DOJ Claims Lotteries Not Affected by New Wire Act Opinion


Earlier this year when the United States Department of Justice announced its new interpretation if the 1961 Wire Act opinion, a number of states began panicking. This was especially evident in states that offered such games as the Powerball and Mega Millions. However, just days before both the Department of Justice and the New Hampshire Lottery are set to meet in court for a lawsuit that was filed by the latter, the department has released a memo claiming that the new Wire Act opinion does not address the legality of interstate online lotteries.

The memo comes as a surprise since there has been no mention whatsoever that the state lotteries would be exempt from the new interpretation. Apparently, the Office of Legal Counsel (OLC) did not address whether the Wire Act applies to the lotteries or their vendors and is only now reviewing that exact issue.

“Department of Justice attorneys should refrain from applying Section I 084(a) to State lotteries and their vendors if they are operating as authorized by State law until the Department concludes its review,” reads a section of the memo.

If at the end of its review the Department of Justice determines that the Wire Act does indeed apply to the state lotteries and their vendors, the Department of Justice’s attorneys will be required to extend the forbearance to 90 days after the public announcement of the DOJ’s position – this is expected to give the state lotteries and their vendors enough time to adjust their operations appropriately so that they are in compliance with the Wire Act.

The Implications

There are speculations that the Department of Justice’s memo is primarily meant to undermine the federal case against the department that was filed by the New Hampshire Lottery Commission (NHLC). It remains rather unclear how the Department will be able to justify saying that other online games are different from other gambling games especially because both cases involve interstate data transfers.  As such, it can be said that the memo is nothing more than a blatant bid to eliminate the state lotteries from the case, something that would definitely give the feds a much stronger position as the only opponents they will have to deal with will be the commercial casinos. These commercial casinos do not have the same clout that state lotteries have with state legislatures.

The oral arguments for the lawsuit will proceed as scheduled on April 11 and it is only then that we will be able to get a better indication of how everything might play out in the long run. Hopefully, everything will be worked in favor of the gaming industry since it has a lot to lose once the new Wire Act takes effect.

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