A federal judge has struck down the expanded prohibition on interstate gambling under the Interstate Wire Act of 1961, saying that the provisions of the law only applied to interstate sports betting.
US District Judge Paul Barbadoro issued his 60-page ruling on Monday in New Hampshire, rejecting a late 2018 opinion from the Office of Legal Counsel in the US Department of Justice, which extended the scope of the Wire Act to cover interstate online casino gaming, poker, and lotteries.
Judge Barbadoro’s decision came as part of New Hampshire’s legal challenge against the DOJ. The state and the New Hampshire Lottery Commission sued the federal agency over concerns that the reversed Wire Act opinion would hit online lottery sales. The state Lottery uses vendors with servers based in Vermont and Ohio. The implementation of the latest Wire Act opinion could criminalize the Lottery’s activities as well as those of other lottery and gaming operators.
Judge Barbadoro’s ruling stated that New Hampshire and other states “faced the choice between risking criminal prosecution, winding down their operations, or taking significant and costly compliance measures that may not even eliminate the threat.”
The Revised DOJ Opinion
The Office of Legal Counsel’s expanded interpretation was dated November 2, 2018, but was made public in January 2019. It revised a 2011 opinion on the Wire Act that stated the law only prohibited interstate sports betting. That 2011 opinion paved the way for the legalization of online gambling in New Jersey. The state’s land-based casinos went live with online casino games and poker in 2013. Last month, New Jersey itself joined the legal battle against the revised digital gambling opinion.
The 2018 opinion of the Office of Legal Counsel now threatens the provision of online gaming in Nevada, Delaware, and New Jersey and of online lottery products in a number of states.
The revised opinion was first expected to take effect on April 15, but the DOJ gave states and gambling companies up until June 15 to ensure compliance with it.
The conflicting readings of the Wire Act have been prompted by the fact that it is an outdated law from more than five decades ago when the US gambling landscape was completely different as well as by ambiguous grammar in key portions of the Act.
Judge Barbadoro said in his ruling that in cases like this it is up to the court to “undertake a nuanced and comprehensive review” of all existing evidence and try to give the Act “a whole fair reading.” The ruling further read that while the syntax of the 1961 law “does not suffice to answer” whether it is limited to sports gambling or applies to online gaming and lotteries, as well,
a careful contextual reading of the Wire Act as a whole reveals that the narrower construction proposed by the 2011 OLC Opinion represents the better reading. The Act’s legislative history, if anything, confirms this conclusion. Accordingly, I construe all four prohibitions in § 1084(a) to apply only to bets or wagers on a sporting event or contest.
What’s Next for Online Gambling
While Judge Barbadoro’s ruling is a big victory for New Hampshire, it is still unclear whether it will be enough to change DOJ’s revised view on interstate online gambling.
News about the federal judge striking down the latest opinion on the Wire Act arrived as Pennsylvania is gearing up preparations to go live with online casino products. The state legalized online gambling in the fall of 2017 as part of a sweeping gaming and betting reform. It planned to launch online gambling services earlier this year, but the revised opinion of the Office of Legal Counsel prompted a delay in the process.
SugarHouse Casino went live with online sports betting last week, becoming Pennsylvania’s first operator to venture into the digital gambling space. Online casino services are now expected to be launched in July.
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