DOJ to Delay Wire Act Opinion Reversal as New Hampshire Lawsuit Moves Forward

Updated: March 4th, 2019 by Haley Hintze

The United States Department of Justice (DOJ) has announced that it will delay for an additional 60 days any prosecutorial efforts stemming from the agency’s controversial reversal in January of its legal opinion regarding the applicability of the US’s 1961 Wire Act to almost all forms of online gambling rather than just sports betting.

The delay will push back any potential prosecutions or investigations based on the January reversal to June 14, 2019. Originally, the opinion issued in January from the DOJ’s Office of Legal Counsel (OLC) included a 90-day window before implementation. This secondary delay was informally announced by DOJ sources late last week, with an official memo expected to be sent by the OLC to US Attorneys General offices across the country in the coming days.

All this comes as the DOJ prepares for what appear to be multiple and considerable legal challenges from forces allied with legalized online gambling in the US, notably many state governments. Last month, the State of New Hampshire filed suit against the DOJ seeking a summary judgment overturning the January reversal opinion, which was issued in the name of an assistant DOJ officer, never formally signed, and bore language and court citations highly similar to the effort of “RAWA” (Restore America’s Wire Act) lobbyists in the employ of Sheldon Adelson, the CEO of Las Vegas Sands Corp. and the single-minded casino magnate behind the RAWA efforts to ban most forms of online gambling across the US.

The January reversal opinion, if left intact, would expand the each of the 1961 Wire Act to every form of online gambling except pari-mutuel horseracing, which was exempted from the Wire Act in a separate 1978 law. However, in addition to online poker and casino games as legalized in New Jersey, Delaware, Nevada, and Pennsylvania, the January reversal would also make illegal many US states’ online-lottery offerings. Those state-lottery-related concerns were the impetus behind the 2011 opinion issued by then-US Attorney General Eric Holder that clarified, based on existing case law, that the Wire Act applied only to sports betting.

Indeed, the reversal opinion would likely make the multi-state Powerball and Megabucks lottery drawings illegal, since information connected to the operation of those lotteries is transmitted across dozens of state lines. That’s part of why New Hampshire quickly sued; the state generates tens of millions of dollars annually from lottery sales.

New Hampshire’s lawsuit seeking summary judgment invalidating the DOJ’s reversal opinion was filed in mid-February, in the US District Court of New Hampshire. The federal judge assigned to the case, Paul J. Barbadoro, recommended to the DOJ that the agency should further delay implementation, and that is indeed what has happened. The current case schedule, already expedited, includes a hearing scheduled for early April in which Barbadoro could grant New Hampshire and its iLottery providers that summary judgment against the DOJ’s Adelson-purchased agenda.

The odds in New Hampshire’s favor are stronger than they appear. The state is part of the US’s First Circuit, one of nine such districts partitioning the country. The First Circuit has prior case law involving the reach of the Wire Act, and that existing law states that the Wire Act applies only to sports betting and not to other online gambling laws. Both Barbadoro’s US Circuit Court and the First Circuit Court of Appeals — should the DOJ pursue an appeal in the likely event of an adverse ruling — would likely be bound by the direct limiting of the Wire Act’s reach in the case¬†UNITED STATES OF AMERICA v. TODD LYONS and DANIEL EREMIAN.

Given the likely victory by New Hampshire a few weeks down the road (which also might involve a stay of the DOJ’s reversal opinion pending further appeals), that means the DOJ could face a tough choice of its own. Will it abandon its pursuit of Adelson’s blatant “crony capitalism” wishes, which are designed to bolster his Las Vegas casino (Venetian, Palazzo) interests? Or will the DOJ continue serving corrupt masters? Time will tell, indeed.

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