Justice Department May Follow Wire Act Appeal Ruling with Minor Action, Lawyers Say

Posted on: February 5, 2021, 12:59h. 

Last updated on: February 5, 2021, 05:46h.

The Department of Justice’s (DOJ) controversial appeal of the Wire Act may end with last month’s ruling by the First Circuit, according to gaming attorneys. They believe the DOJ will conform to January’s decision on the Wire Act with only a little additional comment or measures.

The DOJ should withdraw its 2018 memo on the Wire Act
Attorney and former high-ranking Justice Department lawyer James Trusty, pictured in a 2018 Fox News interview. Trusty says federal prosecutors should not pursue gambling cases if states permit the activity. The comments come after an appeals court ruling on the Wire Act. (Image: Fox News)

On Jan. 20, First Circuit judges in Boston sided with New Hampshire’s rejection of the DOJ’s controversial opinion on the federal law’s scope.

In the ruling, the DOJ argued that the Wire Act applied to all wagers and betting, not just sports bets. The opinion threatened to end online sports betting and other forms of internet gambling involving multiple states.

Casino.org spoke to four legal scholars about the future of the case and the DOJ’s action. 

Return to Status Quo

James Trusty offered his opinion on the recent ruling on New Hampshire Lottery Commission vs. Rosen. Trusty is a former chief of the DOJ’s Organized Crime Section who now practices at Washington, DC-based Ifrah Law.

Trusty says the ruling negates the DOJ’s early 2019 midnight memo.

“It would be wise [for the DOJ] to simply withdraw the 2018 memo and return to the status quo from the last 10 years — simply to be totally clear on the department’s position,” Trusty told Casino.org. “It would be surprising and shortsighted for DOJ to suggest that they would have different rules in the other circuits while abandoning the poorly-reasoned 2018 memo.”

Robert Jarvis, a professor at Nova Southeastern University’s Shepard Broad College of Law, further speculated on the New Hampshire case. Jarvis believes President Joe Biden will not have the DOJ file an appeal to the Supreme Court. 

Everyone knows that the 2018 OLC opinion was purchased by Sheldon Adelson and that its construction of the Wire Act made no sense,” Jarvis said.

“This puts the case in a unique posture,” Jarvis said. “Normally, DOJ is defending a law passed by Congress. But here, it was defending its own handiwork, which it never believed in.”

Still, it remains possible that the DOJ will feel the need for some closure, says Jarvis, the coauthor of Gaming Law and Gambling Law: Cases, Materials, and Problems (forthcoming Second Edition). If this is the case, Jarvis expects the DOJ to issue a one-page memorandum reinstating the 2011 OLC opinion. 

“With Trump out of office and [Sheldon] Adelson dead, there’s no longer any political reason for folks like [Republican South Carolina Sen.] Lindsey Graham to push for an amendment/expansion of the Wire Act,” Jarvis said. Adelson, the Las Vegas Sands Corp. CEO who was also a strong opponent of online gaming, was a supporter of Trump and other Republicans.

A.G. Burnett, a former chair of the Nevada Gaming Control Board who now is a partner at Nevada’s McDonald Carano law firm, predicts there will not be prosecutions in the First Circuit’s jurisdiction, or likely elsewhere, based on the 2018 OLC opinion.

“I think a formal revision of the 2018 memo by the DOJ to go back to the 2011 interpretation and move in line with the First Circuit’s guidance would be a nice endpoint. But ultimately, may not be necessary,” Burnett told Casino.org.

DOJ May Abandon Wire Act Litigation

“I suspect the Biden DOJ will quietly abandon the case and withdraw the 2018 OLC memorandum,” said Kate C. Lowenhar-Fisher, a Las Vegas-based attorney and chair of the gaming and hospitality practice group at Dickinson Wright. 

“That would be much less murky than publishing some kind of no-enforcement memorandum like President Obama did in connection with cannabis,” Lowenhar-Fisher told Casino.org.

“The status quo post-2011 would be restored, and perhaps we could put an end to legislating gambling via memoranda.”

Trusty: Feds Should Not Pursue Gaming Cases

Overall, James Trusty suggests the easiest fix, from the DOJ’s perspective, “is simply to clarify that federal prosecutors generally will not pursue gambling charges — Wire Act or other statutes — when the activity is licensed under state law.”

With the recent Wire Act appeals ruling in place, the DOJ is also “free to pursue off-shore sportsbooks operating illegally in the US, as well as any other criminal conduct that might be connected to otherwise lawful gaming, such as money laundering or organized criminal activity,” explained Trusty, who was presented the US Attorney General’s Distinguished Service Award in 2011.

“This would take the emphasis on gambling prosecutions back to where it has always been intended to be — a tool to use against organized criminal activity, not a threat against today’s regulated, popular betting across the country,” Trusty said.