Department of Justice Allows Deadline To Pass On Wire Act Case

Department of Justice Allows Deadline To Pass On Wire Act Case
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In a case of no news is very good news, the deadline passed Tuesday for when the U.S. Department of Justice could elect to seek a Supreme Court review of a federal appeals court decision regarding the 2018 interpretation of the federal Wire Act.

Specifically, the federal appeals court ruling that was handed down earlier this year affirmed a federal district court decision that the Wire Act’s reach was limited to sports betting.

In effect, the passage of the deadline provides even greater surety to gambling operators that other types of gaming, such as casino games, poker and lotteries, fell under the purview of states and not the federal government.

How We Got Here

Over the past decade, the DOJ has done about-faces on the Wire Act leaving the gaming industry unsettled.

In 2011, a DOJ opinion during the Obama Administration held that the Wire Act — which restricts inter-state gambling activity — applied only to sports wagering.

Several states and operators began enacting laws and forging business plans predicated on that opinion.

Then, in 2018, another DOJ opinion during the Trump administration reversed course and broadened the scope of gaming that was impacted and that created uncertainty for the gambling industry.

In particular, plans were stymied to create interstate compacts for poker that would allow for larger player pools, a necessary ingredient to successful internet poker operations.

The New Hampshire Lottery and its partner sued the DOJ in federal court in New Hampshire that the Wire Act only applied to sports wagering — and prevailed. The case moved to the U.S. Court of Appeals for the First Circuit, and the limitations on the Wire Act were upheld.

While that seemed to seal the deal on the Wire Act, there was still an extremely remote chance that the DOJ could appeal to the U.S. Supreme Court (even though there had been a change in presidential administrations). Still, with the deadline passing for such a move, the Wire Act interpretation appears to be cemented.

What This Means

In a practical sense, this is very good news for online poker .

If gaming companies and state legislatures cooperate, operators and states can now proceed with greater certainty in creating compacts that would allow for inter-state play.

Allowing for more players (the term-of-art is “liquidity”), means that larger tournaments with bigger prize pools can be held, and cash games can be established with great frequency at more price points.

“The DOJ’s decision to not seek Supreme Court review — as well as all the court decisions thus far nullifying the 2018 opinion — signifies that confusion around the interpretation of the Wire Act may be a thing of the past,” said Jeff Ifrah, a gaming law attorney who is general counsel for iDEA Growth, which joined the suit in an amicus capacity on behalf of the online gaming industry.

“Now states considering legalizing online gaming can enter into compacts with other states that offer legal internet gaming, and state legislatures will have the ability to create rational gaming regulations that protect consumers, grow jobs, and generate tax revenues without risk of federal intervention.”

While the current DOJ’s inaction regarding an appeal to the U.S. Supreme Court would seem to imply that it rejects the 2018 DOJ opinion regarding the Wire Act, New Jersey and other states are seeking more affirmative action.

A letter posted Monday on the website for New Jersey Attorney General Gurbir Grewal noted, “In a letter to U.S. Attorney General Merrick B. Garland, Attorney General Grewal on Friday joined 26 Attorneys General from around the country in urging that DOJ issue a formal memorandum rescinding its 2018 opinion.”

While federal court rulings this year have already rejected that 2018 opinion, the state attorneys general want a stake driven through the heart of the 2018 opinion and a clear return to the opinion the DOJ issued in 2011.

In explaining New Jersey’s position, Grewal said, “It’s time for DOJ to lift the fog of ambiguity surrounding this important national issue.”