Wire Act Covers More Than Sports Betting, DOJ Claims in Federal Appeal of Rejected Opinion

Posted on: December 26, 2019, 11:07h. 

Last updated on: December 26, 2019, 11:33h.

The US Department of Justice (DOJ) last week filed the opening brief in its appeal of a federal court decision that vacated an opinion in reinterpreting the Wire Act and expanding the scope of the gambling law.

Then-Deputy US Attorney General Rod Rosenstein (middle) wrote in April that while Justice Department lawyers should use the Wire Act opinion written last year, questions about how it applies to lotteries remain unanswered. The DOJ has filed an appeal over a federal district court decision that threw out that opinion. (Image: Flipboard.com)

In a 52-page document submitted Friday to the US First Circuit Court of Appeals, DOJ lawyers argued that the New Hampshire Lottery does not face an immediate threat of prosecution from the November 2018 opinion developed by the department’s Office of Legal Counsel (OLC).

OLC opinions are predecisional advice internal to the Executive Branch, not final agency action reviewable under the Administrative Procedure Act,” the brief states. “They thus cannot be ‘set aside.’”

For years, the DOJ’s interpretation limited the federal law to ban only those engaged in sports betting from using telecommunication equipment to transfer wagering information across state or international borders. In February, a month after the department finally published its new opinion, the New Hampshire Lottery Commission filed suit.

For years, lotteries across the US have used multi-state jackpots, such as Powerball and Mega Millions, to boost sales. The threat of a shutdown would likely cost state lotteries millions of dollars in revenue.

New Hampshire US District Judge Paul Barbadoro ruled in June that based on the law’s “text, content, and structure,” the Wire Act pertained only to sports betting. In August, the DOJ officially gave notice of its intention to appeal.

DOJ: Lottery Question Under Review

In its appeal, the DOJ said the New Hampshire Lottery and other state-run lotteries do not face an immediate threat of prosecution. However, the brief also states that only a specific portion of the Wire Act, and not the entire law, applies to sports betting.

The Department notes an April memo from then-Deputy Attorney General Rod Rosenstein that stated while DOJ attorneys should use the new opinion moving forward, it should refrain from applying the law to state lotteries and their vendors until the department gave further direction.

“The OLC opinion did not address whether the Wire Act applies to State lotteries and their vendors,” wrote Rosenstein, who resigned a month later. “The Department is now reviewing that question.”

The DOJ also states the Wire Act outlines four offenses: using wire communications to transmit (1) bets or wagers, (2) information assisting placement of bets or wagers on any sporting event or for the transmission of a wire communication which enables the recipient to receive money or credit, (3) a result of bets or wagers, and (4) information assisting the placement of bets or wagers.

“Because the sports-gambling modifier appears only within Offense 2, the logical inference is that it applies only to that offense,” the DOJ writes.

Groups File Brief Supporting DOJ

On Tuesday, two organizations filed a joint amicus brief supporting the DOJ’s case.

The Coalition to Stop Internet Gambling and the National Association of Convenience Stores claims in its brief that the expansion of online gaming would make it easier for children to gamble.

“Online gaming has devastating effects on the vulnerable individuals whom CSIG strives to protect and on the national network of convenience stores whom NACS represents,” the parties wrote in their brief. “CSIG and NACS therefore have a strong interest in ensuring that the Wire Act be correctly interpreted as prohibiting not only sports-related gaming but non-sports-related gaming as well.”

They also argue that if the Wire Act did not apply to the individual states, that it would exempt them from all other federal gaming and lottery laws, too.

That means, they claim, that the New Hampshire Lottery could sell lottery tickets by mail to Alabama residents or offer online slots to Kansans with computer access.

In submitting the brief, the CSIG and NACS also requested 10 minutes to present an oral argument.