On February 15, everyone was talking about New Hampshire filing suit against the Department of Justice (DOJ) regarding the legitimacy of the new Wire Act memo.
While they did, the hero-lawyer of sports betting, Ted Olson, was back at it fighting for the little guys, Neopollard Interactive and Pollard Banknote Limited.
Who are Neopollard and Pollard?
As the complaint notes, Neopollard is the technology and service provider for New Hampshire’s iLottery system. Neopollard also operates in Michigan and Virginia. In case you have not guessed, Neopollard is a subsidiary of Pollard, which owns 50 percent of the company.
Neopollard brought suit for declaratory judgment against the DOJ by virtue of the Office of Legal Counsel’s novel interpretation of the Wire Act.
What’s new here?
Accompanying the complaint for declaratory relief filed in New Hampshire District Court was a skillfully drafted Memorandum of Law in support of the motion for summary judgment. Assuming this matter is constitutionally ripe – which is a big if – this is a strong argument against the new interpretation of the Wire Act put forth by the DOJ.
Olson’s primary argument is that “The Wire Act Applies Only To Gambling On Sporting Events,” based on three sub-components.
What is Olson saying?
Olson begins by articulating that the new interpretation of the Wire Act is happening without the authorization of Congress, and threatens to cause havoc for intrastate gaming activities, including online poker, casinos, and lotteries.
The new interpretation effectively turns tax-paying companies into “1960s-era mobsters,” the original targets of the Wire Act. The Memorandum then advances the argument that the decision in United States v. Lyons supports the position that the First Circuit held that the current DOJ interpretation of the Wire Act is incompatible with the Wire Act’s actual scope.
The question of whether the Wire Act only applies to sports betting was not before the court in the Lyons case, though the document carefully states only that Lyons contradicts the Wire Act opinion, not that the Court of Appeals actually interpreted the scope of the statute.
Neopollard argues that under the new interpretation of the Wire Act, they are going to become targets for criminal prosecution as of April 15. The brief notes that prior to 2011, the only appeals court to address the scope of the Wire Act was the Fifth Circuit (which includes Texas, Louisiana, and Mississippi) in the 2002 case In re Mastercard.
The District Court of Utah (a lower court in a different appellate circuit) reached a different conclusion, and both decisions occurred prior to the 2011 DOJ opinion authored by former Major League Baseball Players Association lawyer Virginia Seitz.
About Wire Act text, structure, context
Olson makes a fallback argument in the event the Lyons’ First Circuit statement is deemed dictum by the New Hampshire District Court. This is that the 2018 Wire Act opinion failed to apply a common-sense interpretation of the statutory language and instead chose to apply the “last antecedent rule,” which essentially confined the phrase “on any sporting event or contest” to only the phrase immediately preceding it.
This is contrary to the Supreme Court’s guidance regarding the application of the last antecedent rule, which states it should only be applied when “the varied syntax of each item in the list makes it hard for the reader to carry the final modifying clause across all three.”
The crux of Olson’s argument is that the DOJ unnecessarily complicated the clear meaning of the words in the statute.
In typical Olson style, he manages to slide in a few quality legal zingers making his argument including: “Congress does not hide elephants in mouseholes, or in misplaced punctuation (citations omitted).”
The Memorandum continues by arguing that the new DOJ interpretation cherry-picks its rules of construction. Choosing to apply the phrase “in interstate or foreign commerce,” across all four acts in the Wire Act, but does not do the same for the phrase “on any sporting event or contest.”
Wire Act purpose and history
The Wire Act was part of Robert F. Kennedy’s attack on organized crime. The DOJ determined that the most effective way to fight organized crime was to go after the sources from which they made their money.
Outside of those who made their way to Nevada, most organized crime figures used sports betting and horse racing as a means of raising revenue throughout the 1950s. Olson notes that the DOJ went after the two tools that a gambling business needs to thrive: rapid transmission of gambling data, and telephone services.
Olson further notes that Kennedy confirmed the role that the Wire Act had on disrupting “race wire services.”
As the brief reaches its conclusion, Olson continues to hammer home that the purpose of the Wire Act’s authors was to target illegal bookmaking narrowly, and not to target all forms of gambling.
The memorandum of law cites the famous interaction between Senator Estes Kefauver and Assistant Attorney General Herbert Miller, where Kefauver asks is the bill would apply to professional wrestling and Miller responds: “[t]his bill, of course, would not cover that because it is limited to sporting events or contests.”
What does Neopollard want?
The Neopollard plaintiffs want the same thing as the officials from New Hampshire, and those from New Jersey as well: a declaration that the new DOJ Wire Act opinion is wrong, and that the Wire Act applies to “sporting events and contests,” only, nothing else.
Olson argues (through local counsel Michael A. Delaney) that billions of iGaming dollars hang in the balance of the District Court of New Hampshire.
What happens next?
The next step will be for some response from the federal government, both in the Neopollard case, as well as in the case involving the New Hampshire officials.
Under Rule 12(a)(2) of the Federal Rules of Civil Procedure, the federal government (and its employees) have 60 days to respond, and file an answer, which — you guessed it — brings us right up against the expiration of the 90-day compliance window for operators to bring their conduct in line with the 2018 Wire Act opinion.
The government could, of course, respond earlier. Do not expect the DOJ to rush their response to these lawsuits. There is likely to be a lot of behind-the-scenes negotiating before the 60-day window expires.