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Internet Gambling Meets New Resistance From US Department of Justice

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While state legislatures around the US are tentatively allowing legal online lottery ticket sales, sports betting and an array of casino games, the Department of Justice has renewed the fight to clamp down on online gambling.

If you have not been following along with the Wire Act for the last half-century, here’s a brief history.

What the Wire Act means for online gambling

The Interstate Wire Act of 1961 is a United States federal law prohibiting the operation of certain types of betting businesses in the United States. It asserts that no interstate gambling or payment of gambling winnings from out of state can take place via the transmission of a wire communication. The same is true of information assisting in the placing of those bets or wagers. Fines and/or imprisonment may be the penalty for failure to conform to these regulations.

In 2011, a new Wire Act ruling stated that “interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act.” This left certain gambling avenues outside of sports betting or contest/event betting able to partake in wagering and payment activities.

A 2018 DOJ opinion reversed that decision, instead asserting in an Office of Legal Counsel decree that the Wire Act’s exclusions are “not uniformly limited to gambling on sporting events or contests.”

The ruling didn’t appear to leave room for interpretation of its rules and to which types of gambling activity the rules applied. All were to comply. However, the new interpretation of the Wire Act would not be enforced straight away, according to Deputy Attorney General Rod Rosenstein. Businesses affected by the decision received 90 days to become compliant with the new ruling. In this case, The US Fifth Circuit Court of Appeals has previously ruled that the Wire Act prohibition on the transmission of wagers applies only to sports betting and no other types of online gambling.

Legal challenges to DOJ decision

The New Hampshire Lottery and Neopollard Interactive LLC filed complaints in the US District Court for New Hampshire, naming the DOJ and Attorney General William Barr as defendants. The suit requested that the court reject and set aside the OLC’s new opinion, which the commission claims will reduce its annual profits by millions of dollars.

US District Court Judge Paul Barbadoro issued a summary judgment in June of 2019 stating the Wire Act “is limited to sports gambling.” This left the OLC decision null and void.

The DOJ would not go down without a fight, though. In August of 2019, a DOJ submitted a filing to appeal the ruling to the US First Circuit Court of Appeals.

Here we are today, where the Coalition to Stop Internet Gambling has thrown its hat into the ring. CSIG is standing up in the fight for a gambling-free internet.

CSIG has filed an amicus brief within the First Circuit of Court Appeals. The group is backed by American casino magnate, investor and political donor Sheldon Adelson. Adelson has staunchly opposed online gambling for years. Adelson is the owner of the Las Vegas Sands Corp., which has land-based casino and resort properties in the US, Macao and Singapore. Adelson and his wife are some of Donald Trump’s biggest donors, having donated at least $25 million to his campaign and his inaugural festivities.

Arguments against online gambling

The brief contains five legal arguments. The first among them is a list of entities CSIG believes the Wire Act applies to. The brief names New Hampshire as not compatible with the statue and federal gaming policy scope. It is the opinion of CSIG that the reversed decision allows the New Hampshire Lottery to sell tickets by mail, either to players outside of the state’s borders or online, including making available online games to players in other areas.

The brief also takes issue with the term “person” in the Wire Act, questioning whether a person constitutes an individual or a public or private entity. The brief raises various other points with concern to employees and vendors, as well as why the act makes no mention of state entities.

So, that does it all mean for the state of legalized online gambling? Simply put, the DOJ decision last year has the potential to completely upturn the infrastructure and operations of multi-state and shared lottery games that have been in business for years, the Powerball and Mega Millions being among the most well-known. This could affect legal online gambling industries in New Jersey, Nevada, Delaware and Pennsylvania, as well. Additionally, the online poker compact that New Jersey, Nevada and Delaware share would be considered gambling across state lines under the new ruling.

New Hampshire has received an extension to respond to the most recent filing. It will submit a response by Feb. 26, 2020.

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