Gregory A. Brower is Chief Global Compliance Officer for Wynn Resorts. He also serves on WLF Legal Policy Advisory Board and is the WLF Legal Pulse’s Featured Expert Contributor, White Collar Crime and Corporate Compliance. William E. Moschella is a shareholder with Brownstein Hyatt Farber Schreck, LLP and a former Principal Associate Deputy Attorney General, U.S. Department of Justice.
In our first WLF Legal Pulse post on this topic back in February 2019, we analyzed the December 2018 U.S. Department of Justice (“DOJ”) Office of Legal Counsel (“OLC”) legal opinion concerning the breadth of the federal Wire Act and noted the shock wave it sent through the Internet gambling industry. OLC’s 2018 opinion reversed OLC’s long-time interpretation of the statute as prohibiting only interstate sports wagering, not all forms of gambling across state lines. Almost immediately, the New Hampshire Lottery, believing that this reinterpretation would put it out of business, filed a lawsuit seeking a judicial declaration that OLC’s 2011 interpretation was indeed correct. In that case, the district court sided with the New Hampshire Lottery, and on January 20, 2021, a unanimous panel of the U.S. Court of Appeals for the First Circuit agreed that the 2011 opinion was correct. With DOJ’s time to appeal that decision having expired on June 21, the Department issued a statement last week that “the government is not planning to seek Supreme Court review of the First Circuit’s decision.” With that, DOJ has effectively returned to its 2011 opinion that the Wire Act does not prohibit the use of the Internet for all forms of gambling.
Even though the 2018 OLC memo was almost immediately followed by Main Justice instructing federal prosecutors to refrain from applying the new Wire Act interpretation for a period of 90 days—a period that was extended during the pendency of the New Hampshire litigation—the 2018 opinion created understandable concern in a gaming industry that has seen significant investment in online gambling over the past decade in reliance on the 2011 opinion. OLC’s reversal came under significant criticism from the gaming industry, with the American Gaming Association observing that “[i]t is unfortunate that the Department of Justice departed from well-established practice in reversing its previous opinion without a compelling reason to do so.” Later, in December 2019, then presidential candidate Joe Biden weighed in by suggesting that the Wire Act should be interpreted under DOJ’s 2011 opinion, thus telegraphing how a Biden DOJ would likely come down on this issue. Criticism also came from other corners, including a bipartisan group of state attorneys general who, in a June letter to the new attorney general and deputy attorney general, urged that DOJ accept the First Circuit’s holding, and requested that the 2018 opinion be effectively rescinded. Last week’s statement by DOJ finally brought the guessing game to an end.
With DOJ’s announcement that it will not seek review by the Supreme Court, the issue seems, at least for now, to be settled—the Wire Act applies to interstate sports wagering only, and other Internet gambling is free to proliferate in accordance with other applicable state and federal laws. As we have observed in previous posts (see “Related Content” below) this conclusion would appear to be in line with both the plain language of the statute and its history. However, the final buzzer may not have sounded just yet. With the growth of legal sports betting around the country, some believe that the Wire Act has outlived its usefulness and support an outright repeal of the law. Others, recognizing the continuing need for federal law enforcement to have a tool to combat illegal bookmaking operations, favor a modernization of the statute to allow for licensed and regulated online sportsbooks to operate across state lines. While many see signs that the Biden Administration will continue to have a friendly view toward the industry, Congressional action on this this issue is a different game entirely.