Last Minute Memo Throws A Wrench In Wire Act Lawsuit

A late DOJ court filing includes a memo suggesting its new Wire Act interpretation does not apply to lottery. It could get the NH Lotto suit dismised.

The legal compass of the Wire Act has changed once more with a new 11th-hour filing. The DOJ filed new evidence, including a memo on how the new Wire Act opinion applies to state lotteries. Or rather, that it does not apply to state lotteries.

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DOJ conducting a review of state lotteries

In the memo the DOJ filed, state lotteries are exempt currently from the opinion issued by the DOJ OLC on January 15, 2019. That new opinion stated that any transmission of a bet or wager across state lines would violate the Wire Act.

Deputy Attorney General Rod Rosenstein stated in the memo that Office of Legal Counsel’s opinion earlier this year did not address the issue of state lotteries or their vendors.

Vendors are companies like NeoPollard and Pollard Banknote that provide lottery technology. These companies successfully joined into the New Hampshire suit against the DOJ.

The DOJ alleges it is now conducting a review on the applicability of the Wire Act to state lotteries and will not be prosecuting such cases while the DOJ conducts the review. The group will look both at multi-state draw games like Powerball and Mega Million and online lottery games.

The 11th-hour legal maneuver by the DOJ

State lotteries and their vendors can breathe a heavy and collected sigh of relief for now. However, what follows from this new memo released by the DOJ is a downright brilliant and shrewd legal maneuver.

It is also one that can extricate the government from the pending litigation brought by New Hampshire and NeoPollard. The case impacts other states too. Many states with a stake in online gaming and lottery, including Pennsylvania, filed amici briefs in the case.

Because the DOJ exempts state lotteries and its vendors out of the most recent opinion regarding the Wire Act, this potentially leaves New Hampshire, NeoPollard, and Pollard Banknote with no standing to bring suit. The New Hampshire Circuit Court could dismiss the case because there is no expectation or fear of prosecution for violation of the Wire Act.

NeoPollard’s attorney speaks out

Matthew D. McGill of Gibson Dunn & Crutcher LLP, represents NeoPollard in the suit. He told Law360 (paywall) via email that the DOJ considers state lotteries as “felonies in progress.” McGill further stated:

“Desperate to avoid judicial review of its radical reinterpretation of the Wire Act, DOJ now is backtracking from the clear import of the reversal of position that it supposedly had so carefully considered. DOJ’s eleventh-hour statement that it may — or may not — further revise its interpretation of the Wire Act only underscores the arbitrariness of the reversal of DOJ’s long-held position that the Wire Act addresses only sports betting activities.”

As both sides have filed motions for summary judgment, all parties plus those who filed amici briefs will appear for oral arguments as scheduled on April 11.

Sheldon Adelson involved again

Two weeks ago, the National Association of Convenience Stores and Coalition to Stop Internet Gambling (CSIG) filed amici briefs on behalf of the DOJ. CSIG is made up of many conservative Christian groups. Sheldon Adelson founded the group in 2013. The convenience stores group has always opposed lottery expansion online.

This is not the first instance of alleged meddling by Adelson. NJ Attorney General, Grubir S. Grewal, filed a Freedom of Information Act request to uncover links between Adelson and the issuance of the January 15, 2019 OLC opinion. The Wall Street Journal has also alleged a direct link between Adelson and the DOJ’s OLC opinion.

What happens next for the DOJ Wire Act case?

The NH District Court is expected to rule on the summary judgment motion as early as May. An appeal will likely be filed to the First Circuit Court of Appeals. The First Circuit Court of Appeals has previously stated that the Wire Act only applies to ‘wagers on any sporting event or contest,’ that is, sports betting.”