The U.S. Department of Justice (DOJ) won’t be able to use the Wire Act of 1961 to ban online casino and poker games, thanks to a recent ruling from the federal district courts.
Judge Paul Barbadoro of the U.S. District Court for the District of New Hampshire issued a 60-page opinion limiting the Wire Act’s scope to ban interstate sports betting only:
“I hereby declare that § 1084(a) of the Wire Act… applies only to transmissions related to bets or wagers on a sporting event or contest.
The 2018 OLC Opinion is set aside.”
Explaining the DOJ’s Doomed Wire Act Expansion
In December of 2011, the DOJ’s Office of Legal Counsel (OLC) under the Obama Administration issued a memo clarifying the agency’s stance on the Wire Act.
That law was originally written to prohibit bookmakers from conducting sports betting related businesses across state lines using telephones or wire services. Because the dial-up internet modems connected bettors to the first generation of online sportsbooks, the DOJ correctly construed the Wire Act as banning online sports wagering.
That interpretation was stretched to include all forms of online gambling, however, prompting several state lotteries that have brought their games online to request guidance and clarification from the DOJ and OLC.
The 2011 opinion put lotteries at ease by stating in no uncertain terms that the Wire Act applied exclusively to sports betting:
“… interstate transmissions of wire communications that do not relate to a ‘sporting event or contest,” 18 U.S.C. § 1084(a), fall outside of the reach of the Wire Act.”
After nearly a decade of intense lobbying by anti-iGaming figure Sheldon Adelson – the multi-billionaire casino mogul owner of Las Vegas Sands Corp. and a top financial donor to the Republican Party – his Restore America’s Wire Act (RAWA) was roundly rejected within Congress on multiple occasions.
When the Trump Administration took office, Adelson parlayed his patronage of former Attorney General Jeff Sessions by lobbying the DOJ to take non-legislative action to re-expand the Wire Act. Sessions was ultimately forced to recuse himself from Wire Act related matters based on the conflict of interest, but his Deputy Attorney General Rod Rosenstein compelled the OLC to issue a second Wire Act opinion on January 15 of this year.
That new OLC memo directed federal prosecutors to begin enforcing Wire Act related statutes against all online gambling operators within 90 days.
Exactly one month later, on new Attorney General William Barr’s first day on the job, the New Hampshire Lottery Commission (NHLC) sued the DOJ and Barr in Barbadoro’s district court.
Per the NHLC’s complaint, the newly expanded Wire Act interpretation essentially criminalizes the online lottery ticket sales relied upon by dozens of state governments:
“The effect of the 2018 Opinion is to extend criminal liability under 18 U.S.C. § 1084 far beyond betting or wagering on sporting events or contests to include virtually any conceivable form of gambling, which would encompass state-conducted lotteries.
Such a construction of the statute is not faithful to the text, structure, purpose, or legislative history of the Wire Act.”
New Hampshire Governor John Sununu put the issue in plain terms, pointing to the potential loss of millions in iLotto revenue in the Granite State alone:
“Today New Hampshire is taking action to protect public education in New Hampshire.
The opinion issued by DOJ puts millions of dollars of funding at risk, and we have a responsibility to stand up for our students.”
Judge Conclusively Rejects Every DOJ Argument
By April, the DOJ was scrambling to clarify its clarification, submitting a brief to Barbardoro to explain that online lotteries wouldn’t be targeted by Wire Act enforcement.
But with concerns lingering over the use of out-of-state servers that could be deemed interstate iGaming, Barbadoro told the DOJ that its rushed rollout of Wire Act expansion was simply too open to interpretation:
“(States) faced the choice between risking criminal prosecution, winding down their operations, or taking significant and costly compliance measures that may not even eliminate the threat.”
And when the DOJ’s arguments devolved into detailed debates on comma placement and other grammatical minutiae, Barbadoro cast those flimsy assertions aside by pointing to similarly worded legislation prohibiting specific forms of gambling:
“That these two gambling statutes were passed the same day sends a strong contextual signal concerning the Wire Act’s scope.
The Paraphernalia Act demonstrates that when Congress intended to target non-sports gambling it used clear and specific language to accomplish its goal.
In other words, when Congress wished to achieve a specific result, ‘it knew how to say so.’”