Pushback surrounding the new Wire Act opinion from the US Department of Justice is beginning to materialize.
AGs Gurbir S. Grewal (NJ) and Josh Shapiro (PA) on Tuesday sent a pointed letter to the DOJ expressing “strong objections” on behalf of their states. Grewal additionally filed a Freedom of Information Act (FOIA) Request seeking records pertaining to the decision.
From the letter:
DOJ’s latest reversal is wrong, and it undermines the values of federalism and reliance that our states count on. We request that you withdraw the OLC opinion or, in the alternative, guarantee that DOJ will not bring enforcement actions against companies in our states that are acting lawfully under state statutes.
The DOJ’s Office of Legal Counsel (OLC) last month released its updated opinion on the 1961 federal law, perceiving its scope to broadly include all online gambling. That move essentially negated a narrower interpretation from 2011, which had limited the reach to sports betting alone.
NJ and PA represent two of the four states that crafted legal, regulated online gambling industries during that seven-year span.
Tuesday’s letter is addressed to US Attorney General Matthew Whitaker and Deputy AG Rod Rosentein. It’s the latter who’s led the public response so far, having issued a DOJ memo to withhold enforcement for 90 days.
Within their letter, the two state AGs work to demonstrate the value of their respective online gambling industries.
Operators in New Jersey have already generated more than $1 billion in combined NJ online gambling revenue to date, and the NJ lottery contributes about that much to the state annually. Next door, the new Pennsylvania iLottery has collected almost $30 million in revenue since launching in May 2018, with full-scale PA online gambling poised to roll out over the course of 2019. Both states also have legal sports betting within their borders.
The letter expresses concern that all state-regulated gambling could be in jeopardy if the OLC enforces its new stance.
This decision puts jobs and livelihoods at risk for the thousands of people who work in the online gaming industry and jeopardizes critical state funding for the public good that is generated by lottery sales and other Internet activity that is legal within our states.
We can see no good reason for DOJ’s sudden reversal.
The AGs argue that the new interpretation “runs contrary to the plain language of the Wire Act” and against the directive to “employ considerable caution” in departing from previous interpretations.
Accompanying the letter is a FOIA request from the NJ Office of the Attorney General seeking “information relating to outside groups’ lobbying efforts urging the Department of Justice to reconsider this position.”
The request goes on to mention casino magnate Sheldon Adelson by name, the primary source of funding for opponents of online gambling. Look at this no-nonsense summary of those efforts (in-line citations removed for readability):
Press reports have indicated that pressure to reconsider the 2011 Opinion derived not from intervening facts or law, but from lobbying efforts. According to the public reporting, “for years, lawyers and lobbyists for Las Vegas Sands circulated position papers in Washington arguing for a change in the 2011 Justice Department interpretation.” The Sands’ Chief Executive, Sheldon Adelson, established the Coalition to Stop Internet Gambling to lobby against the opinion, and the Sands paid lobbyists affiliated with the Coalition $210,000 since 2017. But the Coalition was unable to persuade Congress to amend the Wire Act, so certain lawmakers “pressed the department on its interpretation of the act, and former attorney general Jeff Sessions agreed at his 2017 confirmation hearing to look into it.”
The request seeks all records concerning both the 2011 and 2018 opinions related to:
Grewal’s office requests expedited processing of the FOIA request within 10 days.