The Latest on the New Hampshire/DOJ Wire Act Court Case

Wire ActThe latest on the New Hampshire/DOJ Wire Act court case is that there is little chance of the case being resolved before the end of the non-prosecution period.

Back in January, the Department of Justice´s Office of Legal Counsel issued a memorandum revising its interpretation of the 1961 Wire Act. Rather than just prohibiting sports betting across state lines, the DOJ warned the Wire Act now applies to all forms of gambling and Deputy Attorney General Rod Rosenstein gave operators until April 15th to comply with the new interpretation.

The revised interpretation not only affect interstate online poker compacts and the Daily Fantasy Sports industry, but also interstate lotteries such as the Mega Millions and Powerball. It could also affect intrastate online gambling and online payment processing because of the way Internet communications are routed – which would have a serious impact on every aspect of regulated online gambling.

The New Hampshire Lottery Fights Back

One of the biggest losers under the new interpretation are state lotteries which generate billions of dollars in tax revenues across the country each year. Consequently, in February, the New Hampshire Lottery filed a lawsuit against US Attorney General William Barr looking to reverse the re-interpretation and prevent the new opinion being enforced.

The DOJ´s initial response was to [geolink href=””]extend the period of non-prosecution[/geolink] until June 14th, and it then tried to get the case dismissed by claiming the Office of Legal Counsel [geolink href=””]was yet to decide[/geolink] whether the new interpretation of the Wire Act applied to state lotteries. The judge hearing the case – District Judge Paul J. Barbadoro – threw out the plea to dismiss.

The Case Proceeds, but Not Very Far

During a first hearing on April 11th it was claimed that the DOJ´s re-interpretation of the Wire Act was attributable to the absence of a comma between “bets or wagers” and “or information assisting in the placing of bets and wagers” in Section (a) of U.S. Code Chapter 18 §1084. This, the DOJ claimed, explained why its latest interpretation of the Wire Act was correct. The section reads:

Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers [comma would go here] or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.

Judge Barbadoro noted that, if the DOJ´s interpretation was correct, the text in the second half of the section “criminalizes the use of wires to receive money for doing something that is lawful”. However, if the DOJ concedes this point, Judge Barbadoro only has the power to find in favor of New Hampshire. In order to prevent enforcement of the Wire Act throughout the rest of the United States, it would need a multi-state party such as the Powerball lottery to join the court case.

A New Twist as Adelson Gets Involved Again

While the two side have taken a break to work out their next moves, there has been a new twist to the case. The Sheldon Adelson funded Coalition to Stop Internet Gambling and the National Coalition of Convenience Stores (both of whom would benefit financially if the new interpretation of the Wire Act was enforced) have filed a motion to join the case as new defendants.

Both parties were already involved in the case as amici curate (friends of the court), and they claim in a memorandum that they want to join the case as defendants because the DOJ is not representing their interests. Rather than focus on the missing comma, the parties claim the DOJ should be convincing the court that the first word of the section – “Whoever” – applies to every entity.

What most legal experts feel is that this latest intervention could avoid a scenario in which Judge Barbadoro finds in favor of New Hampshire, and then every other state with an online lottery files a lawsuit against the DOJ. Judge Barbadoro has already commented this case may have to go to the Supreme Court in order to be resolved; and, if this were the case in every legal action against the DOJ, it could take years before any enforcement action is possible.

So, What Happens on June 14th?

With no resolution of the Wire Act court case in sight, the likely outcome is that the DOJ will further extend the period of non-prosecution. This will enable online operators to continue as normal – “normal” being that nobody has a clue how this case will be resolved, and what the consequences will be whatever the verdict.

If the DOJ fails to extend the non-prosecution period, my non-legal feeling is that states that have already regulated online gambling will continue to do so in violation of the new interpretation. Whether payment processors will be as happy to continue processing payments is unlikely, and it may be the case some deposit options are withdrawn at short notice.

Jacqueline Packett
Jacqueline Packett