judge ruled in favor of lottery, said Wire Act only applies to sports betting
  • Department of Justice appeal criticized by founder of iDEA Growth
The U.S. Department of Justice is appealing the Wire Act lawsuit it lost to the New Hampshire Lottery Commission. [Image: Shutterstock]

Justice Department not giving in

On Friday, the United States Department of Justice (DOJ) filed a Notice of Appeal in the civil case it lost over the Wire Act to the New Hampshire Lottery Commission (NHLC) in June.

That legal battle was heard in the U.S. District Court for the District of New Hampshire; U.S District Judge Paul J. Barbadoro issued the ruling. The DOJ, led by Attorney General William Barr, intend to file the appeal with the U.S. First Circuit Court of Appeals.

The Notice of Appeal was filed to Judge Barbadoro, who said in his ruling that he expected the case to eventually make it to the U.S. Supreme Court.

The First Circuit Court of Appeals is not in session until October, so nothing will happen for at least a couple months. It is widely assumed that is a virtual lock for the case to be heard.

Ongoing saga of the Wire Act

Adelson has said he will do “whatever it takes” to quash online gambling in the United States.

The origin of this legal conflict dates back to late 2011, when the DOJ published a re-interpretation of the Wire Act.

Previously, the interpretation had been that all interstate online gambling was illegal. The new opinion said that the Wire Act only applied to sports betting. The DOJ examined the Wire Act at the request of two state lottery commissions, which were interested in selling lottery tickets online. The re-interpretation opened the door for states to legalize and regulate online gambling.

In November 2018, the DOJ – now under the Trump Administration – issued a new opinion, reversing the one from 2011. This time, the Department of Justice said that all interstate online gambling was illegal. This came as a surprise to people when the opinion was made public in January 2019, as it did not seem that there was reason to re-examine the Wire Act.

Shortly thereafter, the Wall Street Journal reported that the review was done at Sheldon Adelson’s urging. Adelson, founder and CEO of the Las Vegas Sands Corp., has said that he will do “whatever it takes” to quash online gambling in the United States.

New Hampshire’s lawsuit

The new Wire Act opinion not only worried online gaming firms, but also made state lottery commissions nervous. By regarding all interstate online gambling illegal, the opinion threatens multi-state lotteries such as Powerball. It also puts internet lottery sales at risk. This is why the NHLC filed a lawsuit against the Department of Justice in February.

The DOJ filed a Motion to Dismiss, but in early June, Judge Barbadoro ruled in the NHLC’s favor. He reasoned that the plaintiffs had established standing, that the opinion was vague enough that the lottery could be prosecuted at any time. The judge also agreed with the plaintiff that the Wire Act only applies to sports betting based on the syntax of the law.

The judge’s opinion boiled down to two simple sentences:

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 Department of Justice indicated after the ruling that it would appeal. In the meantime, it is delaying enforcement of the new Wire Act opinion until 2020.

Industry group criticizes DOJ

Jeff Ifrah, founder of online gambling lobbying organization iDEA Growth, said that that the DOJ’s appeal is both “hardly unexpected” and “unwarranted.”

He added: “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 – the unlicensed illegal offshore Internet gambling operators who do not create jobs or tax revenue in the U.S. and do not appropriately protect consumers.”

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