Perhaps it was coincidental that it fell on the new Presidential inauguration day, but America’s online gambling market and others will benefit as a US federal appeals court upheld the view that the 1961 Wire Act applies only to sports wagering.
On Wednesday, a two-judge panel of the US Court of Appeals for the First Circuit sided with the New Hampshire Lottery Commission against the Department of Justice by ruling that the 1961 Wire Act’s prohibition on communicating wagering information across state lines applies solely to sports betting. Not to other forms of gambling.
The New Hampshire Lottery had previously filed a lawsuit after a November 2018 Department of Justice Opinion held that The Wire Act was not so limited in scope.
That subsequently led to uncertainty about the validity of multi-state lotteries and online poker compacts that clearly crossed state lines. That also involved state lotteries, because a simple purchase of a lottery ticket might technically involve for a moment technology that operates in another state.
Originating in 2018, the memo surprised many and triggered several US gaming proponents to attack the Trump administration to be siding with giant personal donor Sheldon Adelson. The Las Vegas billionaire and chairman of the Sands Corporation, who passed away last week. Adelson was the well-known opponent of online casino wagering along with being the Republican party’s largest contributor.
New Hampshire received publicity being among several states that began offering the lottery online. Partly because they began acting after President Obama and his administration published a 2011 memo that clarified that the Wire Act could only be applied specifically for sports wagering.
The DOJ never took serious action on Obama’s new interpretation. Its defense in 2019 in court was there was no threat to the New Hampshire Lottery or other concerned parties.
In Wednesday’s ruling, the judges had a distinctly different opinion. Judges Sandra Lynch and William Kayatta did not agree with the original reasoning. A third judge, Juan Torruella, heard oral arguments but passed away in October.
In ruling on the case, they issued these opinions:
The government exacerbates the threat posed by its prolonged coyness by limiting its professed forbearance to ninety days from whatever date it decides to opine. A state-wide operation integrating over a thousand retailers and multi-state relationships to produce almost 100 million dollars in net revenue does not strike us as an operation that can be easily wound-up in 90 days. Nor can a state legislature plan sensibly if such a relied-upon revenue stream finds itself suddenly subject to a three-month closure notice.
New Hampshire and its vendors should not have to operate under a dangling sword of the indictment while DOJ purports to deliberate without end the purely legal question it had apparently already answered and concerning which it offers no reason to expect an answer favorable to the plaintiffs.
Many have hailed the ruling as an important milestone. Longtime advocates for the expansion of legal, regulated gambling in the US, American Gaming Association (AGA) President and CEO Bill Miller praised the judgment and said:
Today’s ruling by the First Circuit provides important certainty for those who wish to innovate and invest in mobile gaming products.
The effects of this landmark court ruling go beyond the boundaries of US lotteries. Online poker and other forms of iGaming may dramatically benefit from this action as well. It could possibly mean that more US states join incumbents Delaware, New Jersey, and Nevada in the Interstate Poker Compact. The opportunity greatly increases the pool of players, while increasing interest and revenue.
The barriers for new potential intrastate online casino play have also been lifted now that states know they will not run into the legal limitations or any gray interpretation of the 2018 Wire Act.
It may be coincidental, but hardly one week has gone by that one man’s passing and the passing of a presidential administration will have such an immediate effect upon both the gaming industry and the people in the US who enjoy wagering online.
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Larry Gibbs is both a seasoned journalist and a respected online gaming industry consultant. His wry commentary & sharp analysis have appeared in numerous top gaming and sports wagering publications. He has also served as Vice President of US Gaming Services, a marketing research organization with 15 years of experience in US online wagering. He has spoken at noted gaming industry conferences including G2E, GiGSE, and NCLGS.
Email: [email protected]
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