This is a breaking story and will be updated.
The New Hampshire Lottery has filed suit in federal court against the Department of Justice to attempt to stop it from enforcing its new opinion about the Wire Act against lotteries.
“Today New Hampshire is taking action to protect public education in New Hampshire,” said Gov. Chris Sununu in a press release announced the court. “The opinion issued by DOJ puts millions of dollars of funding at risk, and we have a responsibility to stand up for our students.”
Later on Friday, the technology and service provider of the lottery — NeoPollard Interactive — also filed suit.
Lottery vs. the DOJ
The complaint in the US District Court for the District of New Hampshire comes just weeks after the DOJ said that the federal Wire Act applies to all forms of interstate gaming, not just sports betting. The opinion does not carry the force of law, but is meant as guidance for the DOJ as it pursues cases related to the Wire Act.
That opinion has worried many portions of the gaming sector, including lotteries whose business often crosses state lines.
The new opinion supersedes a 2011 DOJ opinion that declared the Wire Act only applied to sports betting, which had eased the minds of lotteries around the country. The 2011 opinion also led, at least in part, to the rise of legal intrastate online lotteries, online casino and online sports betting, all of which can potentially cross state lines because of the nature of the internet.
The NH Lottery “seeks declaratory and injunctive relief against the defendants,” according to the complaint:NH Lottery v DOJ Barr Feb 15 2019 Complaint
Lottery provider lawsuit
NeoPollard, which handles the technology for the NH Lottery, put in its complaint against Barr and the DOJ:01 – Complaint
Like the lottery itself, NeoPollard argues that the new opinion puts at risk nearly all currently legal forms of lottery:
As a result of the OLC’s erroneous change in position, gaming activities long thought to be lawful are now under threat of imminent criminal and civil prosecution. This includes not only making lottery products available to consumers for purchase via personal computers and mobile devices, but also traditional lottery sales via brick-and-mortar retail sales agents.
Why New Hampshire?
The court challenge likely came from New Hampshire because of a prior position of the First Circuit Court of Appeals which opined that the Wire Act only applies to sports gambling. That’s in addition to the legislative history of the 1961 law, which is generally accepted to be aimed at illegal sports wagering only.
The NHL lottery, in addition to traditional lottery products, has online lottery sales and also has designs on getting into sports wagering. The NH Lottery, in its complaint, notes the consequences of the new opinion regarding online sales:
The USDOJ’s reversal of the 2011 Opinion, without any further action or explanation, is also likely to have a chilling effect on banks accepting and processing these lottery-related transactions, which can effectively shut down this sales channel. This would result in a loss of approximately $6-8 million in education funding for New Hampshire.
The 2018 Opinion also has the potential to create catastrophic consequences for lotteries across the country and to jeopardize billions of dollars in state funding for good causes that are supported by lottery activity that is authorized and legal in every state where it takes place.
The complaints names William Barr as the defendant; he was confirmed as Attorney General this week.
More from the Wire Act lawsuit
The NH Lottery says it fears it is acting illegally under a strict reading of the Wire Act opinion:
“The USDOJ’s reversal of the 2011 Opinion, coupled with statements that depart from long-standing non-use of the Wire Act to prohibit state-run lottery activity, now subject the NHLC and its employees and agents to criminal liability and prosecution.”
The defendant’s 2018 Opinion, coupled with its 90-Day Memo, make clear that the plaintiff and its agents face a credible threat of prosecution on an ongoing basis under 18 U.S.C. § 1084 for engaging in conduct that has otherwise been deemed lawful for decades and now risk substantial criminal and civil penalties for continuing to operate its state lottery activities.
The complaint notes two other cases in federal court saying that the Wire applies only to sports betting. It even says the US Supreme Court agrees, citing the opinion that led to the striking down of the federal ban on sports wagering outside of Nevada:
The United States Supreme Court has also indicated that this is the correct reading of the Wire Act. Murphy v. Nat’l Collegiate Athletic Assn., __ U.S. __, __, 138 S. Ct. 1461, 1483 (2018) (explaining that 18 U.S.C. § 1084, which “outlaws the interstate transmission of information that assists in the placing of a bet on a sporting event” and applies “only if the underlying gambling is illegal under state law,” helps advance “a coherent federal policy” that “respect[s] the policy choices of the people of each State on the controversial issue of gambling”).
Lots of pushback on the DOJ and the Wire Act
Just about no one outside of the DOJ has taken kindly to the new opinion, which has come under fire both for its legality and its creation.
Mulitple media reports have been finding links from the opinion to casino magnate Sheldon Adelson, chairman of Las Vegas Sands Corp. The topic even came up in a House hearing questioning then acting Attorney General Matthew Whitaker.
Other recent pushback on the opinion:
- The president of New Jersey’s Senate asked the DOJ to rescind the opinion and also threatened legal action.
- The New Jersey and Pennsylvania attorneys general raised their objections to the Wire Act opinion.
- The North American Association of State and Provincial Lotteries made its displeasure known.
- MGM CEO Jim Murren said the opinion is unenforceable and that it could make things like Powerball illegal.