Despite losing in the First Circuit, the DOJ still won't formally disavow its controversial 2018 interpretation of the Wire Act

Wire Act Still Being Litigated, Despite Existence Of 6 Legal Online Casino States

Today, London-based International Game Technology (IGT) needs to tell a Rhode Island court why it should kill the US Department of Justice‘s 2018 anti-iGaming interpretation of the Wire Act, once and for all.

The DOJ response to IGT’s complaint has been, in a nutshell: “We don’t want to prosecute you. Why are you suing us?”

It has asked the court – twice – to dismiss the case for lack of standing.

However, IGT is arguing that the current legal precedent leaves it, and by extension any non-sports betting online gambling company, in legal limbo until US District Court District of Rhode Island decides on IGT vs. Merrick B. Garland. Garland is the US Attorney General.

By the same token, anyone operating or supplying a legal US online casino or online poker room has the Wire Act hanging over them. The mere possibility of prosecution for transmitting data across state lines limits companies’ technological and logistical options, which is why IGT is seeking clarity.

At the moment, online casinos are legal and available in six states:

  • Connecticut
  • Delaware
  • Michigan
  • New Jersey 
  • Pennsylvania 
  • West Virginia

There is also Nevada, where online gambling is legal, but the regulators have so far only authorized poker, but not casino gaming.

UPDATE: 04/07/2022

IGT filed its reply with the court yesterday, asking the judge to declare “that the Wire Act does not criminalize IGT’s conduct.”

IGT’s filing read, in part:

“Faced with binding First Circuit precedent on standing, the government ironically argues that the First Circuit’s decision defeats standing because IGT would prevail in any prosecution within the First Circuit, and thus the government would have to bring a prosecution elsewhere. … Tellingly, the government does not dispute that IGT does face a threat of prosecution in the other eleven regional circuits, which include 43 states where IGT does business. …

“Indeed, the entire basis for the government’s motion is to retain its flexibility to bring a prosecution against IGT outside of the First Circuit. … Far from renouncing the 2018 [Office of Legal Counsel (OLC) at the DOJ] opinion and foreclosing prosecution, the government explicitly has left its options open. If the government had no intention of prosecuting IGT, it could have simply acquiesced in judgment.”

What IGT needs to do today

District Judge William E. Smith ordered IGT to supply the Providence court with a “reply in support of their motion for summary judgment.”

That due date comes just days after the DOJ asked the court to dismiss the case entirely.

The DOJ’s March 30 filing with the court said:

“IGT argues that it ‘faces the exact same threat and hardship to its lottery business as the parties in NHLC, and therefore has standing to seek a declaratory judgment for the exact same reasons.’ …

“But that is not right. When the parties in New Hampshire Lottery Commission I & II filed their declaratory judgment action, it was an open question whether they could be prosecuted successfully for non-sports gambling of any kind — whether connected with a lottery or not — in the District and Circuit on whom they called to decide that question. By contrast, unless precedent changes, IGT is protected by the very precedent that the parties in New Hampshire Lottery Commission I & II established. Indeed, the only dispute between the parties is whether IGT is entitled to the benefit of favorable First Circuit precedent in any of the ’43 states and territories not subject to the First Circuit’s precedential authority’ where it conducts business —  most of which have not yet had occasion to interpret the scope of the Wire Act as to non-sports gambling.”

The NHLC Wire Act precedent

The DOJ’s interpretation of the 1961 Interstate Wire Act as it relates to online gambling dates back to 2011. The law itself was obviously not originally about the internet and especially not about online betting, as consumers didn’t use either in 1961.

The Wire Act was supposed to regulate bets placed over the phone and across state lines. Now, the definition of “wire communication” includes the internet. That means the Act applies to online gambling, or at least some forms of online gambling.

In 2011, the DOJ issued an opinion stating that the Wire Act only governed sports betting. That helped New Jersey and Delaware to lead the way in legalizing online casinos.

In May 2018, the US Supreme Court advanced things further by repealing the Professional and Amateur Sports Protection Act (PASPA). This law, separately from the Wire Act, made all sports betting illegal (except in Nevada).

With PASPA out of the way, states begin to legalize online sports betting. This has outpaced online casinos by a large margin and is now permitted in 34 jurisdictions. Kentucky is one step away from legislative approval for online poker and sports betting, which may happen next week.

Returning to DOJ opinions, the department released a new directive in January 2019. Its new interpretation of the law was that it would apply to all interstate online gambling, not only sports betting. Violators would be subject to fines and imprisonment.

Wire Act confusion put the industry in chaos

States react immediately with everything from strongly worded letters to the DOJ to court cases.

In June 2019, the New Hampshire Lottery Commission (NHLC) won its lawsuit against the DOJ in US District Court for the District of New Hampshire.

The DOJ appealed and lost in January 2021.

Former President Donald J. Trump left office that month, shortly after Attorney General William Barr resigned.

President Joe Biden nominated Garland and Congress confirmed him in March 2021.

This current DOJ is calling the NHLC decision the legal precedent regarding the Wire Act.

Still, after more than a decade of the DOJ’s different Wire Act interpretations, IGT filed suit on Nov. 23, 2021. In it, IGT named the Office of Legal Counsel (OLC) at the DOJ as disseminating the DOJ’s 2018 opinion.

IGT’s 2021 complaint read:

“Gaming operators such as IGT face a credible threat of prosecution that poses a present and identifiable hardship as a result of OLC’s new interpretation of the Wire Act.”

In other words, whether or not the DOJ actually plans to prosecute IGT or anyone else is irrelevant. The possibility alone is enough to be disruptive, which is why IGT is asking the courts to provide clarity when the DOJ won’t.

- Heather Fletcher is the lead writer with OnlinePokerReport. She's a career journalist, with bylines in The New York Times, Adweek and other publications. Reach her at [email protected]
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