In the latter part of 2018, the Department of Justice under Attorney General Rod Rosenstein issued a policy change that reversed a prior opinion. In 2011, the DOJ wrote that the 1961 Wire Act was only applicable to online sports gambling and did not encompass playing lotteries, betting on horses or playing online casino games of chance for real cash. For clarification, the Wire Act prohibits the use of wire facilities to fund gambling activities. Wire facilities include bank wires, credit/debit card transactions and third-party wires from providers like Western Union.
Under Rosenstein, the DOJ issued a new opinion than in fact the Wire Act should be inclusive of all online gambling activities. While lottery play was not specifically mentioned, the lottery community took note and immediately became concerned about how much such a ruling would impact states lotteries if they did fall under the blanket of the new DOJ opinion. The end result would have been the closing of every lottery site that’s currently available through websites like states-lotteries.com or through direct contact.
In reaction to the new opinion, the New Hampshire Lottery Commission (NHLC) filed a February lawsuit against the DOJ to stop them from enforcing the change of opinion regarding the Wire Act. It’s no coincidence they did this on the first day President Donald Trump welcomed new Attorney General William Barr into the fold. New Hampshire’s interest in the matter arose from the fact the state’s lottery depends heavily on online ticket sales. At the same time, the state was also looking at the prospects of legalizing online casino gambling and sports betting.
In June of this year, US District Court Judge Paul Barbadoro issued this favourable opinion. His written opinion read: “I hereby declare that § 1084(a) of the Wire Act… applies only to transmissions related to bet or wagers on a sporting event or contest. The 2018 OLC Opinion is set aside.”
This was a huge victory for the New Hampshire Lottery Commission. It was just as a big a win for the online lottery community as a whole. For years, lotteries have been a very important revenue source for states to run education and infrastructure projects. While a prohibition on online access to state lotteries would not have shut down such operations, it would certainly have had a serious impact on the amount of lottery revenues flowing into the state coffers.
At this point, the DOJ does have the option to appeal the ruling to the Supreme Court. As of today, they have not elected to do so, nor does it seem likely under AG Barr. However, it’s incumbent on each and every state to make sure they minimize any issues related to any form of online gambling. The 2018 DOJ opinion, though overturned, should serve as a warning sign that legislators are serious about making sure the online gambling industry as a whole is compliant and protective of its customers. That’s the best way to prevent unwanted government intervention on any level.
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