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New Hampshire Wins Round 1 of DOJ Wire Act Court Case

Posted on by John Lathram

Wire Act

Questions remain about how the DOJ might enforce the Wire Act after a New Hampshire District Judge granted declaratory relief to the NH Lottery Commission.

Yesterday, New Hampshire District Judge Paul J. Barbadoro released his written verdict in the case of NH Lottery Commission vs William Barr – the case brought against the Department of Justice (DOJ) after it revised its interpretation of the 1961 Wire Act and claimed the Act applied to all forms of online and interstate gambling.

What appears on first reading to be a victory for proponents of state-sanctioned cross-jurisdiction gambling isn´t necessarily the case. When you read deeper into the verdict questions remain about enforcement action against some states operating online lotteries, interstate poker compacts, and online sports betting. Furthermore, the DOJ may still appeal the verdict.

The Bones of the Verdict for Interstate Lotteries

Much of the sixty-page verdict discusses the background to the case, the NH Lottery Commission´s case for declaratory relief, previous case law, and the DOJ´s revised interpretation of the Wire Act based on a missing comma in one section of the Wire Act. It concludes by finding the DOJ´s revised interpretation “does not withstand scrutiny” and ruling in the Lottery Commission´s favor.

However, the ruling that the DOJ´s revised opinion of the Wire Act is unenforceable only applies to the NH Lottery Commission, states that had joined the legal action as “amici curiae” (friends of the court), and members of the Multi-State Lottery Association or partner states in the Lucky-4-Life lottery. The ruling does not apply to any states not included in the following table.

States Covered by the NH Lottery Commission Verdict
New Hampshire (PL)FloridaMissouriSouth Carolina
Michigan (AC)IdahoMontanaSouth Dakota
New Jersey (AC)IndianaNebraskaTennessee
Pennsylvania (AC)IowaNew MexicoTexas
ArizonaKansasNorth CarolinaVermont
ArkansasKentuckyNorth DakotaU.S. Virgin Islands
ColoradoLouisianaOhioWisconsin
ConnecticutMaineOklahomaWest Virginia
DelawareMassachusettsOregonWyoming
District of ColumbiaMinnesotaRhode IslandPuerto Rico
Key: (PL) – Plaintiff / (AC) – Amici Curiae / Others – Members of Multi-State Lottery Association

Online Poker Compacts and Online Sports Betting

The remaining states still subject to Wire Act enforcement action includes California, Illinois – where legislation to expand regulate online gambling was only recently passed – and Nevada. The inclusion of Nevada in this list makes it possible that the only existing interstate online poker compact could be considered illegal and shut down after June 14th.

With regards to online sports betting, Judge Barbadoro commented that the Wire Act still applies to sports betting, and therefore any online service in which Internet transmissions could be routed across state lines (i.e. all of them) will still be in breach of the Wire Act. This interpretation could also affect payment processors and online sports betting affiliates.

Is the DOJ Likely to Appeal the Verdict?

This will depend on how much pressure is put on the DOJ and Attorney General by anti-gambling campaigners funded by Sheldon Adelson´s Coalition to Stop Internet Gambling. Adelson has said in the past he will spend whatever it takes to stop Internet gambling, and it was notable that only last week the Coalition to Stop Internet Gambling applied to become a co-defendant in the case – claiming that the DOJ was not doing a good enough job in fighting its defense.

Judge Barbadoro addressed the organization´s application in his verdict – stating that he had the options to “set aside” the claim (i.e. find in favor of either the plaintiff or the defense) or “remand” the case in order for the DOJ to provide a better explanation of the reinterpretation. He commented he had chosen the first option because the DOJ had “produced a capable, but mistaken, legal opinion that no additional process can cure”.

This thwarts any possibility that the Coalition to Stop Internet Gambling can bring its own case against the NH Lottery Commission, but does not prevent the DOJ from filing an appeal. Judge Barbadoro previously said this case may not be resolved until it is heard by the Supreme Court – so the final outcome of this case may not be known for years. In the meantime, here´s a summary of how things stand:

  • The DOJ´s reinterpretation of the Wire Act is not enforceable in thirty-seven states, the District of Columbia, the U.S. Virgin Islands and Puerto Rico.
  • In the remaining thirteen states, the DOJ´s reinterpretation still applies – but whether it will choose to enforce the reinterpretation is not known.
  • Online poker compacts and networked casino games including any of the thirteen states are still in breach of the DOJ´s reinterpretation.
  • Due to potential violations of the Wire Act, payment processors may stop providing a service in non-covered states (including Nevada) from June 14th.
  • Online sports betting remains in breach of the Wire Act and the DOJ may still appeal Judge Barbadoro´s verdict.

Good luck making head or tail of all that!

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