Attorneys for the U.S. Department of Justice backed off the position that online gaming is a criminal act in oral arguments last week for an appeal of DOJ’s 2018 opinion regarding the Wire Act.
In 2018, the DOJ issued an opinion that reversed the Obama administration’s prior opinion that the 1961 federal Wire Act only applies to sport betting. That 2011 decision opened the floodgates for online gaming, both on real-money sites and through state lotteries. In the revised opinion, the DOJ indicated it would not prosecute activities without giving 90 days’ notice.
The New Hampshire Lottery sued to overturn the decision, and won in U.S. District Court. In last week’s appeal hearing in the First Circuit Court of Appeals in Boston, DOJ lawyers appeared to back off their former position.
“There’s not only no credible threat of prosecution (for online gaming), there’s no threat at all,” Justice Department attorney Jeffrey Eric Sandberg told the court.
Attorneys for the New Hampshire Lottery Commission countered that the 2018 opinion in itself threatens the millions in online sales state lotteries have generated for their governments. Judges agreed.
“State lotteries bring in hundreds of millions of dollars that are incorporated into budget planning,” said U.S. Circuit Judge William Kayatta, one of three judges presiding over the appeal. “Any state could wake up tomorrow morning and discover that if it doesn’t substantially change its practices in 90 days, its officials could go to jail.”
U.S. Circuit Judge Sandra Lynch chided the DOJ attorneys for the reversal. “Only after plaintiffs filed suit did your office say, ‘Gee, we didn’t mean what we said,’” Lynch said.
“It seems to me there were considerable reliance interests not only in the states but in the ancillary businesses that caused them to invest hundreds of millions of dollars in reliance on the 2011 memo. You may say it’s vague, but they certainly felt they were threatened.”
