On Monday, the New Hampshire Lottery Commission breathed a sigh of relief as US District Court Judge Paul Barbadoro sided with gambling interests. Specifically, the 60-plus page opinion found in favor of online gambling, lotteries and casinos and against the Department of Justice’s new Wire Act interpretation.
Recall that New Hampshire previously sued the DOJ’s Office of Legal Counsel (OLC) over a revised Wire Act opinion. The core of the revised opinion states that all forms of online gambling violate the Wire Act.
More on the Wire Act decision
In short, after New Hampshire filed suit, the DOJ responded via a motion to dismiss the case. More specifically, the DOJ claimed the plaintiffs (New Hampshire and the lottery vendors) have no standing to sue. Therefore, there is no right to relief.
Their argument against standing is that New Hampshire and the lottery vendors do not face an imminent threat of prosecution.
Barbadoro effortlessly dismissed the DOJ’s argument on standing.
First, they have openly engaged for many years in conduct that the 2018 OLC Opinion now brands as criminal, and they intend to continue their activities unless they are forced to stop because of a reasonable fear that prosecutions will otherwise ensue. Second, the risk of prosecution is substantial. After operating for years in reliance on OLC guidance that their conduct was not subject to the Wire Act, the plaintiffs have had to confront a sudden about-face by the Department of Justice. Even worse, they face a directive from the Deputy Attorney General to his prosecutors that they should begin enforcing the OLC’s new interpretation of the Act after the expiration of a specified grace period. Given these unusual circumstances, the plaintiffs have met their burden to establish their standing to sue.
As a reminder, the Wire Act written in 1961 is both outdated and poorly written. Consequently, it allows for various interpretations. Both New Hampshire and the DOJ argue that the “plain language” of the Wire Act support their arguments.
Barbadoro decided “where, as here, a statute is ambiguous, a court must look at more than grammar to determine its meaning.” After a through examination, Barbadoro concluded to limit the Wire Act to sports gambling. In doing so, his decision “avoids significant coherence problems” which could result from the DOJ’s interpretation.
Limitations on the ruling
The Court took specific notice that the parties disagree on whether judgment should be limited to the parties or be a universal ruling. A universal ruling is applicable to anyone affected including Pennsylvania online lottery and online gambling. Of course, the DOJ wants the ruling to apply only to the parties in the case.
While the Court did agree with the DOJ on this particular argument, Barbadoro also noted that judgment binds the parties outside of New Hampshire. This is due to NeoPollard, New Hampshire’s lottery vendor, operating outside of New Hampshire.
How to extend the judgment
However, all is not lost. Previously, the state of Michigan filed an amicus brief. Their argument is to extend relief to non-parties on behalf of the Lottery Commission.
The National Law Review succinctly outlines Michigan’s argument.
The argument was predicated on the fact that New Hampshire, as a member of the Multi-State Lottery Association, benefits financially from the large scale of multi-jurisdictional games such as Powerball. If another state, such as Michigan, shuttered its state lottery, then the overall revenues of Powerball would decline. If the revenues of Powerball decline, then the share of Powerball revenue that New Hampshire receives would decrease. Based on this Michigan argued that the Court should ensure that New Hampshire not suffer any adverse financial effect.
Sadly, New Hampshire did not use this argument. For this reason, Barbadoro stated, “Should the Lottery Commission wish to pursue such relief, however, I am willing to entertain its claim.”
New Hampshire Lottery Commission has 14 days to file the motion. This motion requires the fleshing out of adequate factual and legal arguments.
Although Barbadoro ruled in favor of New Hampshire, the DOJ can still appeal to the First Circuit Court.
Should the appeal occur, the First Circuit Court has to review the case de novo. This means the court reviews the case anew or independently as if no decision by Barbadoro was previously made.
As a result, the appeals process will take months, if not years to finalize.
PA online poker
So, who benefits most from the ruling on the Wire Act? The answer is Pennsylvania online poker players.
The DOJ’s Wire Act opinion threw Pennsylvania’s expansion of online poker compacting and multi-state lottery games right into violation of their interpretation. Fortunately, Barbadoro’s ruling clears the way for the expansion of online poker in PA should the Pennsylvania Gaming Control Board decide to proceed.
The exciting potential of PA entering the online poker compact would immediately double the amount of online poker players across the four compacted states.