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Heidi Specter February 15, 2019 4 min read
NJ Senate President Stephen Sweeney Warns Rosenstein
New Jersey did it once. Now, the state is prepared to undertake second massive litigation only a year after it defeated PASPA in the Supreme Court of the United States. The Department of Justice has a chance to rescind the new Wire Act interpretation or suffer the consequences, NJ’s Stephen Sweeny warns.
Stephen Sweeney to Lead NJ against DOJ
New Jersey Senate President Stephen Sweeney is on a mission – to let the Department of Justice (DOJ) know that the re-interpreted Wire Act simply won’t sit well with one of the largest gambling states in the country.
If DOJ fails to comply, Mr. Sweeney notes, New Jersey is prepared to go to court. He goes further to explain why the decision have been introduced in the first place.
He finds the new Opinion capricious and arbitrary, reminding that the Wire Act is explicitly focused on restricting sports betting contests rather than anything else.
Mr. Sweeney’s frustration is understandable, measured, and ultimately directed at a man who can change things – Deputy Attorney General Rod Rosenstein.
Mr. Sweeney is a man with a plan. In his letter to Mr. Rosenstein, he explains that should the DOJ fails to rescind the 2011 OLC Opinion, then he has authorized former Senator Raymond Lesniak to file suit in the U.S. District Court on behalf of the New Jersey Senate.
Why Is the Opinion Worrisome for New Jersey?
Where’s the rub? The Wire Act was first challenged by New York and Illinois when the states wanted to develop their online lotter businesses.
There was a lingering uneasiness whether the Wire Act could apply to lotteries and so New York and Illinois took the matter to court questioning the validity of online transactions under the Wire Act.
It was decided that Wire Act would only sanction sports betting activities, which gave the states leeway to develop cross-border operations, pool lotteries and generally predicate an entire industry on this decision.
Now not only money, but livelihoods hinge on the fact. The effects of opening up the casino and lottery business in places like Atlantic City have been tremendous, transforming the region from an economically ailing under-performer to a vibrant hub with hundreds of jobs and millions worth of revenue yearly.
A U-turn would potentially have a catastrophic impact on the future of not only the online, but also live industry.
Undoing Progress, Setting Us Back
The main issue with the re-interpretation of the Wire Act is that under the legislation, cross-state transactions are not allowed.
This puts online gaming businesses, card rooms, and lotteries at a risk of being pursued by the DOJ attorneys as soon as an initial grace period expires in March.
This will directly reset Nevada, New Jersey and Delaware’s efforts to expand their shared-liquidity pool in a bid to present state poker players with better opportunities. Pennsylvania, which is also planning on joining this year, is now wondering how to handle the situation.
Not to mention that a number of businesses bought a poker license just so that they are able to join the shared liquidity scheme.
A Bad Analysis
Mr. Sweeney’s own wording of the interpretation has been robust. He has pointed out two specific points about the latest developments that made no sense.
First, the Wire Act had been examined painstakingly so that DOJ’s Office of Legal Counsel could come up with the latest interpretation.
By reversing its own opinion, the OLC admits the language is not plain and would require an analysis of the legislative history of the Wire Act, which would demonstrate that the Wire Act targeted only sporting events or contests to assist prosecution of organized crime run betting operations on sporting events and horse racing.
Secondly, the fact that the language of the Wire Act needed to be broken down to its very semantics would indeed suggest the legislation’s language wasn’t clear enough and therefore could not just be applied to whatever segment DOJ wanted it to apply.
While Mr. Sweeney didn’t call out the involvement of casino mogul Sheldon Adelson in the DOJ’s renewed stance, that was partially indicated in his wording. Mr. Adelson has spent years trying to bring the online gambling industry on its knees, poker included.
He may have finally succeeded, but while Mr. Sweeney has skin in the game, Mr. Adelson’s fight is far from over.