DOJ Says it Will Appeal NH’s Decision on the Wire Act

In a not-so-surprising move on Friday, the US Department of Justice revealed they intend to appeal the June ruling by the New Hampshire District Court that the Wire Act is only applicable to intrastate sports betting.

What’s the Wire Act?

The Intrastate Wire Act of 1961, often referred to as the Federal Wire Act is a federal law that prohibits the operation of some types of betting businesses in the United States.

The Act begins as “Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.”

After becoming the US Attorney General, Robert F. Kennedy made a suggestion to the 87th United States Congress to make a law that made interstate gambling illegal. His goal was to help the US Justice Department stop organized crime and trafficking.

What’s happened since?

In September 2011, the DOJ released their formal legal opinion on the scope of the Act. They concluded that “interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act.” However, on November 2, 2018, it reversed its 2011 opinion and declared that the Wire Act’s prohibitions are not entirely limited to betting on sports events or contests.

The Act was covered in clouds of doubt and uncertainty for a long period. The US Fifth Circuit Court of Appeals ruled that the Wire Act only applied to sports betting while the Supreme Court remained unopinionated on the issue stating that the law is related to online gambling.

In November 2018, however, the DOJ clearly stated that the Wire Act applied to all gambling, including sports betting. On January 15, 2019, Deputy Attorney General gave 90 days for operators to bring their businesses into compliance. But exactly a month later, the New Hampshire Lottery Commission filed a complaint in the US District Court for New Hampshire stating that the DOJ’s decision will cut short the state’s annual profits by millions of dollars.

The suit, having the DOJ and the Attorney General as defendants, urged the Court to vacate and set aside the OLC’s new opinion. The US District Court Judge Paul Barbadoro on June 3, 2019, issued the summary judgement that the Wire Act is limited to sports betting.

What now?

During oral arguments this spring, Barbadoro called the Wire Act “a mess of a statute”, implying that it needed some sort of updating to keep up with the times. Regarding the appeal, the DOJ still must formally petition the court of appeals, which will then determine if moving forward makes sense after assessing the situation. The First Circuit is not in session, meaning oral arguments can only be expected when it returns in October. So, for now, the world of online gambling sector will not see any change for at least another month and a half.

This doesn’t have a big impact on NJ online gambling either. Betting businesses have boomed in the year since it’s sports betting has been introduced. The only downside the change in Wire Act can have is that we now return to the “what-if” stage following the DOJ’s reinterpretation of the act back in 2018.