Justice Department: Lotteries Not Immune From Wire Act, But DOJ Says ‘No Credible Threat of Prosecution’

Posted on: April 26, 2019, 01:00h. 

Last updated on: April 25, 2019, 08:24h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

The US Department of Justice (DOJ) said in a federal court filing Thursday that state lotteries and interstate games such as Mega Millions and Powerball are not exempt from the legal interpretations of the 1961 Wire Act.

lottery DOJ Wire Act online gaming
The legality of interstate lotteries like Mega Millions and Powerball are being threatened by the Department of Justice. (Image: Eric Baradat/Getty)

The New Hampshire Lottery Commission is suing the Justice Department in US district court after the federal agency made public in January a revised opinion on the longstanding statute that threatens state and interstate lotteries, online poker pooling, and other forms of internet gambling.

US District of New Hampshire Court Judge Paul Barbadoro requested clarification from the DOJ on its amended opinion. In the agency’s brief submitted Thursday, the Justice Department told the court New Hampshire has failed to adequately explain why its interstate and state lottery participation shouldn’t fall within the Wire Act’s oversight.

The Lottery Commission has not demonstrated its entitlement to a declaratory judgment that it, its employees, or its vendors are categorically immune from prosecution under the Wire Act,” the court document reads.

The DOJ did say in the filing that until the new interpretation is fully realized and properly explained, the agency would not prosecute any state lottery or associated vendors. As such, the Justice Department again asked the district court to dismiss the case.

“Because there is no credible threat of prosecution, the Court should dismiss this case for lack of standing,” the memorandum petitioned. “The potential Wire Act liability of state agencies, employees, and vendors involves the evaluation of numerous complicated and important issues, and the Department intends to give these issues the deliberate consideration that they deserve.”

Legal Juggernaut

The 58-year-old law was enacted in order to crack down on the mob’s illegal gambling operations and better protect against money from crossing state lines in relation to underground bookies.

In 2011, New York and Illinois asked the DOJ during the Obama administration whether the Wire Act prevented their state lotteries from operating online games. The same DOJ Office of Legal Counsel ruled then that the law applied only to interstate sports betting.

The decision eight years ago effectively gave states the right to decide their own internet gambling laws – with sports betting being the exception. That was until late last year when DOJ Office of Legal Counsel Assistant Attorney General Steven Engel revised the agency’s position to say the Wire Act bans the transmission of interstate wagers relating to all forms of gambling – not just sports betting.

The DOJ’s decision to re-review the 2011 opinion is thought to be the work of billionaire GOP megadonor Sheldon Adelson. The 85-year-old Las Vegas Sands owner has been on a mission to end internet gambling. Former Acting Attorney General Matthew Whitaker denied there was any improper influence.

Financial Impact

The Associated Press said Thursday that states will lose more than $220 million in annual net proceeds from lottery games if the DOJ stands firm in its decision that lottery tickets cannot be sold online. If the Justice Department takes an even broader approach and says the Wire Act bans all lottery-related activities using the internet, that cost could balloon to over $23 billion a year.

Numerous state lotteries and attorneys general have requested the DOJ rescind the new opinion, or provide permanent immunities for jurisdictions currently engaged in interstate lottery and/or online gaming.