The gaming industry is apparently not going to take the new Department of Justice opinion on the Wire Act laying down. The memo reversed a previous 2011 DOJ memo that said the act applied only to sports betting. The new opinion puts at risk legal online gaming and online lottery ticket sales in several states, as well as mobile sports betting.
MGM Resorts Chairman and CEO Jim Murren was asked about the new interpretation of the Wire Act in an earnings conference call last week.
“This latest missive from the DOJ is perplexing is an understatement,” Murren said. “It’s just, we think, an absurdly poorly written and unenforceable opinion, and I don’t think anyone in the industry, the gaming industry, the sports betting industry, feels any differently.”
Murren pointed out that, if strictly interpreted, the new memo could potentially make multi-state lottery games, like Powerball, illegal.
And that’s one reason why New Hampshire is the latest state ready to sue the Department of Justice over its recently revised opinion on online betting as it seeks to protect its online lottery profits, which help fund the state’s schools.
That state makes about $5 million a year in lottery profits and officials say they will fight to protect them. The DOJ recently issued a revised opinion of the 1961 Wire Act saying it makes illegal all types of online gambling that cross state lines.
The new opinion has called into question all online lotteries, especially those run interstate such as Powerball and Mega Millions. New Hampshire is one of six states that also offer online lottery games.
New Hampshire Lottery Executive Director Charles McIntyre told the state’s Union Leader newspaper that opinion would make it illegal to purchase New Hampshire lottery products online.
“Certainly, at the very narrowest interpretation we are looking at $4 million to $6 million this year and $6 million to $8 million next year, as this represents what we are selling now through the internet online channel,” McIntyre said. “This revenue is growing month by month and profitability now is more than $300,000 a month.
The North American Association of State and Provincial Lotteries also issued a statement this week criticizing the opinion.
“The recent United States Department of Justice, reinterpretation of the Wire Act of 1961 creates a substantially detrimental impact on the lottery industry, including traditional retail-based draw and instant lottery games, as well as traditional lottery games offered over the Internet, and the billions of dollars for good causes lotteries provide,” the statement said.
McIntyre told the Union Leader that New Hampshire and other states that began online lottery sales did so thinking the practice would be permitted.
“We went forward with the best of intentions believing that all of this would be allowed and that’s what is so troubling about this development,” McIntyre said.
He also said he has discussed the issue with Governor Chris Sununu and Attorney General Gordon J. MacDonald about the matter.
“This is a serious enough threat to a major revenue source that I wanted them to be aware of it and to discuss what our options are,” McIntyre said.
Analysts pointed out that New Hampshire would be an ideal sate to file a challenge to the ruling since the U.S. Circuit Court of Appeals in Boston, Mass. ruled in 2014 that only interstate sports betting was illegal under the Wire Act.
New Hampshire joins New Jersey and Pennsylvania in threatening legal action on the opinion. The state attorneys general for both states strongly criticized the opinion. New Jersey Attorney General Gurbir S. Grewal said he has also filed freedom of information act requests to determine what role Adelson played in the release of the new opinion.
Last week, New Jersey Senate President Steve Sweeney sent a letter to Assistant Attorney General Rod Rosenstein saying that he would direct former state Senator Ray Lesniak to file suit in U.S. District Court unless the ruling is rescinded, calling it “arbitrary and capricious.”
Meanwhile, federal Acting Attorney General Matthew Whitaker was challenged on the new ruling before Congress and denied the opinion was issued as a concession to Las Vegas Sands owner Sheldon Adelson, a major republican donor who has been financing a personal lobbying effort to ban online gaming. A recent report by The Wall Street Journal, however, said the new opinion was heavily influenced by a memo from a lobbying firm working for Adelson.
Whitaker said he had no involvement in the new opinion and has never met with Adelson in a hearing before the before the House Judiciary Committee, responding to questions from Congressman Jamie Raskin.
Raskin questioned Whitaker about his relationships with anti-online-gambling groups and casino interests. Whitaker, however, said he was recused from involvement with the opinion.
Whitaker also defended the new opinion.
“The first OLC opinion that preceded the one we just issued in November was done—and the state of Illinois provided a white paper regarding the position on the Wire Act. So, I think it is very consistent, and your inferences on how that process was corrupted or corrupt is absolutely wrong. And the premise of your question I reject,” he said.
For his part, Raskin told the Huffington Post he was unsatisfied with Whitaker’s answers.
“This definitely bears further investigation,” Raskin said. “When and where and by whom remains to be seen.”
Whitaker, however, will now be replaced by President Donald Trump’s Attorney General nominee William Barr, who has not commented on the issue. Barr was confirmed last week.
