Battle Lines Being Drawn As Wire Act Case Heads To Court Of Appeals

wire act update

For most of its life, the 1961 Wire Act was an uncontroversial piece of legislation. But in the age of online gambling, the Wire Act, and its applicability to online gambling, has become an enigmatic piece of legislation. So much so that it is winding through the courts as we speak.

Since 2002, the Department of Justice has issued three opinions on the Wire Act as it pertains to various forms of online gambling. The latest, published in December 2018, unwound a 2011 opinion that limited the Wire Act to sports betting. The 2011 opinion led to multiple states legalizing and offering online casino, poker, and lottery products to their residents.  

One of those states, New Hampshire, decided to file suit against the Department of Justice’s 2018 opinion. And others have lined up in support of New Hampshire.

Conversely, the DOJ has a smaller group on its side.

This article will take a look at the entities on both sides and their core arguments.

If you need to read up on the case itself, I recommend this article.

In Support of the Plaintiffs

States

Three states, New Jersey, Pennsylvania and Michigan, have filed a Brief of Amicus Curiae in support of the New Hampshire Lottery and NeoPollard.

Those briefs can be found here:

The Michigan brief was co-signed by AGs and other key figures from numerous jurisdictions:

  1. Dana Nessel, Michigan Attorney General
  2. Fadwa A. Hammoud, Solicitor General
  3. Melinda A. Leonard, Assistant Attorney General Co-Counsel of Record Attorneys for Amicus Curiae
  4. Jason Ravnsborg, Attorney General State of South Dakota
  5. Dave Yost, Attorney General State of Ohio
  6. Kathleen Jennings, Attorney General State of Delaware
  7. Joshua H. Stein, Attorney General State of North Carolina
  8. Mark R. Herring, Attorney General of Virginia
  9. T.J. Donovan, Attorney General State of Vermont
  10. Kevin G. Clarkson, Attorney General State of Alaska
  11. Josh Kaul, Attorney General State of Wisconsin
  12. Vernon Kirk, Lottery Director State of Delaware
  13. Mary R. Harville, Sr. Vice President, General Counsel & Corporate Secretary Kentucky Lottery Corporation
  14. Phil Weiser, Attorney General State of Colorado
  15. Keith Ellison, Attorney General State of Minnesota
  16. Lawrence G. Wasden, Attorney General of Idaho
  17. Gerald S. Aubin, Director, Rhode Island Dept. of Revenue Division of Lottery
  18. William Tong, Attorney General of Connecticut
  19. Karl A. Racine, Attorney General for the District of Columbia
  20. Brian E. Frosh, Attorney General of Maryland
  21. Alonda W. McCutcheon, General Counsel Tennessee Education Lottery Corporation

All of the briefs make similar points, so to avoid redundancy, I’ll continue to focus on Michigan.

The Michigan brief makes three main arguments:

  • The DOJ has not unambiguously disclaimed an intent to prosecute government-operated lotteries and their vendors for violating the Wire Act.
  • Subsection (a) of the Wire Act extends only to interstate transmissions concerning sporting events or contests.
  • The 2018 Opinion and January 2019 memorandum constitute final agency action reviewable under the APA.

The brief ends with:

The district court’s decision should be affirmed. The 2018 Opinion and January 2019 memo constitute final action under the APA, and the 2018 Opinion is contrary to law. Plaintiffs and their amici face a substantial risk of prosecution that persists despite the April 2019 memo, and amici urge the Court to protect the billions of dollars in public revenues at stake and resolve this dispute by affirming the district court.

Groups

The groups and companies that have filed Amicus Curiae in support of the New Hampshire Lottery are:

  • iDEA Growth
  • IGT (International Gaming Technology)
  • AGEM (Association of Gaming Equipment Manufacturers)

In its brief, iDEA Growth argues:

Following the 2011 Opinion, many States, including New Hampshire, Kentucky, Illinois, Georgia, Michigan, and Pennsylvania, legalized the in-state online sale of lottery tickets. Several other States, including Delaware, Pennsylvania, New Jersey, and Nevada, enacted various iGaming legislation legalizing some form of either online casino gaming, online poker, or both. Each State that has adopted iGaming legislation has developed a tight statutory framework to regulate iGaming operations and activities that occur within its boundaries or between States that have authorized that activity.

[…]

Today, Like the various States that have enacted iGaming legislation, some of which provide direct iGaming or iLottery products to their residents, iDEA’s member-organizations have relied in good faith on the 2011 Opinion and have, collectively, invested millions of dollars to develop markets and create iGaming products that comply with state laws and are offered pursuant to licenses issued by States.

[…]

On January 14, 2019, the DOJ published a new opinion (dated November 2, 2018) reversing its position from the 2011 Opinion and concluding that certain aspects of the Wire Act do, in fact, reach beyond sports wagering to all forms of bets or wagers… As a result, any present conduct that does not conform to the 2018 Opinion is, according to the Department’s interpretation, in violation of the Wire Act and subject to prosecution.

According to iDEA, the DOJ reversal presents a serious threat to the states and operators that invested million and acted in good faith.

In Support of the Defendants

The DOJ has the support of the Coalition to Stop Internet Gambling and the National Association of Convenience Stores. The two groups filed a joint Brief of Amici Curiae.

The brief makes the following five arguments:

  1. Interpreting the Wire Act Not To Apply to the States Would Upend Federal Gaming Regulation Because It Would Compel the Conclusion that the States Are Exempt from All Major Federal Gaming and Lottery Statutes.
  2. The Presumption that Terms Such as “Person” and “Whoever” Do Not Include the Sovereign Is Inapplicable to the Wire Act.
  3. Other Federal Statutes that Regulate Gaming Clearly Indicate that, as a Default, Terms Such as “Person” and “Whoever” Include States.
  4. Legislative History Indicates that the Wire Act Includes States in the Definition of “Whoever.”
  5. The Wire Act Applies to State Employees and State Vendors.

Andrew Silver of Ifrah Law countered these arguments in a recent issue of Gaming Law Review.

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