Confusion about how The Wire Act impacts countless forms of gambling in the U.S. — especially in the media — has been rampant since the Department of Justice issued a curious opinion that was made public in January.
One enormous industry that has fired the first salvo against that opinion is state lotteries — with the New Hampshire Lottery leading the charge.
A flurry of filings were made last week in the case, with U.S. District Court Judge Paul Barbadoro expected to issue his ruling by the end of the month.
While there is a technical debate about whether the word “whoever” in The Wire Act applies to states and their employees — yes, really — and while that has brought up several references to The Dictionary Act — yes, really — it was an issue raised by the Michigan Lottery’s attorneys that underscored how odd this saga really is.
The DOJ, the attorneys note, seeks to make the case for “finding statutory intent to include government-operated lotteries in ‘whoever’ even though they did not exist when the statute was written.”
Lottery history lesson
While lotteries in some fashion date back to the country’s founding, by the end of the 19th century they were prohibited due to countless scandals.
Then along came The Interstate Wire Act of 1961, and nearly six decades later, it is still at the heart of U.S. gambling controversy.
If you’re wondering when the modern state lottery began, that happened first in 1964 in — of all places — New Hampshire, followed by — again, of all places — New Jersey in 1969. Michigan — go figure — was next in 1972 along with Rhode Island and, as with casinos and now sports betting, most of the action arrived first in the Northeast and then the Midwest.
It’s like a variation of the old Match Game TV show recurring question: “How old is The Wire Act? It’s so old that it’s even older than modern lotteries are!”
So how could The Wire Act be intended to regulate state lotteries if none existed at the time of passage?
NeoPollard Interactive, which runs operations for the New Hampshire Lottery, reiterated its position that the DOJ seems to want to eat its cake and have it, too (the more sensible variation on the phrase).
The DOJ wants the New Hampshire case tossed because it says the Lottery has no standing and there is no legitimate threat of prosecution. But it won’t surrender its option to change its mind.
“So maybe the Wire Act applies to State lotteries and their vendors, or maybe it doesn’t,” write NeoPollard attorneys, including Ted Olson, perhaps the country’s most renowned lawyer. “This charade must end.”
Why The Wire Act is so feared
The Wire Act indeed is “a criminal statute that imposes severe penalties — including lengthy terms of imprisonment — on violators.” And yes, RICO Act conspiracy convictions and treble damages in civil suits also are possibilities opened by the DOJ’s unexpected reversal of a 2011 DOJ Opinion — one made at the behest of two state lotteries — that had clarified for seven years that The Wire Act only applies to sports betting across state lines.
NeoPollard’s filing also mirrors my own suspicions about an odd backpedaling, but not complete abdication, of the DOJ’s very January memo. More than 40 states have lotteries that raise significant billions annually — mostly for education — and that means that DOJ seems to have poked a hornet’s nest.
“The Department might have miscalculated the impact and misjudged the legal and political reaction, but the Act’s application to State lotteries surely did not escape the Department’s attention” as it worked on the explosive memo, last week’s filing insists.
“The Department’s recent interpretive gymnastics make clear that only a declaratory judgment from this Court — not further discretionary forbearance from prosecution, and certainly not a new opinion from [DOJ] — can relieve NeoPollard from the threat of criminal liability and the many collateral consequences that flow from that.”
Instead, NeoPollard seeks a finding that it is “categorically exempt from The Wire Act” and potential criminal and civil risk from conducting the lottery in New Hampshire.
“Plaintiffs urge the Court to reach the core question in this proceeding: whether The Wire Act applies to non-sports gambling.”
What if the NH Lottery wins?
The Wire Act was passed more than 30 years before the internet came into usage among the general public. And barring a sweeping ruling that the judge already has suggested is unlikely, the fate of online poker and mobile sports betting, the latter of which is thriving in New Jersey, would seem to await further litigation.
If former New Jersey state Senator Ray Lesniak has his way, he’ll be right at the forefront of that battle, just as he was regarding sports betting legalization a decade ago.
Still, Judge Barbadoro said in passing at an April hearing that like that epic sports betting legal battle, this one is liable to be headed to the U.S. Supreme Court as well.
As for New Hampshire, the Coalition to Stop Internet Gambling and the National Association of Convenience Stores teamed for an amicus brief in the case last week.
CSIG informs the court that “States today are already struggling to prevent children from accessing online casinos on mobile devices.”
Given the organization’s widely reported ties to billionaire Sheldon Adelson, the Las Vegas billionaire who is the nation’s leading opponent of online gambling, some in the legal gambling expansion camp have experienced Schadenfreude at times regarding news stories about Adelson’s land-based casinos struggling along with rivals on that same issue.
CSIG’s argument is that if “whoever” doesn’t apply to states regarding The Wire Act, then “there is nothing in federal law preventing a State from exploiting the channels of interstate commerce to undermine the gambling laws of other States.”
