Justice Department Argues for Online Lottery Ticket Sales Ban
The U.S. Department of Justice argued in a federal court filing on Thursday that state and interstate lotteries are not exempt from its legal interpretations on online gambling under the 1961 Wire Act. The DOJ argues that the Mega Millions and Powerball fall under a recent ban on online lottery sales.
The New Hampshire Lottery sued the US Justice Department in March to protect its online lottery sales. Since then, the attorney generals of New Jersey and Pennsylvania signed on to the lawsuit. The AGs are protecting the online poker, online caino, and mobile sports betting industries in their states.
US District Judge Paul Barbadoro requested clarification of the DOJ’s opinion. When former Acting Attorney General Matthew Whittaker unsealed the opinion by the Office of Legal Counsel in January, the opinion centered upon online casinos and card rooms.
Therefore, it is important to know whether the new OLC opinion targeted online lottery sales, too. It does, according to the Thursday filing.
DOJ: New Hampshire Doesn’t Have Legal Standing
The DOJ said New Hampshire had failed to demonstrate why its interstate and state lottery sales should not fall under the 1961 Wire Act’s ban. In the DOJ’s lawyers’ opinion, New Hampshire does not have legal standing to sue. The lawyers stated, “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.”
In doing so, the US Justice Department asked Judge Barbadoro to dismiss the case. The filing argued, “Because there is no credible threat of prosecution, the Court should dismiss this case for lack of standing.”
“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.”
1961 Wire Act
The 58-year old law sits at the heart of New Hampshire’s lawsuit. When it was passed in 1961, lawmakers created the law to target organized crime members who ran sports betting rackets over the phone lines. The Wire Act states that bets taken over interstate telephone lines violate federal law.
In the 1960s and down through the years, federal investigators used the Wire Act to prosecute mobsters. Other rackets were harder to prove, so the FBI targeted the sports betting rackets. Because slots gambling, table games, and poker sessions couldn’t be conducted over the phone lines, the Wire Act mentioned no form of gambling but sports betting.
2006 UIGEA Law
When the US Congress passed the Unlawful Internet Gambling Enforcement Act of 2006, it banned (for the Internet) any gaming that was banned (for phone lines) under the Wire Act. The Bush administration viewed UIGEA as applying to online sportsbooks, casinos sites, and poker rooms. Their logic was the Wire Act would have banned poker, blackjack, and slots if they could have happened over the phone lines, so the UIGEA should ban them online.
In 2011, the attorney generals of New York and Illinois asked the US Department of Justice for its opinion on the Wire Act’s bans. The DOJ ruled that the ban was specific to online sports betting, because the Wire Act mentioned only “sports gambling” and US attorneys had only prosecuted sports betting rackets under its provisions over the years.
Restore America’s Wire Act
That led to howls from lawmakers like US Sen. Lindsey Graham (R-South Carolina) and former US Rep. Jason Chaffetz (R-Utah). Both introduced Restore America’s Wire Act (RAWA), calling for an amendment to the UIGEA to state the Wire Act specifically banned online casinos and online poker. The bill failed to gain support from 2014 to 2016, and eventually seemed dropped.
During Jeff Sessions’ time as US Attorney General, a variety of lawmakers urged him to reverse the DOJ opinion: Lindsey Graham, former US Senator Orrin Hatch (R-Utah), US Sen. Dianne Feinstein (D-California), and US Sen. Charles Schumer (D-New York). Sessions order the Office of Legal Counsel (OLC) to study the problem.
2019 Office of Legal Counsel Opinion
Five days before he was fired as head of the Justice Department, the OLC sent Sessions its opinion. The new OLC opinion, which was sealed, said that the UIGEA should have banned online poker sites and casinos after all. Two and a half months later, the DOJ released the findings. Deputy Attorney General Rod Rosenstein said interstate online gambling was banned, and gave operators 90 days (April 15) to comply with the law.
Later, Rod Rosenstein extended the deadline another 90 days to June 14. By the time the extension was announced, New Hampshire had sued the US Department of Justice. While its online lottery ticket sales are single-state, online and mobile sales could cross over state lines to servers in other states or countries. The cost of assuring compliance is great, but other concerns dominate the debate.
Does the Wire Act Ban Online Lottery Sales
For one, states like New Hampshire, Pennsylvania, and New Jersey believe the US federal government should not have the right to regulate state gambling laws. Like the sports betting decision, they believe the Wire Act opinion is a vast expansion of federal authority — an unconstitutional. New Hampshire sued to see whether federal judges view it the same way.
The coming months will determine the status of the Wire Act opinion. For what it’s worth, Thursday’s legal filing shows that the US Department of Justice believes it has blanket authority to determine the legality of online gambling — whether it involves intrastate or interstate wagers.