DOJ Notifies Court of Plans to Appeal Wire Act Decision

Updated: August 21st, 2019 by Haley Hintze

The US Department of Justice (DOJ) has filed a formal notice of intent to appeal the early June ruling from a US District of New Hampshire judge that nullified the DOJ’s Wire Act “reversal opinion” and continued to allow the interstate transmission of any form of gambling information except that related to sports betting.

The reversal opinion was never formally signed when finalized in November 2018 but was published in January 2019 despite significant questions about its legality. Later research showed that large parts of the memo were crafted nearly word-for-word from draft communications supplied by lobbyists and attorneys for Las Vegas Sands Corp. Las Vegas Sands’ CEO and primary shareholder, Sheldon Adelson, has spent tens of millions of dollars in an ongoing effort to derail online gambling expansion and legalization throughout the United States, and has famously vowed to spend “whatever it takes” to eliminate what he perceives as competition to his land-based casino empire.

The notorious reversal opinion attempted to override a 2010 opinion from then-US Attorney General Eric Holder that examined the language of the original 1961 Wire Act and determined that its clearest intent was to apply only to sports betting. The law was an attempt to rein in the underground activities of organized crime, particularly the American Mafia, which at the time was in the heyday of its illegal activities.

The reversal opinion based its claim on a small number of tortured grammatical reinterpretations of the Wire Act, which even under the most generous reading were ambiguous. The DOJ’s reversal opinion drew widespread ridicule, and it was only a short while later that the first major legal challenge arose. That came from the State of New Hampshire and its two state-run lottery entities, whose ongoing operations were largely dependent on the state’s participation in multi-state lotto draws such as PowerBall and Megabucks.

As with interstate online poker, which desperately needs interstate player pooling to thrive, multi-state lotteries would also become illegal should the recent DOJ reversal opinion be allowed to stand. In fact, it was the state-run lottery entities in New York and Illinois that sought the 2011 Holder clarification, since they were being prevented from selling lottery tickets online by overzealous American banks concerned about legal liability.

The DOJ’s appeal doesn’t mean that the 2019 reversal opinion will stand; the department appeals virtually every decision it loses. However, according to prominent gaming attorney Jeffrey Ifrah, the DOJ may in fact be wrangling the issue in hopes of convincing federal legislators a chance to fast-track a bill with a more intermediate, updated opinion.

Ifrah wrote: “The Department’s action, while hardly unexpected, is certainly unwarranted. DOJ generally files appeals of adverse district court decisions as a matter of course. 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.”

The DOJ used nearly all of a 60-day window it had to file the initial notice of appeal in the court of presiding US District Judge Paul J. Barbadoro. The appeal, if approved for review, will be heard before the US’s First Circuit of Appeals. Eventually, the battle may well go all the way to the US Supreme Court.

Comments are closed.