Appeals Court Sides With New Hampshire Lottery on Wire Act Opinion Ruling

Posted on: January 20, 2021, 07:50h.

Last updated on: January 20, 2021, 07:50h.

On the day the Trump Administration ended, its efforts to redefine the Wire Act likely came to an end as well after a federal appellate court issued a ruling Wednesday morning.

Wire Act judge
Wire Act judge
US Appeals Court Judge William Kayatta Jr. speaks at a Legal Services Corp. luncheon in Maine in July 2019. On Wednesday, he wrote an opinion that sided with the New Hampshire Lottery Commission, which had sued the US Department of Justice regarding a 2018 opinion on the Wire Act. (Image: LRC.gov/Vimeo)

The US First Circuit Court of Appeals issued its opinion and ruling Wednesday morning. In it, the judges agreed with the New Hampshire Lottery Commission. The commission challenged a 2018 Justice Department opinion radically altering federal authorities’ position on the Wire Act. The DOJ, in that draft opinion, claimed the 1961 law covered more than just sports betting.

A federal district judge in New Hampshire previously sided with the lottery in 2019. That prompted an appeal.

The Trump Administration’s interpretation could threaten the existence of multi-state lottery games, like Powerball and Mega Millions. Federal officials argued that the DOJ opinion was simply advice. As such, courts could not offer a ruling until prosecutors decided to act upon that advice.

The appeals court, which heard arguments in June, disagreed.

New Hampshire and its vendors should not have to operate under a dangling sword of indictment while DOJ purports to deliberate without end the purely legal question it had apparently already answered and concerning which it offers no reason to expect an answer favorable to the plaintiffs,” Judge William J. Kayatta Jr. wrote.

American Gaming Association President and CEO Bill Miller praised the ruling.

“Today’s ruling by the First Circuit provides important certainty for those who wish to innovate and invest in mobile gaming products,” he said in a statement.

Judge: New Opinion Does Not Follow ‘Common Sense’

When the Wire Act was passed the Kennedy Administration pushed it as a means to prevent organized crime.

The law’s text reads: Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.”

Justice officials claimed in the 2018 opinion the reference to sports betting was limited to only the clause where it’s mentioned. All other portions of the text, they said, pertain to other forms of gaming as well.

The appeals court found that argument incredulous.

“The text of the Wire Act is not so clear as to dictate in favor of either party’s view,” the opinion stated. “The government’s reading of the statute, however, would most certainly create an odd and unharmonious piece of criminal legislation. Neither common sense nor the legislative history suggests that Congress likely intended such a result.”

More Than Just Lotteries Impacted

Federal officials can appeal the ruling to the Supreme Court. However, that may not happen now with President Biden in control.

The new president has previously said he did not agree with the 2018 opinion. Specifically, Biden has said he opposes “unnecessary restrictions” in the gaming industry.

In addition, the recent death of Las Vegas Sands Chairman and CEO Sheldon Adelson also makes an appeal less likely. He was perceived to be the major reason why the Trump Administration pushed for the new opinion.

The decision may not just have implications for lotteries. Online poker and other forms of iGaming may benefit from the ruling as well. For online poker, it could mean that more states join with Delaware, New Jersey, and Nevada in the Interstate Poker Compact.

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