In a huge victory for the state of online poker in the United States, the First Circuit Court of Appeals upheld a U.S. District Court ruling regarding the Department of Justice’s 2019 opinion on the Wire Act.
Just a few weeks into 2019, the DOJ released a memo stating that it reconsidered its 2011 opinion of the 1961 legislation. It basically outlawed all forms of online gambling on an interstate level. The new opinion put the legality of interstate online poker and even some forms of the lottery, like Mega Millions and Powerball, into question. In 2011, the DOJ stated that the Wire Act only applied to sports betting.
The New Hampshire Lottery filed a lawsuit against the DOJ’s Office of Legal Counsel in response to the DOJ’s change of heart. It partners with a vendor that has servers in Vermont and Ohio, which could make the state’s lottery illegal under the latest opinion.
In June 2019, a U.S. District Judge ruled in favor of the New Hampshire Lottery and struck down the DOJ’s 2019 opinion. Judge Paul Barbadoro rejected the interpretation and pointed to the Paraphernalia Act, which was passed by Congress simultaneously with the Wire Act, to decipher lawmakers’ true intentions.
“The Paraphernalia Act demonstrates that when Congress intended to target non-sports gambling it used clear and specific language to accomplish its goal. In other words, when Congress wished to achieve a specific result, it knew how to say so,” said Barbadoro in his ruling.
A month later, the DOJ filed an appeal, which was ruled on by an appellate judge Wednesday. According to a tweet from Jeff Ifrah, a lawyer on the case, New Hampshire won its second straight ruling after Judges Sandra Lynch and William Kyatta upheld Barbadoro’s opinion.
And we win! The 1st Circuit upholds the District Court’s Opinion and rejects the OLC‘s opinion. The 1st Circuit holds that the Wire Act only (and obviously) applies to sports events and contests! Big Win! @iDEA_Growth #sportsbetting #wireact
— Jeff Ifrah (@jifrah) January 20, 2021
The 2011 opinion opened the doors for online poker to make a comeback in the U.S. with a handful of states legalizing online gambling. Nevada was the first and was followed by Delaware and New Jersey. Initially, poker players in those states could only compete against other players geolocated within the same borders.
But eventually, the three states formed a compact that shared player pools and liquidity. It allowed players from all three states to compete against one another, allowing for a larger selection of cash games and bigger prize pools in tournaments on WSOP.com, the only platform operating in all three states.
Pennsylvania, West Virginia and Michigan legalized online poker over the last few years as well. Pennsylvania launched its online poker market in November 2019 but opted to keep its operations intrastate while the legal battle surrounding the Wire Act played out.
With PokerStars operating in both Pennsylvania and New Jersey, but not in Nevada or Delaware, it makes a second compact between those states likely in the future.
PokerStars will also have a Michigan platform when the state launches online poker later this year. With Gov. Gretchen Whitmer signing a bill earlier this month that would allow interstate online poker, it looks like there is an easy path to a shared player pool on PokerStars between New Jersey, Pennsylvania and Michigan.
When it does launch, however, the ruling makes it clear that they will be allowed to share liquidity with other states if they choose to. As other states warm up to legalizing online poker, it will make compacts much easier to form, thus brightening the future for online poker in the U.S.
Can The DOJ Continue The Legal Battle?
If the DOJ were to continue to pursue the case, it would have to take it to the United States Supreme Court.
In a different set of circumstances, this could be a likely outcome. But with an incoming Biden administration, who has already said that they will adhere to the 2011 interpretation of the Wire Act, it doesn’t seem likely.
The passing of Las Vegas Sands Corp. founder Sheldon Adelson last week adds to the unlikelihood of a Supreme Court case. Adelson was one of the most influential and powerful figures driving the push for the ban of online gambling.