DoJ Extends Wire Act Enforcement to 2020 Amid Likely Appeal

Dealt a blow by a federal judge with regard to its most recent Wire Act opinion, the DoJ has extended the prosecutorial grace period to December 31, 2019.

That directive came from US Department of Justice Deputy Attorney General Jeff Rosen in the form of a memo to the FBI and all US attorneys dated June 12, 2019. Rosen’s memo instructs federal prosecutors to hold off on going after Wire Act violators until the end of the year or 60 days after entry of final judgment in the New Hampshire litigation, whichever is later.

The New Hampshire case was initiated by that state’s Lottery Commission in response to an opinion put forth by the DoJ’s Office of Legal Counsel (OLC) in January 2019 that found that the 1961 Wire Act that forbids interstate wagering covered practically all online gambling – and not just sports betting. That opinion from earlier this year was 180 degrees different than a DoJ opinion in 2011.

In other words, federal lawyers under the Barack Obama administration opined one way until attorneys in the polarizing Donald Trump era ruled another. It’s all a huge mess that will keep plenty of lawyers very busy for the foreseeable future, all the while creating lots of confusion for online poker and gambling operators, as well as the state honchos that were leaning toward i-poker regulation based on the 2011 DoJ ruling.

New Hampshire Wins

The New Hampshire Lottery Commission was successful in convincing a federal judge to rule against the latest DoJ opinion. The judge’s opinion was issued on June 3, 2019 and included a mention that a DoJ appeal was very likely.

Indeed, Rosen’s recent memo points out that the DoJ is evaluating its options with regard to the judge’s ruling in the New Hampshire case. And until that all plays out, the DoJ won’t initiate prosecution against state lotteries and regulated online poker and gambling operators that it deems to be violating the 1961 Wire Act.

Following the OLC opinion in January 2019, the DoJ delayed such prosecution until April 15 and later extended that deadline until June 15. The newest deadline is now December 31, 2019 and the odds are good that legal wrangling may push that deadline back even further.

Back in Business?

In the meantime, multi-state lotteries will continue, as will the i-poker and i-gaming regimes in the regulated states of Nevada, New Jersey, and Delaware. Those states have already partnered in the realm of online poker, an interstate wagering model that would likely be a breach of the latest DoJ opinion that’s at the very heart of the current legal loggerheads.

Still under debate is whether or not [isGeoAllowed]the DoJ may retrospectively try to prosecute violators[/isGeoAllowed][isNotGeoAllowed]the DoJ may retrospectively try to prosecute violators[/isNotGeoAllowed] of the 1961 Wire Act that are operating right now – if the DoJ should eventually prevail in a likely appeal to a higher court. That possibility surfaced due to the language in Rosen’s recent memo that stated that the newest extension until the end of 2019 regarding enforcement of the Wire Act is an internal exercise of prosecutorial discretion and does not create a safe harbor for violations of the Wire Act.

Some observers of all the legal maneuvering and the accompanying confusion in determining the scope of the 1961 Wire Act point to billionaire casino mogul Sheldon Adelson as the cause. His stated desire to put an end to regulated online poker and gambling at all costs may be behind the DoJ reversal of its stance on the act.

Whether Adelson’s efforts are eventually successful have yet to play out. The octogenarian has, however, seemingly halted other states from moving forward with plans to roll out regulated online poker and gambling offerings until the matter is finally settled – if it truly ever will be.