NJ Files Brief In New Hampshire’s Wire Act Case, Calls DOJ’s 2018 Opinion ‘Flawed’
Since the Department of Justice issued its revised interpretation of the Wire Act in 2018, it has been busy trying to justify the action.
The New Hampshire Lottery Commission (NHLC) filed suit, challenging the overly broad new opinion and won the first round when a New Hampshire District Court rejected the 2018 opinion.
The DOJ continues its fight to expand the reach of the Wire Act beyond sports betting. And it does so without regard for precedent or legal rulings.
As a result, on March 4, 2020, New Jersey Attorney General Gurbir Grewal filed an amicus brief with the US Court of Appeals for the First Circuit in support of the NHLC’s position.
New Jersey files brief in Wire Act case
The New Jersey sports betting industry has evolved under the Wire Act and the DOJ’s 2011 interpretation of it. The new opinion will not change anything there.
If allowed to stand, however, the opinion will impact NJ online casinos and iGaming and iLottery industries in states around the country.
The state’s position is simple.
The 2018 opinion should be set aside because multiple states built gambling industries based on the 2011 interpretation.
“The DOJ’s reinterpretation of the Wire Act should be rejected not only because its statutory arguments are flawed, but also because its change of position ignores the harms that would result from reasonable actions taken by the states in reliance on DOJ’s 2011 opinion.”
The state also outlined the financial impact to the state. The NJ online gambling industry has “directly and indirectly created 3,374 jobs and paid $218.9 million in wages to employees in New Jersey.”
Grewal wrote that New Jersey stands to lose $60 million in tax revenue per year and over 300 jobs.
“This is in addition to the immense waste of time and resources that went into building the industry, which would have been for naught.”
The DOJ’s argument for its revised Wire Act opinion
From the onset, the revised interpretation seemed hasty and ill-thought-out.
In fact, Legal Sports Report reported that the ruling that set aside the opinion found that the DOJ’s new analysis of the Wire Act was “bizarre,” and was “plagued” by “incoherence.”
The DOJ holds to its opinion that the Office of Legal Counsel (OLC) memos are not final. It is basically basing its argument on the fact that it has a right to change its mind.
“OLC opinions are not final agency action reviewable under the [Administrative Procedure Act] because they are pre-decisional legal advice and do not themselves determine rights or obligations or impose any legal consequences.”
But can it? Can the DOJ just change course after many years even knowing what is at stake for states like New Jersey that have built huge industries based on its opinions?
If the only consideration is legal precedent, then the answer is no.
New Jersey’s brief included precedent supporting the rejection of the revised opinion.
Specifically, it notes several Supreme Court cases that ruled a revised interpretation must be set aside if it does not show adequate evidence in support of disregarding interests built on the original interpretation of the law.
The impact of ambiguity around the Wire Act
There was no reason to believe the Wire Act and its real-world application was in question. At least not until the DOJ issued its revised opinion of the Wire Act.
The first appearance of the 2018 opinion in court went NHLC’s way. However, the current administration continues to show self-interest in the policies it pursues.
In fact, just recently, a judge called into question Attorney General William Barr‘s credibility in an unrelated case.
The ambiguity is likely impacting the crafting of legislation and launches of online casino gambling around the country.
The ultra-conservative state of West Virginia is a good example. Having passed online gaming legislation in 2019, the WV Lottery, the regulating body of all gambling in the state, does not plan to approve the launch of the first online casino until 2021.
Considering it launched sports betting within months of legalizing it, there is no doubt it is taking a more cautious approach with its new iGaming expansion while the ambiguity around the Wire Act is being resolved.
The state of New Jersey is right to be worried if the 2018 opinion is allowed to stand. It states as much in the brief.
“There is every reason to believe that the DOJ will attempt to prosecute those involved in such transactions in light of the 2018 reinterpretation. And that threat alone, regardless of the merit of such a prosecution, will devastate New Jersey’s iGaming industry.”
The only thing that is certain right now is that the Wire Act will be making NJ online gambling news headlines for a while longer.