Proponents of online gaming aren’t yet ready to spike the football. But the end zone is in view.
The ruling 10 days ago by a New Hampshire federal judge that set aside the latest U.S. Department of Justice opinion on the 58-year-old Wire Act allows states to continue offering both online casino gambling and online lottery wagering.
What is unclear is whether or not the Justice Department will continue to press the issue. A spokesman told the Associated Press it was “reviewing the decision” but declined further comment.
Eilers & Krejcik analyst Chris Grove
Some analysts believe political pressure may force the government agency to continue to back the opinion, even though the Department is being led by its third Attorney General since the Office of Legal Counsel drafted the 23-page memorandum in November.
“One thing to keep in mind is that the DOJ may have a broader interest in not backing down,” Eilers and Krejcik gaming analyst Chris Grove said in an email. “They may not like the precedent this sets for other issues, or the loss of face, or any number of other factors that don’t have to do with the issue of online gambling itself.”
The opinion, made public in January, reversed a 2011 Office of Legal Counsel ruling that said the Wire Act pertained only to sports betting.
Legal experts and gaming analysts said the new opinion could wipe out seven years of gaming technological advancements — not just Internet gaming, which is offered in just three states. Wide-area progressive slot machine networks such as Megabucks, mobile sports wagering, and the sale of online lottery tickets – such as the nationwide Powerball game – could all come to a sudden halt.
The New Hampshire Lottery filed suit in February, asking U.S. District Judge Paul Barbadoro to strike down the opinion, which he did in a 60-page ruling. The next playing field would be the 1st Circuit Court of Appeals, should the Justice Department continue to push the matter.
Longtime Nevada gaming attorney Tony Cabot thought it was “unlikely” the 1st Circuit would reverse the District Court. Cabot, who now teaches gaming law at the William Boyd School of Law at the University of Nevada, Las Vegas, cited the 5th Circuit Court of Appeals’ 2002 decision in a case involving Mastercard, which ruled the Wire Act pertained only to sports betting.
A similar ruling would likely keep the case out of the U.S. Supreme Court.
“A significant factor (for the Supreme Court to take up the Wire Act) would be whether there is a disagreement among the Federal appellate courts,” Cabot said in an email. “In the unlikely event that the 1st Circuit reversed the District Court, then the division between the 1st Circuit and 5th Circuit could form a strong basis for review by the Supreme Court.
Tony Cabot
“My prediction, however, is that this ends at the 1st Circuit,” Cabot said.
Political pressure could weigh into the matter.
The Coalition to Stop Internet Gambling, which is financially backed by Las Vegas Sands Chairman and GOP megadonor Sheldon Adelson, supports restoring the Wire Act’s pre-2011 interpretation. The group has, so far, failed to reverse the 2011 opinion, even after spending millions of dollars on grassroots efforts and working to influence legislative processes.
A law firm headed by Washington, D.C. attorney Charles Cooper, who has worked for the coalition, wrote a detailed memo in 2017, outlining potential changes to the Wire Act. The memo was given to the Office of Legal Counsel that year. Cooper told the Washington Post in February the opinion “accords entirely with the analysis my firm undertook and I shared with the DOJ.”
U.S. Attorney General William Barr
In a statement last week, the coalition again voiced disagreement with the New Hampshire ruling, but said “other jurisdictions will see this issue very differently.”
Las Vegas Sands has not commented on the Wire Act matter this year. The company recently sold its Bethlehem, Pennsylvania casino – a state where online gaming is legal – and is focused on Asia, where it is spending $5.5 billion to expand hotel-casinos in Macau and Singapore and is bidding for an integrated resort license in Japan.
It was revealed in March that Adelson, 85, is being treated for non-Hodgkin’s lymphoma. He has not participated in Las Vegas Sands’ last two earnings conference calls, but he has been quoted in several recent company press releases. How much interest he has in the issue is in question.
In February, New Jersey and Pennsylvania asked the Justice Department to withdraw the Wire Act decision, saying the opinion was “wrong” and an “unfounded about-face” that “undermines the values of federalism.”
New Jersey also filed a Freedom of Information Request (FOIA) seeking records pertaining to the Justice Department’s opinion, as well as any communications involving Las Vegas Sands that might have taken place between the agency and the casino company’s lobbyists.
Grove speculated that an “aggressive” DOJ might look to insert itself into online sports betting.
“That’s especially worrisome if you buy the narrative that the agency is acting on these issues as a result of political pressure,” he said.
At an American Gaming Association-backed conference on sports betting in March, several speakers said Attorney General William Barr should not make the Wire Act a priority.
Former New Jersey Gov. Chris Christie, a keynote speaker at the summit, thought Barr, long viewed as a states’ rights advocate, would make his own judgement.
“I don’t know why (the Wire Act) should be a priority of the Justice Department when we’re in the midst of an opioid crisis and a whole other number of issues that we think are very important,” Christie said.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
