DoJ Extends Wire Act Compliance Deadline Through End of Year
It seems that interstate online poker in the United States is safe for at least the rest of the year, as a new memo signed by Deputy Attorney General Jeffrey Rosen has pushed back the deadline for compliance with the Office of Legal Counsel’s new interpretation of the Wire Act to December 31, 2019. This comes as the previous deadline, June 15, loomed this weekend.
The single-page memo was dated Wednesday. The most relevant portion is the second paragraph:
On June 3, 2019, a federal district court in New Hampshire issued an opinion holding, inter alia, that Section 1084(a) applies exclusively to sports gambling. The Department is evaluating its options in response to this opinion. Accordingly, the forbearance period announced in the Deputy Attorney General’s February 28 memorandum is hereby extended from June 14, 2019 to December 31, 2019 or 60 days after entry of final judgment in the New Hampshire litigation, whichever is later.
How Did We Get Here?
This entire drama dates back about a decade, when the Illinois and New York lottery commissions asked the Department of Justice to clarify whether or not the Wire Act, which made interstate sports betting over communications wires illegal in an effort to curtail organized crime, applied to lotteries. The commissions were specifically interested in selling lottery tickets online. In late 2011, the DoJ’s Office of Legal Counsel issued an opinion, saying that the Wire Act did, in fact, only apply to sports betting.
That opened the door for states to legalize and regulate online gambling, though even to this day, only a few have launched online poker and casino industries.
In November 2018, the OLC, now part of the Trump Administration, reviewed the Wire Act again, this time issuing a new opinion, that it made all interstate online gambling illegal. The opinion was made known to the public in January 2019. Unlike the first opinion, there was no legitimate prompting or reason for the review. As we all guessed, though, crony capitalism was involved, as the Wall Street Journal reported that the reinterpretation was made at the behest of Sheldon Adelson’s lobbyists.
Operators and states were given 90 days – until April 15 – to get into compliance with the new opinion. This, of course, posed a serious problem. Not only did some poker sites already share liquidity across states, but gambling sites, including online lotteries, often route things like financial transactions through out-of-state servers, even if the start and end points are within state borders. Even ubiquitous multi-state lotteries like Powerball and Mega Millions could be in jeopardy. All of this would go against the new Wire Act opinion.
Lawsuits naturally followed, including one filed by the New Hampshire Lottery Commission, and at the end of February, then-Deputy Attorney General Rod Rosenstein extended the compliance period to June 15.
DoJ Takes a Hit
So what has changed? The New Hampshire Lottery Commission won its lawsuit, with United States District Judge Paul Barbadoro ruling that the OLC’s revised opinion was incorrect. His summary of his decision was as follows:
In summary, I deny the Government’s motion to dismiss for lack of jurisdiction because the plaintiffs have established standing, and the Government has not met its burden to show that the case is moot. I grant the plaintiffs’ motions for summary judgment and deny the Government’s cross-motion for summary judgment.
I hereby declare that § 1084(a) of the Wire Act, 18 U.S.C. § 1084(a), applies only to transmissions related to bets or wagers on a sporting event or contest. The 2018 OLC Opinion is set aside.
The Department of Justice can still file an appeal in the U.S. First District Court of Appeals, which is probably why the Deputy Attorney General decided to extend the compliance window to the end of this calendar year. The Department needs to get its ducks in a row for the upcoming appeal.
One of the most significant impacts this has on the poker world immediately is that New Jersey poker players can participate in the World Series of Poker online bracelet events. There are nine such events, but after the OLC’s new opinion, the WSOP said that New Jersey eligibility was up in the air for all but the first two, which fell before the June 15 deadline. Recently, the WSOP allowed that all nine events were now in play for New Jerseyites, but this memo extending the deadline to December 31 should seal the deal.
Before Nevada and New Jersey shared online poker liquidity (with Delaware, as well), players on both states’ WSOP.com sites were separated from each other. Thus, for the first few years of online bracelet events, only people in Nevada were eligible. With the player pools mixed, though, New Jersey players could also join in, allowing for larger fields, larger prize pools, and more opportunity for those who can’t travel to Nevada.
The new deadline may also take some pressure off of Pennsylvania, which is set to flip the switch on internet poker and casino sites in a month.