By Gregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC, with William E. Moschella, a Shareholder in the firm’s Washington, DC office. Mr. Brower also serves on WLF Legal Policy Advisory Board and is the WLF Legal Pulse’s Featured Expert Contributor, White Collar Crime and Corporate Compliance.
On February 20, we posted about a November 2018 U.S. Department of Justice (DOJ) Office of Legal Counsel (OLC) opinion that reversed a 2011 OLC opinion on the scope of the Wire Act, a law that prohibits certain gaming activities across state lines. The 2011 opinion had clarified that the statute applied to sports betting only. The new opinion reinterpreted the Wire Act to prohibit all forms of wagering activity that crosses state lines, not just sports betting. We also reported back in February that two lawsuits had been filed challenging the new opinion. Last week, that litigation was decided in favor of the plaintiffs, with a federal court effectively setting aside the new opinion with a declaration that the Wire Act applies to sports betting only.
DOJ vigorously defended the challenge to the most recent OLC opinion, raising both procedural and substantive objections, and even, on the eve of oral argument, issuing a memorandum in which it attempted to disclaim any intent at actually enforcing the opinion against the plaintiffs. Nevertheless, a federal district court in New Hampshire moved ahead with a decision. After first finding that the plaintiffs had standing and that the 2018 OLC opinion was a “final agency action” for purposes of a valid claim under the Administrative Procedure Act, U.S. District Court Judge Paul Barbadoro addressed the merits of the dispute and concluded as follows: “In sum, while the syntax employed by the Wire Act’s drafters does not suffice to answer whether Section 1084(a) is limited to sports gambling, a careful contextual reading of the Wire Act as a whole reveals that the narrower construction proposed by the 2011 OLC Opinion represents a better reading.”
Judge Barbadoro went on to conclude that the “Act’s legislative history, if anything, confirms this conclusion.” Based upon these findings, the court declared that § 1084(a) of the Wire Act “applies only to transmissions related to bets or wagers on a sporting event or contest,” and further declared that the “2018 OLC Opinion is set aside.”
This decision, while subject to appeal by DOJ, is significant for the gaming industry, which increasingly is developing online products that electronically cross state lines in some way. Because the 2011 DOJ opinion seems so logically based on the text and history of the statute, and because online products were developed in reliance on that opinion, it was a surprise to most all observers that DOJ would suddenly reinterpret the scope of the statute. With this much anticipated judicial decision, it would appear that a more logical interpretation has been restored, at least for now.