New Jersey

New Jersey Joins Wire Act Lawsuit-Fest

About a month ago, we reported that the state of New Jersey announced that it was planning to sue the United States Department of Justice over the Office of Legal Counsel’s (OLC) revised opinion on the Wire Act. On Friday, the state did not exactly file its own lawsuit, but it has jumped into the pool, filing an amicus brief in support of the New Hampshire Lottery Commission’s (NHLC) suit against the DOJ and US Attorney General William Barr.

For those of you who are not legal experts, and I include myself in that category, an amicus brief is essentially a way for a party that is not part of the litigation to piggy back on the lawsuit. The brief will contain relevant information, analysis, or advice that may be taken into consideration by the court, though the court does not have to consider it at all.

The NHLC filed its lawsuit in mid-February, taking to task the Justice Department for the Wire Act reinterpretation. In late 2011, the OLC, then part of the Obama Justice Department, issued an opinion stating that the Wire Act only made interstate online sports betting illegal, not all online gambling. This decision, though not an actual change to the law, jump-started the legalization and regulatory process of online gambling for an number of states, though only a few have actually launched online gaming industries more than seven years later.

In January of this year, now under the Trump administration, the OLC reversed course, saying that the Wire Act applied to all online gambling. This potentially throws a massive wrench into existing and potential gambling industries.

New Hampshire Lets DOJ Have It

New Hampshire does not have online poker or online casino gambling, but the Lottery Commission does sell lottery tickets online, hence the angst over the Wire Act. New Hampshire is also in the jurisdiction of the United States Court of Appeals for the First Circuit, which is important because it was the First Circuit Court of Appeals that ruled years ago, before the OLC’s 2011 opinion, that the Wire Act applied only to sports betting.

The NHLC’s criticism of the new opinion includes but is not limited to the following:

• Such a construction of the statute is not faithful to the text, structure, purpose, or legislative history of the Wire Act.

• Such a construction would also render the statute unconstitutionally vague, as well as unconstitutional under the First Amendment.

• The 2018 Opinion’s interpretation of the Wire Act also intrudes upon the sovereign interests of the State of New Hampshire without unmistakably clear language demonstrating that Congress intended such a result.

The Commission also estimates how much damage enforcement of the new Wire Act opinion could do financially, saying it could result in an “immediate annual loss of over $90 million to the State” and “sales would likely be reduced to approximately 25% of their current level.”

New Jersey Has New Hampshire’s Back

In its 32-page amicus brief, New Jersey urged the court to overturn the revised Wire Act opinion, saying that it affects more parties than just those in New Hampshire. The Garden State also discusses the inevitable crossing of state lines that takes place in online gambling, something with which New Jersey has years of experience:

If allowed to stand, the 2018 Reinterpretation, and the DOJ Memo which adopts it for enforcement of the Wire Act nationwide, may end New Jersey’s iGaming industry. Some aspects of the industry are specifically designed to operate in multiple states. For example, New Jersey, Delaware and Nevada have entered into a multi-state agreement to provide for and regulate Internet poker among people in each State. This now may be unlawful under the 2018 Reinterpretation.

In addition, other aspects of New Jersey’s iGaming industry involve interstate use of the wires, notwithstanding the best efforts of the regulators, operators, and participants. It is simply the nature of the Internet that even purely intrastate transactions may travel through channels that cross state lines.

The first paragraph above is self-explanatory. Interstate gaming compacts could come to an end because of the new Wire Act interpretation. This was most recently apparent with the World Series of Poker’s announcement of nine online gold bracelet events this summer and its lack of inclusion of players on WSOP.com in New Jersey.

The second paragraph has mostly to do with financial transactions. The UIGEA allows for intrastate online gambling payments to cross state lines as long as they originate and terminate within the state, but the latest Wire Act opinion does not. By nature, many, if not most payments to and from licensed, regulated gaming sites will route around the country and not stay confined within a single state’s borders. I might be situated in Newark, New Jersey and depositing money at an online poker room in New Jersey, but my banking transaction might route through, say, North Carolina in the few seconds it takes to process. This was perfectly fine before the OLC changed its mind about the Wire Act and would make logical sense to anybody with a reasonable, functioning brain, but with the reinterpretation, not so much.

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