The Final Chapter In The Wire Act Saga Has Yet To Be Written

The Department of Justice’s decision to not appeal the First Circuit ruling upholding a prior district court opinion that The Wire Act only applies to sports betting was hailed as a significant victory for legal, regulated online gambling in the USA.

But that victory could be fleeting.

Read our previous coverage for a deeper dive into the recent Wire Act court cases.

Unlike the thoughtful and well-argued 2011 opinion that opened the door to online casinos, online poker, online lottery, and more, the 2018 opinion more or less employed the parental argument, “because I said so,” a legal point of view that was seen as shaky at best.

Not surprisingly, the New Hampshire Lottery (which took the lead in pushing back against the 2018 OLC opinion) received favorable rulings in District Court and the First Circuit. And you’d be hard-pressed to find any legal scholar who gave the DOJ more than a snowball’s chance in hell to prevail at any point in the process.

For that reason, my sincere hope was the DOJ would appeal the ruling, and the case would continue through the court system, eventually landing at the Supreme Court, where the Wire Act’s applicability to online casinos, poker, and lottery would be determined once and for all.

Yes, there is some risk going down that path, but this was as close to a slam dunk case as you could find. But more importantly, this matter needs finality, not another temporary solution.

Instead, we are right back where we have been all along, with the whims of the current administration able to issue a positive or negative OLC opinion regarding the Wire Act and online gambling. The recent rulings provide some cover, but they’ve done nothing to fix the abomination that is the Wire Act. The law still exists and still lacks clarity.

Let’s Talk About OLC Opinions

Office of Legal Counsel opinions are just that, opinions.

These opinions aren’t legally binding and don’t carry the force of law. That said, OLC opinions are meaningful, as they dictate how the current Department of Justice will enforce a law. 

It’s pretty remarkable how both sides have praised and dismissed OLC opinions, which illustrates the overall point of this column: OLC opinions are not a solution. They’re a temporary fix.

Advocates of legal online gambling praised the 2011 opinion, while opponents quickly noted OLC opinions don’t carry the force of law, something the DOJ has said itself:

Office of Legal Counsel “simply renders legal advice and has no power to determine the ‘rights or obligations’ of, or impose ‘legal consequences’ on, plaintiffs or anyone else,” the Justice Department asserted in the US Court of Appeals for the First Circuit.

Upon the issuance of the 2018 opinion, the roles reversed.  Proponents who used the 2011 opinion as a basis for legalization quickly noted that OLC opinions don’t carry the force of law, while opponents who were adamant that the 2011 opinion didn’t carry the weight of law pointed to the 2018 opinion as a reason to prohibit online gambling.

This hypocrisy was on full display in a 2019 press release from the Coalition to Stop Internet Gambling applauding the opinion. The same group argued for years OLC opinions don’t carry the weight of law:

“CSIG is pleased to see today’s decision by the Department of Justice to reverse an Office of Legal Counsel opinion that was as problematic legally as it was morally.

“Today’s decision seamlessly aligns with the Department’s longstanding position that federal law prohibits all forms of internet gambling, as well as with Congress’s intent when it gave law enforcement additional tools to shut down the activity through the overwhelmingly-passed Unlawful Internet Gambling Enforcement Act in 2006.

“Today’s landmark action to rightfully restore the Wire Act is a win for parents, children and other vulnerable populations.”

Flip-Flop-Flip…

Since 2002, there have been no less than three DOJ opinions on the matter.

2002: DOJ Weighs In

In 2002 the Department of Justice Criminal Division responded to a request from Nevada gaming regulators regarding a 2001 law the state passed that opened the door for online gambling.

Michael Chertoff, then-acting Assistant Attorney General in the DOJ’s Criminal Division, responded thusly:

“[T]he Department of Justice believes that federal law prohibits gambling over the Internet, including casino-style gambling.”

However, as Minton notes, “Chertoff provided no rationale for this conclusion, other than citing the Wire Act itself,” and was at odds with “legal scholars, court rulings, and other DOJ staff who continued to question the Wire Act’s applicability to non-sports gambling.”

The DOJ sent a similarly worded letter to the state of North Dakota in 2005, and the department’s stance remained the same until 2011.

2011: The OLC Opinion

At the request of Illinois and New York, the DOJ’s Office of Legal Counsel issued an opinion on the legality of online gambling in the US. The crux of the 2011 opinion was the conflict between the DOJ’s current interpretation of the Wire Act and UIGEA on the subject of intrastate online gambling and intermediary routing of data:

“The Criminal Division further notes, however, that reading the Wire Act in this manner creates tension with UIGEA, which appears to permit out-of-state routing of data associated with in-state lottery transactions.”

The result was an OLC opinion dated Sept. 20, 2011, that reads, “… interstate transmissions of wire communications that do not relate to a “sporting event or contest,” 18 USC. § 1084(a), fall outside of the reach of the Wire Act.”

The 2011 OLC opinion brought about legal intrastate online lotteries, online casinos, and online poker sites.

2018: DOJ Reverses Course

In 2018, the OLC issued a new, controversial opinion, rewinding the 2011 opinion, and reasserting its previous “all forms of online gambling” stance on the Wire Act.

The new opinion concludes:

“While the Wire Act is not a model of artful drafting, we conclude that the words of the statute are sufficiently clear and that all but one of its prohibitions sweep beyond sports gambling. We further conclude that that the 2006 enactment of UIGEA did not alter the scope of the Wire Act.”

However, with more than a dozen states offering online lottery sales and online casino and poker games, the opinion came under fire, culminating with a lawsuit filed by the New Hampshire Lottery (the oldest US lottery) and its supplier Neopollard.

Yes, the 2018 opinion was legal gobbledygook, but who is to say a better argument won’t present itself in another OLC opinion in the coming years. As I said on Twitter, “the 2018 opinion was thrown together pretty haphazardly. Any of us could play devil’s advocate and present a better argument.”

The First Circuit ruling provides additional precedent and further bolsters the case for a narrow reading of the Wire Act (one that doesn’t apply to online casino, poker, and lottery). Still, it stops short of settling the matter.

That’s a pity, as this was a slam dunk opportunity to put the Wire Act-online gambling debate to bed once and for all. As it stands, the specter of another OLC opinion persists, and that provides a convenient excuse for states to continue to resist passing online gambling legislation.

No matter how much state attorneys general want the Biden administration to renounce the 2018 opinion, that repudiation has a shelf-life. The next administration can do as it pleases.

Reasons for Optimism

To say online gambling has become normalized in the US is an understatement. That, coupled with the multiple legal rulings favoring a narrow view of the Wire Act, makes it difficult to envision a future challenge, let alone a successful one.

The toothpaste rarely goes back in the tube, and right now, it’s spread all over the counter.

Additionally, the man who spearheaded the anti-online gambling movement, Sheldon Adelson, is no longer with us. Adelson fought against online gambling expansion for years, including multiple attempts to rewrite the Wire Act and being the driving force behind the 2018 OLC opinion. 

The Elephant in the Room

There is an argument to be made that the Wire Act doesn’t apply to online poker, casino, and lottery, but there’s no question that it applies to sports betting. Yet, that has spread like wildfire across the country. While it’s occurring on an intrastate basis, it’s clear that transmissions are crossing state lines and that data used to facilitate wagering is too.