NJ online casino and sports betting could be impacted by Wire Act opinion from DOJ

NJ Senate President To DOJ: Rescind Wire Act Opinion Or We’re Going To Court

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New Jersey Senate President Stephen Sweeney has asked the Department of Justice to rescind its new opinion on the Wire Act. And if the DOJ does not, Sweeney has indicated NJ will go to court.

In a letter to Deputy Attorney General Rod Rosenstein, Sweeney lays out his case for why the opinion from the DOJ, issued earlier this year, is wrong.

Here’s Sweeney’s conclusion:

“If the OLC 2019 Wire Act Opinion is not rescinded, I have authorized former Senator Raymond Lesniak to file suit in U.S. District Court on behalf of the New Jersey Senate for a Declaratory Judgment that the 2019 OLC Opinion is arbitrary and capricious and that the statutory prohibitions of the Wire Act are uniformly limited to gambling on sporting events or contests.”

You can see the full letter here:

Sweeney letter to Rosenstein

Altered opinion threatens NJ casino industry

While the federal Wire Act of 1961 has long been considered to only deal with illegal forms of sports betting, the DOJ reversed course in January. In a new opinion, it said that the Wire Act applies to all forms of gaming.

That has made lots of people worried about repercussions, including its possible impact on lotteries, horse racing, online casino and online sports betting.

Sweeney’s letter contends that the 2019 OLC Wire Act Opinion flies in the face of the opinion issued by the same office in 2011, which the legislature and governor relied upon in authorizing internet wagering at Atlantic City casinos in 2013.

This legislation has generated more than $1 billion for the then-struggling casino industry, brought back thousands of jobs as casinos in Atlantic City reopened, saved thousands more from future closures, and produced hundreds of millions in revenue for the state treasury, according to the letter.

The new opinion “nullifies the intent of our legislation to make New Jersey a national and international hub for Internet gaming,” Sweeney wrote.

Gaming compacts in jeopardy

The Wire Act is meant to focus on interstate transmissions that cross state borders. While there are concerns about how the new OLC opinion could impact intrastate gaming in the routing of transmissions, there is no doubt that the OLC interpretation doesn’t allow for the online poker network that New Jersey has established with Nevada and Delaware.

When then-state Sen. Raymond Lesniak fought to get his legislation passed to authorize online gambling in the state, he spoke of his goal for New Jersey to be an international hub for internet gambling. The network with Nevada and Delaware is just the beginning of the state’s plans, which the OLC memo puts in jeopardy.

Sweeney wrote that this opinion “casts a dark cloud over our ability to establish additional compacts to increase revenue to our casinos and treasury.”

Why was a new opinion needed?

Sweeney points to a 2011 letter from then-Assistant Attorney General Robert Weich to then-US Senators Harry Reid and Jon Kyl as evidence that the 2011 OLC opinion was well reasoned and not in need of reinterpretation.

While the Senate leaders sought to clamp down on all forms of internet gambling, including lottery sales over the internet, Weich wrote that the 2011 opinion that the Wire Act applied only to sporting events or contests was made “after a thorough review” and “reflects the Department’s position in congressional testimony at the time the Wire Act was passed in 1961.”

Sweeney wrote:

“The 2019 opinion, which took 26 pages of tortured analysis of sentence structure and comma placements to determine that the clear language of the Wire Act applied to all forms of gambling, was contrary to the much better reasoned opinion of the 5th Circuit and the ‘thorough review’ of the Department of Justice in 2011.”

OLC ignored legislative history

The 2019 OLC opinion made the argument that, given the plain language of the Wire Act, there was no need to examine its legislative history, which the 2011 OLC had done to render its opinion.

Sweeney points out that it’s illogical to base an opinion on the plain language of the statute when two OLCs came to opposite interpretations of it.

“By reversing its own opinion, the OLC admits the language is not plain and would require an analysis of the legislative history of the Wire Act, which would demonstrate that the Wire Act targeted only sporting events or contests to assist prosecution of organized crime run betting operations on sporting events and horse racing.”

Lesniak ready to answer the call

Sweeney’s letter to Rosenstein followed up on his statement days after the OLC opinion was made public in which he called on Lesniak, an attorney who served in the New Jersey legislature for 40 years, to come out of retirement to help protect the online gambling and sports betting industries that he helped bring to the state.

Lesniak then wrote a letter to Sweeney outlining how New Jersey could fight the opinion, and Sweeney used some of that language verbatim in his letter to the deputy attorney general.

Lesniak, who reactivated his license to practice law in the state of New Jersey on Monday, tells Online Poker Report that he plans to wait 30 days for new US Attorney General Bob Barr to get up to speed on the issue before filing the complaint requested by Sweeney.

- Matthew began writing about legislative efforts to regulate online poker in 2007 after UIGEA interfered with his hobby of playing small-stakes online poker while working as a sportswriter at the Los Angeles Daily News. Covering the topic for Bluff Magazine, PokerNews and now Online Poker Report, he has interviewed four U.S. Congressmen and 40+ state legislators. His poker writing has been cited by The Atlantic, Politico.com and CNN.com. Matt also has written on a variety of topics for Playboy Magazine, Men's Journal, Los Angeles magazine, LA Weekly and ESPN.com.
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