New Hampshire Defeats DOJ in District Court Battle

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  • DOJ phrasing of Wire Act Opinion ambiguous
  • New Hampshire wins the court battle
  • Judge refrains from naming the verticals the WA applies to

New Hampshire pries away from DOJ with a district court siding with NH insofar as iLotteries are concerned. Judge Paul Barbadoro didn’t explicitly dismiss the validity on the Wire Act on verticals beyond sports betting.

New Hampshire Wins Court Battle vs DOJ

New Hampshire has got a headway in the legal fight against the U.S. Department of Justice and the DOJ’s 2018 Opinion of the Wire Act of 1961. According to a New Hampshire District Court Judge, the Opinion lacked substance and the original interpretation o the Wire Act,where it only applies to sports betting, was upheld.

In the official ruling, Judge Paul Barbadoro rejected the DOJ Office Of Legal Counsel 2018 interpretation of the Wire Act by which the Department tried to expand the significance of the Wire Act to cover multiple gaming verticals beyond sports betting, and specifically raising concerns among iLotteries.

I hereby declare that § 1084(a) of the Wire Act, 18 U.S.C. § 1084(a), applies only to transmissions related to bets or wagers on a sporting event or contest.

Judge Barbadoro further noted that the DOJ had issued the 2018 Opinion on no justifiable grounds. He noted that online state lotteries, particularly in places like New York, Illinois an New Hampshire, have been conducting their activities for years and branding them as criminals was in the essence of the 2018 Opinion. He clarified:

The risk of prosecution is substantial. After operating for years in reliance on OLC guidance that their conduct was not subject to the Wire Act, the plaintiffs have had to confront a sudden about-face by the Department of Justice.

The judge also emphasized on the lack of clarity in the way the DOJ had been handling the situation. In essence, the Department had demanded from states to begin enforcing the Opinion, but no specific legal framework had been given and the grace period was ill-determined, Barbadoro continued.

He explained that the Opinion was frivolous insofar it hardly exempted lotteries and states from prosecution:The plaintiffs faced the choice between risking criminal prosecution, winding down their operations, or taking significant and costly compliance measures that may not even eliminate the threat.”

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A Peace Offering Nobody Accepted

In the weeks after New Hampshire lodged its lawsuit, the DOJ tried to dismiss it completely and veto its progress in court. However,the DOJ’s efforts came short and NH headed for a legal clash with the Department.

Faced with stiff opposition, the DOJ then decided to make a peace offering to NH arguing that the operations of the state’s Lottery Commission wouldn’t be affected. Once again, this was a little more than paying lip service and not offering concrete resolution.

In the official decision of the NH District Court, another point was raised. The OCL had failed to previously point out that lotteries weren’t the subject of the Wire Act:

“Had the OLC believed that states were excluded from the Act’s coverage, it could have responded to the states’ request by simply informing them that they were not subject to the Act. To infer from the OLC’s silence on this point that it might conclude in the future that state actors are not subject to the Wire Act requires an unwarranted speculative leap.”

Barbadoro methodically went over every point that appeared contentious and delivered a fact-based decision, which reinforced the sentiment that the OCL had acted at the behest of people who had a personal stake in seeing online gabling thrown in disarray with dim prospects of success. To clarify, the Judge himself made no such allusions and that is solely the opinion of Gambling News.

He further commented on the 60-day grace period (which was extended) which the DOJ had given lotteries to make adjustments to their legal framework, explaining that even if the states had acted at the moment of issuance of the 2018 Opinion, they would still be liable to prosecution.

New Hampshire’s 2012 Argument Rejected

Not all of New Hampshire’s arguments were accepted, which went to show that the matter focused on lotteries exclusively rather addressing the significance of the Wire Act on other gaming verticals. For instance, New Hampshire cited a 2012 criminal prosecution trying to use it as the basis of restricting the WA to only sports betting.

The judge dismissed the argument, explaining that the final decision was based on the guilty parties transferring sports data between states borders – which would be penalized by the WA Opinion once and if it was fully enforced.

Barbadoro went on to elaborate further on his decision arguing that it would be for him to take sides with either New Hampshire or the DOJ. However, he explained that the DOJ’s interpretation was vastly more confusing for two specific reasons:

  • One, the DOJ seemed okay with businesses operating online gaming verticals and didn’t say it was specifically unlawful
  • However, the DOJ specifically criminalizes financial transmissions of any sort whereby these same businesses can earn payment.

He noted that it struck as strange to allow the activity in principle, but then ban and criminalize any payment received and carried out as a result of that same activity. Barbadoro also took the previous considerations of Deputy Attorney General Byron when the Wire Act was examined by the House Judiciary Committee.

In summation, Barbadoro is not convinced by any of the arguments raised by the Department of Justice. He explained that the 2011 OCL Opinion was far better tailored to the actual text of the Wire Act and shared concerns that the forcible expansion of the meaning of the law wasn’t sufficiently unambiguous to allow the Wire Act to serve as the basis of sanctions against iLotteries for one.

The case against DOJ was supported by a number of stated who have passed or are in the process of passing sports betting, including Pennsylvania, New Jersey, Michigan, Kentucky, Colorado, Rhode Island, Virginia, Vermont, Mississippi, Alaska, Columbia, Delaware.

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