Industry Lottery

Feds Delay Wire Act Enforcement After New Hampshire Ruling

In an unsurprising move, the federal government revised its window for potentially enforcing the Wire Act of 1961 in the wake of the New Hampshire ruling.

The June 4 ruling in New Hampshire saw a federal judge declare that the Wire Act only applies to sports betting. It was good news for the gaming industry, and especially online poker. As a result, poker players in Nevada and New Jersey can continue to compete against each other in WSOP bracelet events.

The Department of Justice will more than likely appeal the NH ruling, and there’s been indication that the Wire Act could potentially make its way to the Supreme Court for a final resolution to a years-long saga over the meaning of its language.

On June 12, the DoJ put out another memo, this one in response to the NH ruling.

“The Department is evaluating its options in response to this [NH] opinion,” said the memo. “Accordingly, the forbearance period announced in the Deputy Attorney General’s February 28 memorandum is hereby extended from June 14, 2019 to Dec. 31, 2019, or 60 days after entry of final judgment in the New Hampshire litigation, whichever is later.

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“Providing this extension of the forbearance period is an internal exercise of prosecutorial discretion and does not create a safe harbor for violations of the Wire Act. All other provisions of the January 15, February 28, and April 8, 2019 memoranda remain in effect.”

NH Hampshire ruling a loss for DOJ

The federal government’s 2018 reinterpretation of the Wire Act, which came when the anti-gambling Jeff Sessions was at the helm of the Department, claimed that it applies to all forms of gambling that have any facet cross state lines. State lotteries, which have benefited from massive multi-state jackpots in recent years, were particularly rattled by the reinterpretation, and it’s now being decided in the courts.

Federal judge Paul Barbadoro said in his ruling last week in NH that “the risk of prosecution is substantial.”

“After operating for years in reliance guidance that their conduct was not subject to the Wire Act, the plaintiffs [the lottery] have had to confront a sudden about-face by the Department of Justice,” Barbadoro stated. “Even worse, they face a directive from the Deputy Attorney General to his prosecutors that they should begin enforcing the new interpretation of the Act after the expiration of a specified grace period.”

The New Hampshire Lottery’s servers are based in Vermont and Ohio, which would potentially cause the federal government to prosecute the lottery under the Wire Act.

The Wire Act saga prompted the state of Pennsylvania to require its upcoming online casinos to make sure that their servers are within the Keystone State. That has caused a delay in PA’s online gaming launch.

The court fight is far from over.

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