Federal Authorities Insist State Lotteries Remain Unchallenged by Them - So Far, However
In this intriguing turn of events, the New Hampshire Lottery's clash with the federal government just got a whole lot more fascinating.
Last Friday, the U.S. Department of Justice (DOJ) filed a lengthy argument to the First Circuit Court of Appeals, attempting to overturn a court ruling from last year that voided a 2018 Office of Legal Counsel opinion pertaining to the Wire Act of 1961.
The Wire Act, though limited in scope when it was first passed - around 35 years before the internet's widespread public use - clearly forbids sports betting across state lines. However, the blurry language and convoluted structure of the statute have led to some debate on whether it applies more broadly to other gambling activities.
Back in the Obama era, officials from state lotteries in the IL sports betting market and New York sought clarification on whether they could legally sell lottery tickets online even if these sales might involve infrequent interstate components.
In response, the DOJ provided a 2011 opinion confirming that the Wire Act only applies to sports betting, effectively green-lighting not only online lottery sales but also online casino gaming.
However, in 2018, the DOJ appeared to change its stance with a new opinion, raising the possibility that all sorts of online gambling might be illegal. This sparked the lawsuit by the New Hampshire Lottery, which secured a favorable ruling from U.S. District Court Judge Paul Barbadoro in 2019.
In its recent filing, the DOJ stands firm, albeit in a peculiar manner, essentially asserting that there is "nothing to see here" because the 2018 opinion doesn't have any substantive impact. According to the DOJ briefing, "plaintiffs - a state lottery commission and its vendors - demand that Article III courts issue an advisory opinion and 'set aside' internal Executive Branch advice with which they disagree."
The DOJ contends that the plaintiffs have not established a credible threat of prosecution and as such, do not have grounds for their lawsuit. The DOJ highlights that no state lottery official has ever faced prosecution based on the Wire Act, and it offers slightly contradictory interpretations of the statute's true meaning.
In the eyes of some, the DOJ's strategic inaction is becoming its defense. "Plaintiffs, therefore, face no threat of prosecution (much less a credible threat) for what they have previously done, are currently doing, or may do in the immediate future," the briefing underscores.
The attorneys handling the case for the U.S. appellate staff emphasize that the 2018 Opinion did not resolve the Wire Act's applicability to state lotteries and their vendors, and that presently, the DOJ has not taken any position on whether the plaintiffs' conduct violates the Wire Act.
With a clear lack of action from the DOJ, proponents of online gambling expansion are left feeling increasingly frustrated. The confusion surrounding the Wire Act's applicability to various online gaming activities remains a significant obstacle for states considering expanding their gambling offerings, particularly online casino games and lotteries, which generate well over $200 million annually in some states.
The ongoing uncertainty surrounding the Wire Act's interpretation is all the more complex when taking into account the Adelson connection. The Las Vegas-based billionaire Sheldon Adelson, a major Republican Party donor, vehemently opposes online gambling expansion and funds the Coalition to Stop Internet Gambling. The Adelson connection has been raised in several court filings, adding another layer to the mix.
- The debate over the Wire Act's broad application beyond sports betting extends to the finance and investing sectors, as the industry follows the New Hampshire Lottery's clash with the federal government closely.
- The risk in sports betting and online gambling is a contentious issue, with the DOJ's shifting stance potentially impacting the wealth-management advice given to individuals involved in these activities.
- The business of banking-and-insurance could also be affected by the outcome, as the interpretation of the Wire Act shapes the legal landscape for online gaming and financial transactions.
- Personal-finance advisors are closely monitoring the situation, as the potential changes could have significant implications for their clients' financial portfolios and investments.
- The politics of online gambling expansion are notably intertwined with the Wire Act interpretation, given the influence of figures like Sheldon Adelson, who has a substantial stake in the outcome.
- The general-news media continues to cover the story comprehensively, offering insights into the legal complexities and financial ramifications for various stakeholders in the sports betting and online gambling industries.
