Sports

New Hampshire Sues Department Of Justice Over Controversial Wire Act Opinion

new hampshire statehouse

The revised Department of Justice opinion that interpreted The Federal Wire Act of 1961 to extend far beyond a ban on interstate sports betting was bound to meet up with a court challenge.

On Friday, New Hampshire Attorney General Gordon J. McDonald answered the bell.

McDonald filed a complaint in U.S. District Court seeking “declaratory and injunctive relief” against the opinion, with just-appointed Attorney General William Barr as the defendant.

The DOJ issued a binding opinion on Nov. 2 regarding the Wire Act, but curiously it was not made public until mid-January — on the eve of congressional inquiry of Acting Attorney General Matthew Whitaker. Under questioning, Whitaker said he had been recused from any involvement with the DOJ opinion.

Don’t mess with the lottery

A 2011 DOJ opinion seemed to have clarified that activities such as online lotteries or even interstate online poker compacts would be permissible. But the new opinion has thrown parts of the legal U.S. gaming industry into uncertainty.

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New Hampshire’s standing rests only in part on its decision last fall to introduce online lottery play.

“The effect of the 2018 Opinion is to extend criminal liability … far beyond betting or wagering on sporting events or contests to include virtually any conceivable form of gambling, which would encompass state-conducted lotteries,” McDonald wrote. “The 2018 Opinion’s interpretation of the Wire Act also intrudes upon the sovereign interests of the State of New Hampshire without unmistakably clear language demonstrating that Congress intended such a result.”

What’s the harm?

The filing notes that since 1964, the state Lottery Commission has deposited “in excess of $2 billion in the Education Trust Fund for the support of New Hampshire public education.” In fiscal year 2018 (ending June 30), operating revenue of $337.8 million translated into $87.2 million into the fund.

“Today New Hampshire is taking action to protect public education in New Hampshire,” Governor Chris Sununu said Friday in support of McDonald’s complaint. “The opinion issued by DOJ puts millions of dollars of funding at risk, and we have a responsibility to stand up for our students.”

The state lottery contracts with Intralot to provide the gaming system, which by regulation must have duplicate systems in case of emergency — and often, as in New Hampshire’s case, those systems are located beyond state lines. Therefore, the complaint concludes, the state’s entire lottery system is under question given the new DOJ opinion.

Furthermore, the state introduced its iLottery platform last September, allowing players to buy tickets on the internet. This new source of revenue is expected to bring in $6 mm to $8 mm in Fiscal Year 2021. This new option is more directly called into question by the new opinion.

“The USDOJ’s reversal of the 2011 Opinion, coupled with statements that depart from longstanding non-use of the Wire Act to prohibit state-run lottery activity, now subject the NHLC and its employees and agents to criminal liability and prosecution,” McDonald wrote. “The 2018 Opinion also has the potential to create catastrophic consequences for lotteries across the country and to jeopardize billions of dollars in state funding for good causes that are supported by lottery activity that is authorized and legal in every state where it takes place.”

The remedy sought is an order declaring that the Wire Act does not extend to state-conducted lottery activity — and also that the entire 2018 opinion be vacated. New Hampshire is filing for summary judgment before April 15.

Two federal circuit courts of Appeal, the 1st in United States v. Lyons (2014) and the 5th In Re MasterCard Int’l, Inc. (2002), have held that the Wire Act applies “solely to betting or wagering on sports events or contests,” the filing notes.

The May 2018 U.S. Supreme Court voiding of the Professional and Amateur Sports Protection Act of 1992 both opened the door for intrastate sports betting and also further buttressed the concept that “respects the policy choices of the people of each State on the controversial issue of gambling.”

Photo by Wangkun Jia / Shutterstock.com

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