DOJ Postpones Wire Act Implementation For Several Months

The US. Department of Justice has decided to postpone the implementation of the 2019 Wire Act Opinion by yet another two-to-six months.

DOJ’s Latest Memo Is Putting Everyone on Edge

A new memo issued by the Department of Justice ( DOJ) has delayed the roll out of the revised Wire Act Opinion in July. Instead, the DOJ would await a ruling in the New Hampshire case which it is leading against the state’s lottery. However, the enactment cannot exceed the deadline which is set for December 31, 2019.

So far, the DOJ has appeared adamant about the enforcement of the Wire Act Opinion which it voted and passed into a law earlier this year in January. Yet, nothing has happened since. This is the second time the DOJ has reneged on a deadline for the enforcement of the Opinion.
Previously, regulators expected to be dealing with the Opinion in April, but then it was pushed back for July 15. The cascade of changes has been occasioned by the mounting litigation that DOJ attorneys have been forced to deal with.

Why Is the DOJ New Opinion Challenged

The DOJ is trying to extend the meaning of the Wire Act to apply to all sorts of gambling and betting activities. This has been deemed a frivolous move by observers and business leaders. The real reason, some have argued, is the DOJ’s affiliation with casino mogul Sheldon Adelson, who has been a long-time opponent of any online gambling.

The latest Opinion on the Wire Act is dangerous to businesses and owners, because the DOJ wants to effectively criminalize anyone who has been running an iLottery since 2011. This goes against the grain of the then decision, which the Obama administration issued.

In the 2011 ruling of DOJ, the Wire Act was deemed not to extend to activities such as lotteries and casinos, but this is to about to change, or so the Department hopes. The arguments that former Attorney General Rod Rosenstein presented in January, 2019 aren’t exactly cogent and nobody is really sure why the Wire Act should apply to anything beyond sports wagers.

New Jersey has even taken matters in its own hands, launching a lawsuit against Sheldon Adelson in a bid to clamp down on the casino-owners’ ambitions to meddle in the iGaming industry.

Business Fighting Back to Avoid Prosecution

Lottery operators have every bit of reason to be contesting the decision as under the decision they would be turned into criminals liable to hefty fines and multiple years in prison. Avoiding prosecution will depend on a clearer language of the Wire Act Opinion.

States seem to be ready to accept the decision as long as it’s not ambiguous. It’s this ambiguity that has been the source of all of DOJ’s trouble so far. New Hampshire dismantled the Wire Act Opinion in a district court, arguing that the new legislation was too badly-defined to give any clear indication to businesses what their next move should be.

This was upheld by a judge, although NH didn’t receive anything more than a nod that the state’s original concerns were well-founded. In other words, no judge has yet said that the Wire Act Opinion has been made on the basis of no legal arguments, but this would probably not happen until states and DOJ clash in court over whether the Wire Act in its would-be new interpretation is designed to favor one specific party exclusively.

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Rosenstein Announces DoJ Opinion Will Take Effect

  • US Deputy Attorney General Rod Rosenstein signs the enforcement of DoJ’s latest Wire Act Opinion
  • Businesses and states have 90 days to cope with the measures
  • Online gambling may suffer as a direct result

The newly-struck Department of Justice (DoJ) Opinion might prove too disruptive, especially now that it has been officially set to take effect.

DoJ Reinterprets Previous Wire Act Decision

Republican-heavy, the Department of Justice (DoJ) is now (what seems like) officially reversing the December 23, 2011 ruling of the Wire Act. According to US Deputy Attorney General Rod Rosenstein, DoJ should start applying the Opinion laws after an intial 90-day period has expired:

Department of Justice attorneys should adhere to OLC’s interpretation, which represents the Department’s position on the meaning of the Wire Act.

The document, signed by Mr. Rosenstein on January 15, states that “as an exercise of discretion, Department of Justice attorneys should refrain from applying Section 1084(a) in criminal or civil actions to persons who engaged in conduct violating the Wire Act in reliance on the 2011 OLC opinion prior to the date of this memorandum, and for 90 days thereafter.”

Legal Changes That Bite Deep

The changes to the Wire Act interpretation is set to have repercussions for all cross-state businesses. Legal online gambling is in fact the main prey of the new legislation, which has proven rather too restrictive in nature some fear.

In essence, the previous interpretation of the Wire Act allowed lotteries and online casinos to run their businesses with relative freedom, although local challenges have been many. However, the new Opinion published by the DoJ will effectively reset all progress that has been made, effectively equating all forms of gaming to sports betting, and therefore “banning” those activities under the Wire Act.

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The developments are counterproductive on all levels, but the question remains – can this Opinion really undo the progress achieved on state level?

While the DoJ opinion doesn’t explicitly say anything against state-level legislation, the Office of Legal Counsel (OLC) has clarified in the opinion itself that:

While the possibility of judicial review cannot sub-stitute for the Department’s independent obligation to interpret and faith-fully execute the law, that possibility does provide a one-way check on the correctness of today’s opinion, which weighs in favor of our change in position.

Put simply, federal courts cannot contest the measure on a federal level, although litigation is almost bound to happen if DoJ goes after shared-liquidity schemes. Inter-state gaming is also dependent on data routing, which can be targeted by the latest interpretation of the Wire Act.

The Possible Fallout

The Wire Act reversal seems to be the culmination of casino mogul Sheldon Adelson’s efforts, as the Washington Post has stated. Mr. Adelson has fought long and hard to limit the scope of online gaming, backed by various political entities and lawmakers.

Adelson’s desire to narrow down the reach of the industry has been superhuman, but the fact remains that too many states have now found the public & political support to fight back.

Sophia Rojas

Growing up around law firms, Sophia keeps our team of reporters atop any legislative developments to follow up with a welcomed dose of positive news as our house trivia nut!

DOJ Could Consider Flip-Flopping on Its 2011 Decision

The Department of Justice (DOJ) could cancel a former decision it made back in 2011, regarding the remit of the Wire Act of 1961. According to the then Office of Legal Counsel (OLC), the Wire Act applied only to sports betting. However, this may not be the case if reports turn out to be true, with the OLC making a complete about-face on their former decision.

The Significance of 2011’s DOJ Wire Act Decision

Petitioned in 2009 by the states of Illinois and New York, the Department of Justice (DOJ) spent 3 years mulling the nature of the Wire Act of 1961, which the plaintiffs said, affected only sports betting. Three years after the states had filed their petition, the DOJ’s Office of Legal Council (OLC) reached a final decision in December, 2011.

The Wire Act, OLC’s opinion stated, doesn’t apply to other form of online gambling, including, but not limited to:

  • Poker
  • Card rooms
  • Lotteries

From the standpoint of Illinois and New York, that was the decision that the pair had hoped for, starting to develop their lotteries both in land-based venues, but also expanding online and across states.

Poker also benefited, albeit timidly. From 2011 through 2013, different legislations passed, making the game legal in several states, most notably:

  • New Jersey
  • Nevada
  • Delaware

These states were the pioneers of legalized poker. And it may all be coming to an end now, as reports have surfaced that The DOJ’s 2011 decision could be cancelled.

The Wire Act interpretation has been called “bizarre” by Senator Lindsey Graham, a close friend to casino mogul, Sheldon Adelson, who has been a sworn opponent of the online industry, seeing it as a strong competitor to his own casino business.

What Does a Cancellation of the OLC’s Opinion Mean for Online Poker?

There are certainly sufficient reasons for concern when it comes to pivotal changes in legislation. In the short term, there is little evidence to suggest that the industry will be disrupted. State laws in Nevada, New Jersey, Delaware, and Pennsylvania are iron-clad and they would hardly suffer interference from the federal government.

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Lotteries are in immediate danger, experts opine, as they are based on systems that are intertwined and inherently dependent on one another. Should the state consider canceling the endorsement of online gambling products, the grid may start going off in individual states, sending ripples across the entire network.

Another danger is that if the legalization of online poker is targeted, along with that of online casinos, then the offshore industry will again re-double its efforts in pursuit of more ground from the United States, which is bad for customer protection.

Will the Opinion Pass?

While respected sources have confirmed that an opinion has bene drafted and prepared, there’s no evidence yet to suggest that it will be delivered before Christmas or at all. While the legislation would certainly be disruptive, its short-term implications are not entirely clear.

One thing is for certain, though. With the offense on sports betting from senators Hatch and Schumer, and the now reportedly renewed efforts to curb the expansion of the online gambling industry, the challenges ahead businesses are substantial.

No short-term implications may indeed follow, but investors, card rooms and iGaming companies will have to tread carefully.

Grant Mahon

Grant is the self-professed casino madman and reporter that brought this eclectic team of dedicated and talented writers together from around the world to proudly build an humble empire of authentic casino news.