The Wire Act lawsuit was won by IGT

The Wire Act lawsuit was won by IGT

Summary:

In order to force the DOJ to officially state that the 1961 Wire Act can no longer be construed to apply to bets and wagers other than sports betting, International Gaming Technology won its case against the US Department of Justice. The DOJ could not prosecute the company for internet-based lottery services in 37 states because of the ruling.

In order to force the DOJ to officially state that the 1961 Wire Act can no longer be construed to apply to bets and wagers other than sports betting, International Gaming Technology has emerged triumphant in its battle against the U.S. Department of Justice. In an opinion published on Thursday, the U.S. District Judge William E. Smith denied the DOJ’s motion to dismiss the case.

Years went by before the DOJ finally issued a formal order acknowledging that a related decision by the U.S. First Circuit in favor of the New Hampshire Lottery Commission would be considered to be the supreme law of the land. Over the course of a decade, the fight over the Wire Act’s reach has continued. In addition to the multi-state lottery implications, interstate online-poker player pooling, such as that offered through MSIGA member states, could have been jeopardized by any future attempt to prosecute services related to online gambling outside of the First Circuit, which includes only four New England states.

The Wire Act litigation had a negative effect on U.S. regulated online poker. After the New Hampshire Lottery Commission received a favorable verdict in the Wire Act case, WSOP.com initially declined to launch its services in the newly regulated state of Pennsylvania.

In his ruling, Judge Smith dismissed the DOJ’s assertions that there was no credible threat of prosecution in the wake of the New Hampshire Lottery Commission, and that there was no standing to bring the case. The DOJ had imposed a forbearance period under which it vowed not to prosecute accused illegal internet gaming providers until the New Hampshire situation had been resolved.

The DOJ promised to institute new guidelines regarding the Wire Act that would supersede a revised opinion from the year before that attempted to reestablish the pre-2011 interpretation that the act applied to all forms of online gambling except horseracing. The DOJ didn’t issue that revised opinion because they didn’t think federal legislators would pass a modernized Wire Act that would revisit the online issue.

The DOJ wanted to maintain prosecution options

Judge Smith did not find merit in the DOJ’s claims of lack of proper standing. Smith found that the chilling effect created by the DOJ’s failure to fully acknowledge that its revised opinion was invalid justified the lawsuit.

Smith noted that the DOJ wanted to stick to its opinion despite the New Hampshire Lottery ruling. The opinion written for the DOJ by lawyers for the late anti-online-gambling casino magnate was designed to reverse a 2011 DOJ opinion limiting the Wire Act’s reach to sports betting only. Two populous states, New York and Illinois, were hoping for a legal green light to implement online lottery sales. Officials from the New York and Illinois lotteries were informed by the DOJ that the online lottery sales would be against the law in accordance with federal law.

The scenario mirrored developments in marijuana legalization, where voters approved pot sales on a state-by-state basis, but the entire industry is still considered illegal by the federal government. Judge Smith made a comparison to the legalized-marijuana battle in the Thursday ruling.

A sword of indictment is what it is

Smith wrote in his conclusion that a judgment will serve a useful purpose in clarifying and settling the legal relations in issue and that it will afford significant relief from the uncertainty and controversy giving rise to the proceeding.

The NHLC plaintiffs should not have to operate under a dangling sword of 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 them. The very purpose of the Declaratory Judgment Act was to alleviate the dilemma IGT faces, between abandoning its rights or risking prosecution.

Judge Smith concluded that a declaratory judgment would bind the United States and that it would be subject to prosecution. Judgment will enter as a matter of law because the Court finds there is no dispute of material fact. The Wire Act only applies to bets or wagers on any sporting event or contest, according to the court.