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DOJ Gets Dec. 20 Extension for Wire Act Case Appeal

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Yet another delay to proceedings in the Wire Act case involving the New Hampshire Lottery has been granted to the Department of Justice (DoJ), which seems to be angling hard for all forms of interstate online gaming to be prohibited under its new interpretation of the Act. It was on Nov. 4 that the United States Court of Appeals for the First Circuit chose to give the DoJ an extension on its appeal thus pushing back even further the date by which we may see a final decision on the matter.

DoJ Wire Act Appeal Delay

The Wire Act Story So Far

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The Interstate Wire Act of 1961, which also goes by the name of the Federal Wire Act, prohibits the operation of certain types of betting businesses in the United States of America. As its name suggests, this was something that came into operation in 1961, and part of its text 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 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.

It was in September of 2011 that the DoJ Office of Legal Counsel (OLC) released a formal legal opinion to the public regarding the scope of this Wire Act. This legal opinion went on to claim that any interstate transmissions of wire communications not relating to sports betting “fall outside of the reach” of the Act.

In November of 2018 though, this legal opinion was reversed by the DoJ, with the declaration now being that the Wire Act’s prohibitions aren’t actually limited just to placing bets on sports events or contests but rather extend to encompass all forms of wagering that cross state lines, including online poker sites.

History of the New Hampshire Case

Following the DoJ’s new opinion that the Wire Act actually relates to all types of gambling, an announcement was made on Jan. 15, 2019 by Deputy Attorney General Rod Rosenstein, which said the Justice Department would delay the enforcement of this opinion to be able to provide “businesses that relied on the 2011 OLC opinion time to bring their operations into compliance with federal law.”

On Feb. 15, 2019, the New Hampshire Lottery Commission filed a complaint in the U.S. District Court for New Hampshire, which named both the DoJ and the Attorney General William Barr as defendants. That suit requested that the Court vacate the OLC’s new opinion on the Wire Act due to it having the potential to reduce yearly lottery profits by millions. This was swiftly followed by a comment from the state governor, Chris Sununu, who said that New Hampshire had no interest in negotiating this in an out-of-court settlement and instead had the intention of winning a judgment in its favor.

This led to a ruling on June 3, 2019 by U.S. District Court Judge Paul Barbadoro who stated that the Wire Act only applies to sports betting, which directly affected the opinion that was issued by the DoJ.

Paul BarbadoroDistrict Court Judge Paul Barbadoro Issued a Wire Act Decision Unfavorable to the DoJ

Two months later, the DoJ filed notice of its intention to appeal that decision. As part of that appeal, the DoJ was supposed to file an appellant’s brief containing an explanation as to why it believed the court should not have ruled against it. This document should have been submitted by November 12.

Appeal Extension Requested and Granted

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Even though the initial date for the appeal to be submitted was toward the start of November, the DoJ requested an extension of this time window. The First Circuit Court of Appeals granted that deadline extension with the new date being set at Dec. 20, 2019.

[UPDATE: Dec. 23, 2019]

Right as the deadline was fast approaching on Dec. 20, the Department of Justice finally filed its appellate brief with the United States Court of Appeals for the First Circuit. This 158-page document lays out the reasons that the government believes the decision rendered by Judge Barbadoro in favor of New Hampshire should be overturned.

Firstly, the DoJ contends that the plaintiffs, namely the New Hampshire Lottery and its vendors, should not have been able to sue in the first place because the Justice Department didn't make any determination that they were committing any crimes, and the Lottery was not facing a direct threat from the DoJ's memo.

Second, the Department of Justice stands by its interpretation of the Wire Act wherein this statute's limitation to just sports betting applies to just one of four crimes described in the law. According to the government, the other three sections of the Wire Act pertain to other types of wagering in addition to sports betting.

Finally, the DoJ contends that the memorandum updating its position on the Wire Act is merely an internal communique and is not representative of any “Final Agency Action.” Therefore, it doesn't fall under the jurisdiction of the courts.

The next step in this litigation is for the plaintiffs, that is, the New Hampshire Lottery and its partners, to file their brief. This should occur within 30 days of Dec. 20. Then the DoJ will have a chance to respond again.

[UPDATE: Jan. 10, 2020]

Now it's the turn of New Hampshire to delay the proceedings. Originally, the NH Lottery had 30 days from the Dec. 20 submission of the DoJ's brief to file its own response, but this deadline has been extended at the request of New Hampshire to Feb. 26.

Meanwhile, the Sheldon Adelson-backed Coalition to Stop Internet Gambling submitted its own amicus curiae brief on Dec. 24. As may be expected by a group with such a name, it argued in support of the DoJ's position that the Wire Act prohibits all interstate gambling.

The forecasters who predicted that this would be a long, drawn-out case appear to be correct. Each party seems to want to take its time completing the court paperwork, doubtless because they both want to make the most comprehensive and convincing argument possible. Even after the First Circuit Court of Appeals renders its decision – who knows when? – the eventual loser will most likely appeal to the Supreme Court.

Yet, it has also been pointed out that the timing will work as a potential obstacle against the DoJ. While a panel discussion was taking place during the 2019 Global Gaming Expo, it was noted that if there is an administration change in the 2020 election, then the DoJ could actually end up dropping its bid to reinterpret the Wire Act.

We must bear in mind too that even when the appeal has been submitted to the First Circuit Court by the DoJ, this only marks the first step. A 30-day period will be given to the State of New Hampshire as well as its two lottery-agency entities – Pollard Banknote Limited and Neopollard Interactive LLC – in which they can file an initial response on the appeal. Then it goes back to the DoJ to respond within 21 days, and that’s not including any other requests from either party for further extensions, additional filings, or anything else.

Because of this, it's probable that a decision on the matter won’t be reached until we’re well into 2020. Given the fact that many observers believe that this case could be appealed all the way to the Supreme Court, if necessary, we could have to wait until 2021 or 2022 for the issue to be finally resolved.

How Will This Affect the Online Gambling Industry?

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While this may all seem like differences of opinion from various bigwigs completely butting heads, there’s a lot more at stake than it may initially seem. Should the reformed decision by the DoJ stand as the active law, then all forms of interstate gambling would be deemed illegal. Because of this, some states would effectively have to reorganize their policies for interactive gaming to adhere to the DoJ's mandates.

It wasn’t long ago that Pennsylvania had to advise its online gaming operators that were preparing to launch that they would need to comply with the new policy marked out by the DoJ. As things stood originally in the state, operators were allowed to host infrastructure within other states, and that practice would certainly be deemed illegal under the DoJ policy. So, the Pennsylvania Gaming Control Board (PGCB) ordered its operators to change their plans for online gaming so as to not run afoul of the DoJ's guidelines.

Reluctance Over Interstate Poker Compacts on the Horizon?

It’s not just a general dissension in the overall online gaming scene that can be felt due to the DoJ decision, but there's a lot of grumbling specifically involving poker. States like Pennsylvania and West Virginia, which have only recently legalized online poker gaming, may now be quite hesitant to sign up to interstate poker networks where there could have been a strong potential for this beforehand.

The states of New Jersey, Delaware and Nevada already have an interstate network in place, which allows sites to pool their players together into one market thereby effectively introducing more competitive games and larger amounts of traffic in general. This arrangement was facilitated by a compact signed by the three states.

Nevada, New Jersey, DelawareThe Three States That Operate a Shared Online Poker Traffic Pool

Pennsylvania had a soft launch of online poker on Monday, Nov. 4, but with such uncertainty in regard to the DoJ decision, the likelihood is that it will hold off on expanding much farther with internet poker for now. That’s quite a shame where the interstate network is concerned as something has been needed to give it a boost for quite some time now. Many thought that introducing Pennsylvania’s poker players to the pool would increase numbers and activity significantly.

Until the case is settled one way or another, it’s likely that there will be little movement toward the interstate network by Pennsylvania or West Virginia.

Offshore Poker Remains Available in the US

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While there are clear issues with the interpretation of the Wire Act for now, whatever the outcome of the decision, it will not affect offshore poker rooms. This is because they’re not operating from within the United States, so the Wire Act of 1961 has no bearing on how they continue to provide poker to the masses. Many of these sites cater to the U.S. market, and we have a guide that you can read through to find an online poker room suitable for your gaming preferences.