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Federal Court Restricts DOJ’s New Opinion on Wire Act

Publish: 12.06.2019

Good news for the intrastate online gambling in the United States, after a federal court made a decision to restrict the reach of the Wire Act.  

Thanks to the latest ruling, this controversial piece of legislation will be limited only to interstate sports betting.  

The new opinion of the US Department of Justice on the 1961 Wire Act, issued last year, raised a lot of controversies, especially as it was in total contrast with the Department’s opinion on the same subject, from 2011. 

Court Pic-canadascasinos

Two Conflicting Opinions

The opinion from 2011 stated the Wire Act applied only to sports betting, which allowed a number of states to establish their own intrastate online casino, poker and lottery markets. The latest opinion, which came shortly after the US Supreme Court’s decision to repeal PASPA and allow sports betting, claimed the said piece of legislation applied to almost all forms of online gambling.  

The first one to challenge this opinion was the New Hampshire Lottery Commission (NHLC), claiming the position represented a threat to the state’s online lottery sales. On the other hand, the DOJ claimed the NHLC lacked standing to challenge the opinion, as the text doesn’t specifically mention lottery operations.  

Judge Paul Barbadoro didn’t agree with the DOJ and added there was a substantial risk that the Department would prosecute the NHLC if it continued its online operators. He explained this was no hypothetical case, as the NHLC was facing a serious threat of enforcement, as the Commission had been left with few options.  

In the opinion from 2018, DOJ argued that the absence of a comma in a sentence defining the illegality of transmitting betting information didn’t limit the illegality to just wagering on sports. Barbadoro decided the context of the clause was all that mattered. After hearing both sides, Barbadoro decided to accept the NHLC request for summary judgement.  

He described the latest opinion as “a capable, but mistaken”, and stated the only proper remedy was to set it aside.  

What’s Next?  

The Department of Justice is likely to appeal to Barbadoro’s ruling – and even he himself suggested the case would go all the way to the US Supreme Court, no matter which of the sides prevailed in court.  

Hypothetically, the DOJ could reach a conclusion the opinion from 2018 doesn’t hold water, and just give up on it. But this probably won’t happen, especially as many believe the 2018 opinion was a really big favour to Sheldon Adelson, who long sought such a restriction. With another election coming up in 2020, the DOJ could really push its agenda.

For the time being, Judge Barbadoro’s ruling will ease the situation for states like Pennsylvania, which are in the process of debuting their online casino and poker operations. This decision could boost the confidence of other states that thought about making such a move but didn’t have enough confidence.  

As for the DOJ, we’re pretty sure they won’t give up that easily. Game 1 was won by intrastate online gambling, but the series is far from being over.