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IGT Wins Big Against DOJ: Wire Act Only Applicable to Sports Betting
By Jeff Osienya Sep 23, 2022 LegalityIGT celebrates resounding victory following a lawsuit against the DOJ about the interpretation of the Wire Act. According to a Rhode Island District Court ruling, the law only applies to sports betting. Online casino games and lotteries are safe.The online gaming industry can finally breathe a sigh of relief thanks to some recent good news about the interpretation of the Intestate Wire Act of 1961. International Game Technology (IGT), a leading gaming company, has won a case about the law’s interpretation against the US Department of Justice (DOJ) and US Attorney General Merrick Garland.
Following a year-long legal battle, the ruling made at the US District Court for the District of Rhode Island read:
Quote“Judgement is in favor of the Plaintiffs, International Game Technology PLC and IGT Global Solutions, and against the Defendants, Merrick B. Garland and The United States Justice Department.”
The judgment passed last Thursday (September 15) by District Judge William Smith meant Wire Act would only cover sportsbook betting, not online casino games and lotteries. It is notably a big win for IGT as it can run its online lottery operations in 37 states without fearing losing money due to lawsuits.
In his 21-page ruling, Judge Smith indicated that:
Quote“The Court holds that the threat of prosecution faced by IGT, both for its lottery and non-lottery businesses, is credible enough to meet the requirements of proving an injury-in-fact.”
The Interstate Wire Act of 1961, a brainchild of Robert F. Kennedy, was enacted to ban interstate gambling in a bid to curb the rampant organized crime activities at that time.
A State of Confusion Loomed iGaming After a 2018 Interpretation
In 2011, during the Obama Administration, the DOJ’s Office of Legal Counsel (OLC) issued its opinion on the Wire Act when two state lotteries planned to sell lottery tickets online. So, based on the interpretation of the US Department of Justice at that time, the Interstate Wire act of 1961 solely applied to sports betting.
As a result, the decision opened doors to the legalization of state-by-state online casinos and poker gambling. However, in 2018, under Trump’s Administration, the DOJ OLC reversed the 2011 opinion stating the Wire Act covered all online gambling activities. Although no action was taken against the US lottery and gaming operators, the 2018 opinion left the gambling industry in a state of confusion.
Come February 2019, The New Hampshire Lottery Commission (NHLC) filed a lawsuit against then Attorney General Bill Barr and the DOJ. The Commission requested the US District Court for the District of New Hampshire to throw out the revised DOJ opinion, claiming that it would cost the commission millions of dollars each year.
In June of the same year, District Court Judge Paul Barbadoro highlighted that the Wire Act only covered sports betting in his ruling. The DOJ’s OLC then proceeded to the US Court of Appeals for the First Circuit, but again, the court ruled in favor of the NHLC in January 2021.
IGT Took to Court to Shield its Operations From Legal Turmoil
After the First Circuit ruling, the Biden Administration and the Department of Justice had not given any indications of going after the online gambling community. Nonetheless, IGT wanted the Wire Act correctly interpreted to ensure its business runs without fear of paying hefty fines. Thus, IGT moved to file a lawsuit in November 2021, and at the time, the gaming company’s legal team remarked on the Justice Department’s OLC opinion saying in part:
Quote“..gaming operators such as IGT face a credible threat of prosecution that poses a present and identifiable hardship as a result of OLC’s new interpretation of the Wire Act.”
IGT further claimed that the OLC’s 2018 interpretation of the Wire Act pushed the company to set aside money to cover potential lawsuits in case the government sought legal action.
Later in February 2022, the DOJ filed a motion to dismiss, maintaining that the international lottery and gaming firm did not present sufficient evidence to support its claim of potential prosecution. In addition, the department of justice emphasized that the Wire Act did not apply to the brick-and-mortar casino and lottery services, which consist primarily of IGT’s business.
The Interstate Wire Act Legal Brawl is Far From Over
According to experts in US gaming law, the Wire Act issue is still in limbo. A report from Pokerfuse indicated that after the court ruling, Jeffrey Silver, a gaming law attorney, warned the gambling industry in an ominous statement as follows:
Quote“While IGT appears to have been given its ‘safe harbor’ to continue lottery operations in the First Circuit — and perhaps other poker and live casino game operators may see this as encouraging news for their internet wagering plans — the gaming industry should still move forward cautiously.”
Gregory Gemignani, an attorney, working with Dickson Wright PLLC, noted that IGT and other gaming operators are safe from lawsuits until 2024. However, if Republicans win 2024, the Wire Act situation will be unpredictable. Gemignani pointed out that:
Quote“The Biden DOJ has never had any particular appetite for enforcing or advancing the opinion that came out in the Trump years. But this ruling wouldn’t necessarily prevent [a future DOJ] from using the Wire Act against somebody else. If they did that, they would scare the hell out of the market.”
Meanwhile, according to Jeremy Kleiman of Saiber LLC, there are two possible circumstances where the ruling made by Judge Smith is not to be the final verdict of the Wire Act. That is, Congress amends the Wire Act, or when an appellate court makes a ruling conflicting with other circuit courts. If there is conflict in the ruling between the appellate court and the circuit, then the US Supreme Court will resolve the matter.
Anthony Cabot, a Distinguished Fellow in Gaming Law at the Boyd School of Law at the University of Nevada-Las Vegas, took shots at the US Congress saying:
Quote“If Congress cared about solving policy issues instead of partisan politics, there is much to fix in the Wire Act, given the rapid proliferation of sports wagering.”
Furthermore, in June 2021, the Attorney Generals of 25 states and the District of Colombia requested the Biden Administration to reject the Wire Act opinion based on the OCL during Trump’s Administration. However, Biden’s team has not acted on it.
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