Threat of prosecution
International Game Technology (IGT) is seeking a preemptive court judgment against the lingering threat of US Department of Justice (DOJ) prosecution under the Wire Act.
The global gambling technology company filed a petition with the District Court for Rhode Island earlier this week. Gaming law & sports betting lawyer Daniel Wallach shared news of the Wire Act lawsuit via Twitter:
Rhode Island-based IGT is suing the DOJ over a 2018 Office of Legal Council (OLC) opinion which, it claims, could force it to shutter its business or “risk federal felony prosecution.”
The supplier wants clarity on whether the bulk of its business is subject to the 1961 federal Wire Act. This will clear up whether IGT can offer its online lotteries and iGaming products in US states without the risk of prosecution.
Seeking a guarantee
At one stage, the Wire Act banned most forms of interstate betting. It also prohibited the sharing of information pertaining to bets made over the telephone or other wired facilities. In 2011, the DOJ issued an OLC stating that the act applied to sports wagering only. However, the contradiction, which is what gives IGT the jitters, is that in 2018 the DOJ said the act applies to all forms of wagering.
As IGT’s lawsuit states:
Virtually all modern lottery and gaming relies on interstate wires.”
Essentially, IGT wants a guarantee that the same ruling the First Circuit Court of Appeals granted to the New Hampshire Lottery and its supplier partner also applies to itself. The court exempted the state-run lottery from the Wire Act in 2019, and ordered that the DOJ’s 2018 interpretation of the rule be ignored.
While the DOJ lost its appeal against this ruling, the First Circuit only upheld the portion of the OLC pertaining to those specific New Hampshire plaintiffs. This means that other suppliers such as IGT must take it up with the court to ensure they also have an exemption from the rule.
Right to use the wire system
Essentially, IGT’s entire non-lottery gaming operations are subject to prosecution through the Wire Act. As the company has stated, the “DOJ has offered only the promise of a 90–day heads up before it can subject IGT’s lottery business to the Wire Act as well.”
The “declaratory relief” IGT is seeking is for the court to state, affirmatively and transparently, that IGT has the right to use the wire system for non-sports wagering, even across state borders, as long as the firm abides by all other pertinent laws.
The DOJ is currently showing no inclination that it will enforce its interpretation of the Wire Act, which is partly thanks to the Biden administration’s hands-off stance on US states expanding their gambling markets.
iGaming suppliers such as IGT fear that a new president with views contrary to Biden’s could take office, and the Wire Act may come back to bite them.