What Will DOJ Appeal Mean for the Regulated US Online Casino Market
The U.S. Department of Justice is still seeking to effectively shut down online casino gambling in the United States. On Friday, the DOJ filed an appeal to its June loss in the Wire Act lawsuit filed by New Hampshire.
While this move was expected, it once again puts the regulated online gambling market in peril and makes some wonder if another Black Friday scenario is around the corner, this time for regulated online gambling.
Today, we will take a look at the appeal and what it might mean for the regulated online gambling market in the United States should the DOJ win their appeal.
DOJ Files Appeal to June Ruling
On Friday, the DOJ filed a Notice of Appeal to the First Circuit Court of Appeal. This is an attempt to appeal the June 20 judgment filed in the case of the New Hampshire Lottery against the DOJ over their 2018 memo regarding the Federal Wire Act.
Some of you may remember that the DOJ sent out an opinion in late 2011 that stated that the Federal Wire Act only applies to sports betting. This led to several states pursuing online gambling regulation. Regarding online casino gambling, four states have regulated general online casino games and five have regulated online poker.
In late 2018, the DOJ reversed course and sent out a new opinion that stated that the Wire Act covers all forms of online gambling. This immediately put the regulated online casino market in jeopardy as many states would be unable to easily meet the terms of the new memo.
New Hampshire filed suit and US District Court Judge Paul Barbadoro declared that the Wire Act indeed only covers sports betting and threw out the December 2018 memo. The DOJ states they would delay enforcing the new memo as most anticipated an appeal.
What Will Happen if the DOJ Wins Their Appeal?
We urge you to exercise caution in your outlook of this appeal. Do not assume that this is a slam dunk for states as some are calling it. Should the First District accept the appeal from the DOJ, this gives them decent odds at winning.
So what happens in a “worst-case scenario” if the DOJ wins their appeal. For starters, you can kiss the interstate online poker network goodbye. Under the new Wire Act interpretation, interstate poker networks would become illegal. This would force online poker back to strictly intrastate, and could force smaller states like Delaware and West Virginia to abandon the concept altogether.
This would require a restructuring of certain processes such as online casino payment processing and some data transmission of game data. Some sites may choose to shut down entirely rather than foot the extra expense of intrastate compliance.
Next, expect active online casino and online poker sites in New Jersey, Delaware, and Nevada to shut down for a time as they prepare for an intrastate offering. Under the new interpretation, everything involving the operation of an online gambling site must be restricted to intrastate only.
Expect Appeals to the Supreme Court Regardless of What Happens
From the beginning, some have stated that this case will travel to the Supreme Court before it is finished. We concur. If the DOJ loses their appeal, it is likely that they will push on to the Supreme Court to get the judgment overturned. New Hampshire will do the same if the First Circuit overturns the June ruling.
Regardless of the outcome, we are years away from a final resolution to this issue. The best-case scenario is that the DOJ loses their appeal, meaning that business can continue as usual until the matter goes to the Supreme Court. Stay tuned as we will keep you updated to any major developments for this story.