FEATURE

FEATURE

Down to the wire

The Department of Justice has finally confirmed that it will challenge the New Hampshire court ruling that saw its revised interpretation of the Wire Act set aside. iGB North America brings together opponents and advocates of US gambling expansion to discuss the case

WHAT IS YOUR OPINION ON THE NEW HAMPSHIRE COURT RULING ON THE WIRE ACT?

JEFF IFRAH, IDEA GROWTH (JI): Judge Barbadoro’s ruling correctly found that the DoJ’s 2018 opinion was inconsistent with the Wire Act’s text, its legislative history and the historical application of the law. By setting aside the 2018 opinion, the ruling correctly restored the proper interpretation—as embodied by the DoJ’s 2011 opinion— that the Wire Act’s application does not extend beyond sports wagering. The ruling provides needed certainty to industry stakeholders by clarifying that non-sports wagering activities are not subject to the Wire Act.

DOUGLAS KANTOR, COUNSEL, NATIONAL ASSOCIATION OF CONVENIENCE STORES (DK): We disagreed with what the NH court decided—we don’t think there was any precedent for the direction they went on this. Our perspective is that since its inception, the Wire Act has prohibited use of the wires (and now the internet) for gaming of all types. While the DoJ confused and clouded that issue in 2011, we think the stance by the current department undoing [the 2011 opinion] was the right one and was consistent with what the law was intended to do.

If folks are successful in sweeping away what the Wire Act is, that’s going to leave a vacuum that we think is a mistake procedurally and policywise, as there would be nothing to guide what can happen and how.

JON BRUNING, COUNSEL, COALITION TO STOP INTERNET GAMBLING (JB): We disagree with Judge Barbadoro’s assessment of the Wire Act, an assessment which differs from five decades of interpretation of the Act by the DoJ, starting from the day it was signed into law.

We were pleased the judge rejected the plaintiff’s request for a national injunction and instead confined his ruling to the parties involved. The DoJ’s 2018 restoration of the longstanding interpretation of the Wire Act was correct, and we are confident other jurisdictions will see this issue very differently than Judge Barbadoro.

CONSIDERING THE DOJ’S ARGUMENTS FAILED TO SWAY THE JUDGE IN NEW HAMPSHIRE, DO YOU EXPECT IT TO PRESENT ITS ARGUMENT DIFFERENTLY IN ITS APPEAL?

DK: I don’t know how the case will be presented but I would expect the First Circuit to take a different view to the New Hampshire Court. We’ve done a lot of research on this law and, looking into the history of it, we think it’s clear that it intended to reach all internet gaming in a way that would not allow direct consumer interface through the wires, or internet.

That does not mean that backoffice operations cannot happen electronically, which is never part of what the law says. We think there has been a confusion about what the Wire Act means and does, and perhaps purposefully so on the part of some advocates, but I’m optimistic that the First Circuit will sort that out.

JI: Although it is hard to predict how the DoJ will approach an appeal to the First Circuit, because Judge Barbadoro’s analysis was so fulsome and carefully written, I am hopeful that the DoJ, because its chances of getting that ruling by the First Circuit reversed are highly unlikely, will decide to abandon its appeal rather than pursue this matter any further.

I cannot think of how the DoJ could present its argument differently because it already made the only argument available to it, which involved advancing a fundamentally flawed interpretation of the Wire Act. Were it to actually pursue its appeal, no matter how the DoJ were to present its argument, for it succeed the DoJ would have to convince the First Circuit to adopt a defective interpretation of the Wire Act, which I am confident will not take place.

IS THE KEY ISSUE HERE THAT THE WIRE ACT IS TOO VAGUE AND UNFIT FOR PURPOSE?

JI: The key issue is not vagueness, rather that the government, via the 2018 opinion, fully reversed course from both its own 2011 opinion along with the historical interpretation and application of the Wire Act.

Although the parties and court agreed to a certain degree that the Wire Act is not a model of clarity, its text and legislative history allowed Judge Barbadoro to easily conclude that the law’s application is limited to sports betting. The Act’s purpose when it was passed in the early 1960s was to combat illegal bookmaking by unlicensed operators, and with its proper interpretation restored, the Wire Act remains fit for that purpose.

JB: The Wire Act clearly covers all forms of gaming, and as such prohibits online casinos, which is why many of America’s largest financial institutions refuse to process internet casino transactions.

DK: I think when you read the law and read what was done with the law at the time, and the DoJ’s views set out at that time and since, that it is clear what the law is doing and what its intention is. It is a fair point that time has passed and the world has changed, and it does make sense to reevaluate some laws after time. But with this I think we have a process problem, if the law is going to be changed by someone waking up and deciding it means something different. That should go through the legislative process and real changes be passed so that process is more public and open, and more folks have input. That was the big concern with what the DoJ did in 2011.

COULD CONGRESS ADDRESS THIS ISSUE BY PASSING FEDERAL GAMING LEGISLATION?

DK: Sure, a law could be passed. There are always challenges trying to get something done, particularly with an issue this controversial, but in 2006 Congress did pass the Unlawful Internet Gaming Enforcement Act (UIGEA).

These issues were on the table, and they made a decision about how they were going to deal with unlawful gaming. That’s part of why the Wire Act shouldn’t be changed through administrative interpretations—Congress in 2006 made these decisions based on what the DoJ said. Congress has shown a willingness and ability to deal with these issues, and it’s a mistake to pull the rug out from under them by changing what they thought was settled already.

JI: There are a couple of steps that Congress could take to improve the Wire Act. First, although the New Hampshire court’s ruling provides sufficient clarity, Congress could certainly amend the Wire Act to leave no doubt that the law applies only to sports betting. Additionally, Congress could amend the Wire Act to bring it into harmony with other federal gaming laws (such as the Unlawful Internet Gambling Enforcement Act and the Interstate Transportation of Wagering Paraphernalia Act) that explicitly specify that their targets are activities made illegal under state laws. The government’s 2018 opinion marked an attempt to use the Wire Act to attack fully licensed activities that were blessed by state legislatures and regulators, and Congress should act to insulate lawful state activity from overreaching federal attacks.

JB: Congress did address this issue when it enacted the Unlawful Internet Gambling Enforcement Act in 2006, legislation giving law enforcement additional tools to shut down online casinos. In developing this law, Congress relied upon DoJ assurances that the Wire Act and other federal laws banned all forms of internet gambling. The 2011 Office of Legal Counsel opinion, which does not carry the force of law, and now Judge Barbadoro’s ruling, undermine this statute.

Whether the law should be changed to permit online casinos, and if so under what conditions, is properly a decision for Congress and not for a Justice Department lawyer or a single federal judge.

WAS THE AMENDMENT TO THE APPROPRIATIONS BILL LOOKING TO BLOCK THE DEPARTMENT FROM USING ITS BUDGET FOR ENFORCING THE REVISED WIRE ACT OPINION INDICATIVE OF THE PREVAILING MOOD TOWARDS THIS CASE?

JI: The bipartisan nature of that amendment was definitely encouraging. I think it reflects an agreement among those in Congress that the DoJ’s enforcement resources should not be wasted on potentially targeting betting activities explicitly blessed by state legislatures, such as the sale of lottery tickets over the internet or lawful, licensed sports wagering or online casino activities. I also suspect those who introduced the amendment realized that the New Hampshire court’s reasoning was sound and, therefore, wanted to prevent the DoJ from wasting money enforcing the Wire Act in a manner that has already been deemed illegal in a ruling that is highly likely to be upheld on appeal.

DK: I don’t think it is indicative of Congress’ feelings. These changes are attempted every year. I wouldn’t read too much into the fact that a small group of congressmen attempted this. I think you would get a confusing view of Congress and the law if you took these attempts seriously. It’s a very common thing.

IT HAS BEEN SUGGESTED THAT THIS ISSUE WILL CONTINUE TO RUN UNTIL IT REACHES THE SUPREME COURT. DO YOU THINK THIS IS LIKELY?

JI: The government is certainly within its right to pursue appeals to both the First Circuit and Supreme Court, but for the reasons discussed above, it is my hope that the DoJ will recognize it is unlikely to succeed and, therefore, that it will abandon its appeal. The New Hampshire court’s ruling represents an opportunity for the government to negotiate a settlement, instead of engaging in an unsuccessful legal fight.

Such a resolution could focus the Wire Act and DoJ’s enforcement resources on the right targets: unlicensed illegal offshore internet gambling operators who neither create jobs or tax revenue in the US nor appropriately protect consumers.

JB: That was the view expressed by Judge Barbadoro in New Hampshire and we intend to participate in every step of the process.

DK: I think this could be resolved at the appellate court level. I’m not really sure what the Supreme Court issue would be. Typically, the Supreme Court gets involved in cases primarily because different appellate courts have taken different views, and it acts as an arbiter between those. I haven’t seen anything yet that would justify it. The other is a very significant constitutional question, and I don’t really see that here, but whoever is unsuccessful in the First Circuit will be looking hard at how to get the Supreme Court involved. But it’s premature to think that this is where things are going to go.

It’s my hope that the First Circuit will make things clear—we could all use some certainty in this arena.