DOJ Files Motion to Dismiss IGT Lawsuit Against 2018 Wire Act Reversal

Home » DOJ Files Motion to Dismiss IGT Lawsuit Against 2018 Wire Act Reversal

Posted on: March 1, 2022, 09:37h. 

Last updated on: March 1, 2022, 09:37h.

The US Department of Justice has filed a motion to dismiss a lawsuit, brought by Rhode Island-based lottery provider IGT, that seeks to obliterate the Trump administration’s interpretation of the federal Wire Act.

wire act
IGT’s HQ in Providence, Rhode Island, above. The operator wanted the 2018 Wire Act opinion set aside once and for all, but the DOJ wasn’t playing ball. (Image: IGT)

IGT sued the DOJ in November last year in the US District Court for the District of Rhode Island. The company asked the court for declaratory relief that its non-sports betting operations will never be prosecuted under the 1961 law pertaining to interstate gambling.

The Wire Act, introduced by Robert Kennedy, was designed to disrupt revenue streams for organized crime by prohibiting “betting or wagering knowingly us[ing] a wire communication.”

But in the digital age it has become subject to interpretation. In 2011, under the Obama administration, the DOJ issued an opinion that the Act only prohibited sports betting, not other forms of gambling.

Crossed Wires

The opinion was sought by the New York and Illinois state lottery commissions. They wanted to know whether the use of the internet and out-of-state transaction processors to sell lottery tickets within their borders would violate federal law.

Not only did the 2011 opinion pave the way for online state lotteries, but also intra-state online poker and casino gaming.

But the opinion was sensationally overturned in late 2018 by the Trump administration, which said the Wire Act covered all forms of gambling. Critics claim the reversal was a favor to a Republican megadonor, the late Sheldon Adelson, who despised online gambling.

The New Hampshire Lottery sued the DOJ, backed by numerous other state lotteries. It argued the reversal intruded on “the sovereign interests of the State of New Hampshire without unmistakably clear language that Congress intended such as result.”

In 2019, the district court sided with the New Hampshire Lottery, ruling it exempt from the 2018 opinion and ordering the new interpretation to be set aside.

The Trump administration quickly appealed. In 2021, the higher court upheld the lottery’s exemption but vacated the order for the opinion to be set aside. This means, theoretically, the statute could one day be reinterpreted anew.

Yes and No

In June that year, the Biden administration allowed the deadline for an appeal to lapse, tacitly confirming that it considered the 2018 opinion to be incorrect.

IGT wanted a declaration to that effect. But if it thought the Biden administration was going to play ball, it was wrong.

In its motion to dismiss the case, the DOJ acknowledged that the US government could not successfully prosecute IGT in New Hampshire.

Regarding IGT’s non-sports betting operations elsewhere in the US, it said:

IGT does not allege that it has been prosecuted or threatened with prosecution in this time, nor does IGT point to a single prosecution or threatened against any party [sic] engaged in like conduct. Under these circumstances, the perceived threat that IGT may be prosecuted in some other jurisdiction for its non-sports gambling activities is merely speculative and certainly not imminent or substantial.”

Moreover, the plaintiff “implicitly seeks to extend the benefit of favorable First Circuit precedent [in New Hampshire] to other jurisdictions where it engages in non-sports gambling – jurisdictions where courts have not yet decided whether the Wire Act reaches any non-sports gambling,” the DOJ said.

In short, IGT is unlikely to be prosecuted by the federal government anytime soon. But the DOJ is unwilling to interfere with the right of any other state that wants to abide by the 2018 interpretation if it chooses to do so.

After all, the right of states to decide their own gambling laws was what this was all about in the first place.

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