US Justice Department Wire Act Opinion Case Now Heads to Appellate Court

Posted on: August 16, 2019, 05:54h. 

Last updated on: August 17, 2019, 07:28h.

The Department of Justice (DOJ) gave official notice in a federal court in New Hampshire Friday that it will appeal a June ruling made by US District Judge Paul Barbadoro in dismissing its new interpretation of the Wire Act.

A New Hampshire convenience store clerk hands a Powerball ticket to a customer last year. A recent opinion on the Wire Act by the US Department of Justice threatens multi-state lottery games, which is why the New Hampshire Lottery Commission filed suit in February. Justice officials will appeal a lower court decision. (Image: Steven Senne/Associated Press)

The announcement means the First Circuit Court of Appeals will now consider hearing the case between the DOJ and the New Hampshire Lottery Commission. In February, the Lottery filed suit over the DOJ’s amended interpretation of the law that prohibits the use of wired communication technologies to transmit bets across state lines or international boundaries.

Eight years ago, DOJ officials released an opinion that said the Wire Act only applied to sports betting. Lottery commissions, like New Hampshire’s, used that ruling to set up new online betting games.

However, Justice officials in the Trump Administration announced a new opinion on the law in 2018, saying the law did not just apply to only sports betting but other types of wagers as well.

Taking the matter to the Court of Appeals is the next step in a process that will likely end up before the Supreme Court. The DOJ had an Aug. 19 deadline to submit its request for an appeal in the case.

Appeal Called Political Move

The US gaming industry is closely watching the case, as the final ruling will have long-lasting implications across the country. If the DOJ’s recent opinion is upheld, then it could signal the end of multi-state lottery games like Powerball and Mega Millions.

Shortly after the DOJ filed its intent to appeal, a gaming industry trade group issued a statement urging the government to reconsider.

A group called IDEA Growth, founded by noted gaming attorney Jeff Ifrah, said the decision wasn’t unexpected, but it was still a political move.

We hope that, rather than engaging in a protracted, expensive and ultimately unsuccessful legal fight, the Department will take this opportunity to negotiate a settlement which will focus the Wire Act and DOJ’s enforcement resources on the right targets – the unlicensed illegal offshore Internet gambling operators who do not create jobs or tax revenue in the U.S. and do not appropriately protect consumers,” said Ifrah, whose practice is based in Washington.

Others legal experts also weren’t surprised by the appeal.

“One question – if this drags out, will the next administration (assuming there is a change over), continue the same fight against the Wire Act?” tweeted Aalok Sharma, a Minneapolis-based sports and entertainment attorney.

Wire Act History

The Wire Act was established in 1961 and signed into law by President Kennedy as an attempt to stop organized crime.

It states: “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.”

Previous opinions on the law, which has been upheld by the Fifth Circuit Court of Appeals, have stated that covers sports betting.

However, in his November opinion, Steven A. Engel, an assistant Attorney General in the US Office of Legal Counsel, said the second half of the text – which begins with “for the transmission of a wire communication which entitles the recipient to receive money” – applies to any type of wager.