Justice Department Getting Crushed on New Wire Act Opinion

By in Industry on
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The biggest news in the poker world for the past month has been the Justice Department’s new opinion on the Wire Act, as issued by its Office of Legal Counsel (OLC). The new opinion reverses the old one issued by the OLC in late 2011, now saying that the Wire Act applies to all interstate online gambling, rather than just sports betting as was originally intended. And now the Justice Department is hearing strong opposition from multiple directions.

The Attorneys General of New Jersey and Pennsylvania have written a letter to the Acting U.S. Attorney General and Deputy Attorney General, requesting that the new opinion be withdrawn and, if not, to at least be given assurances that any gaming companies operating legally under state law will not be prosecuted. They Attorneys General laid out the basic background of the Wire Act and explained why gambling has been so important to their states. Then they launched their offensive:

We can see no good reason for DOJ’s sudden reversal. First, it runs contrary to plain language of the Wire Act. Second, DOJ has recognized that it should “employ considerable caution in departing from … prior opinions,” in light of the “strong interests in efficiency, institutional credibility, and the reasonable expectations of those who have relied on our prior advice.” Here, however, DOJ acknowledges that states were relying on its prior advice and did not provide any intervening facts or information to justify such a major departure. Press reports instead indicate that this new advice followed substantial lobbying by outside groups that have long been unhappy with the 2011 opinion—but who were unable to convince Congress of the merits of their view. That is not a good enough reason to trample over the law and states’ rights, and to upend the settled expectations on which we have been relying for nearly a decade.

Former Associate Attorney General in the George H.W. Bush administration, Peter Ferrara, wrote an opinion piece in the USA Today, trashing the Justice Department for cronyism, calling the Wire Act opinion, “corrupt, unethical and legally bankrupt.”

He cited a Wall Street Journal report that Las Vegas Sands CEO and billionaire Republican donor Sheldon Adelson, who is virulently against online gambling, was the driving force behind the new OLC opinion. In 2017, his lobbyist sent an “anti-online gambling, anti-federalism” memo to the Justice Department about the Wire Act, which then forwarded it to the OLC, asking it to look at the Wire Act again. The new opinion followed the next year.

Ferrara called the decision “appalling” and wrote, “….the DOJ reversed its opinion on internet gaming almost immediately after receiving pressure from a casino owner who has a lot of power and influence in Republican circles, less than one decade after releasing its initial ruling. Never before have I seen law enforcement officials bend so easily seemingly to please one influencer.”

The North American Association of State and Provincial Lotteries (NASPL) also published a statement on the Wire Act opinion, explaining how the 2011 opinion that set the state for internet lottery sales has been a huge boon to the lottery industry, both in technological infrastructure improvements and the ability to generate more revenue.

“DOJ’s reinterpretation of the Wire Act creates substantial uncertainty concerning the legal status of lottery transactions, including these critical enhancements and improvements, many of which were made in reliance on the 2011 opinion, and the related contractual obligations and the industry’s ability to provide critically needed funding for important public interests,” the NASPL wrote.

More criticisms of the Justice Department and OLC are sure to come, and not just from me, though I am always happy to provide a well-timed rant.

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