Wire Act Application to State Lotteries in Limbo as DOJ’s Newest View Dissed by Gaming Expert

Posted on: April 11, 2019, 11:41h. 

Last updated on: April 11, 2019, 11:44h.

Prominent gaming attorney Anthony Cabot is calling the latest interpretation by the Department of Justice (DOJ) on the Wire Act — and whether it applies to state lotteries — “ridiculous,” given earlier interpretations of the federal law.

New Hampshire Attorney General Gordon MacDonald is working with other lawyerss to challenge whether the Wire Act could be applied to state lotteries. (Image: NH Campaign for Legal Services)

On Monday, DOJ attorneys filed a motion which says the recent reinterpretation of the Wire Act did not address whether it applies to state lotteries and their vendors. The DOJ Office of Legal Counsel is now “reviewing” that question.

Facing Off

The latest twist in the controversy comes as attorneys representing the Granite State’s lottery appear today, Thursday, in a hearing before Judge Paul Barbadoro in Concord federal court over New Hampshire’s lawsuit against Attorney General William Barr and the DOJ, which challenges application of the law to state lotteries.

Filed in February, the lawsuit says the Nov. 22018 opinion — which was publicly released in January — reverses the DOJ’s 2011 opinion that held the Wire Act applied only to betting or wagering on sporting events or contests, and does not apply to sales of state lottery tickets over the internet.

The new motion by the DOJ is a sign that federal attorneys are backing down in the heated dispute, according to Anthony Cabot, a Distinguished Fellow in Gaming Law at UNLV’s Boyd School of Law and a former chair of the gaming law practice at Lewis Roca Rothgerber Christie.

The only reason that the DOJ is making this ridiculous claim is to try to defeat the standing of the New Hampshire Lottery and its vendors from having standing for a court to determine the legality of their latest opinion,” Cabot told Casino.org.

DOJ Will Lose

“This is not a fight they want to wage on the merits because they will lose,” Cabot told Casino.org. “They are looking for a way out.”

Many attorneys representing the gaming industry have predicted extending the Wire Act to gaming other than sports betting will not come to pass.

Cabot agrees that the Wire Act only applies to sports betting, and the DOJ is “trying to back pedal to get out of a losing proposition.”

New Hampshire Lawsuit Likely to Get Dismissed

A different perspective comes from Greg Gemignani, an attorney at Dickinson Wright’s Las Vegas office and who also teaches gaming law at UNLV.

Gemignani says the DOJ’s opinion is “general guidance and not a threat against any particular operator,” so the New Hampshire lawsuit is “premature at best and should be dismissed.”

He explained to Casino.org that the DOJ’s newest motion argues that lotteries are not “threatened” legally, and courts “should not get involved when there is no dispute to adjudicate.”

Under a long-standing legal principle, courts basically only adjudicate cases where there is a “controversy” between the parties.

“Courts do not provide general guidance, opinions or statutory interpretations in the abstract,” he explained. “If there is no case in controversy to adjudicate, the court will dismiss the matter.”

The DOJ says it has no plans to enforce law against the state lotteries — irrespective of the 2018 opinion – so there is nothing for the court to adjudicate, Gemignani said.

Casino City Case

Looking back to a 2006 case, the DOJ wrote to the National Association of Broadcasters to warn that carrying ads for online off-shore companies violated federal gambling laws.

Casino City, which carried ads for offshores on its website, filed for declaratory relief in a federal court in Louisiana.

“The DOJ argued that it had no imminent plans to enforce against Casino City and, therefore, the matter should be dismissed as there was no case in controversy.  The court dismissed the matter as requested by the DOJ.”

He says it is likely the judge will dismiss the New Hampshire lawsuit too because of similar grounds.

I am not sure the DOJ cares one bit about the Federal Wire Act, and I don’t think it will be enforcing the [law] based on its new interpretation,” Gemignani said. “Other news stories indicate that the opinion is a favor to an octogenarian casino mogul and large political donor that believes online gaming will destroy his investment in land-based casino gaming.”