- Sports Betting
- NJ Sports Betting
- PA Sports Betting
- Indiana Sports Betting
- US Betting
- LSR Podcast
The next step in the federal Wire Act case has been taken.
Late in the evening of Friday, Dec. 20, less than an hour before its deadline to do so, the Department of Justice filed its opening brief of its appeal of the order by the federal court in New Hampshire setting aside the 2018 memorandum by the DOJ’s Office of Legislative Counsel (OLC) purporting to expand the scope of the Wire Act beyond sports wagering, to cover all forms of wagering.
The appeal is in a lawsuit filed this past February by the New Hampshire Lottery Commission (NHLC) and its service provider, NeoPollard Interactive LLC.
In June 2019, Judge Paul Barbadoro of the U.S. District Court for the District of New Hampshire ruled that the OLC’s 2018 opinion contradicted the text and legislative history of the Wire Act. The court set aside the opinion, effectively barring the DOJ from being able to apply the Wire Act beyond sports wagering.
In June, the New Hampshire court issued a 63-page decision in which it rejected every explanation the DOJ offered for its broadened interpretation of the Wire Act. The decision found that the DOJ’s new analysis of the Wire Act was “bizarre,” and was “plagued” by “incoherence.”
The court also found that an analysis of the legislative history of the law being debated by Congress prior to its passage in the 1960’s—which the DOJ claimed supported its broadened reading of the Wire Act— “tend[ed] to subvert rather than support the Government’s interpretation of the statute.”
Given that the New Hampshire court’s decision roundly rejected the DOJ’s legal analysis, and that the only federal appeals courts to have addressed the scope of the Wire Act likewise found that it applied only to sports wagering, many observers speculated that the DOJ may accept its defeat in New Hampshire, rather than pursue an appeal to the United States Court of Appeals for the First Circuit.
Even after DOJ provided notice of its intent to appeal in August, many believed that the government would ultimately abandon its appellate efforts.
This speculation was fueled when the government sought an extension of time to file its appeal brief, pushing its deadline to file its appeal from November to this past Friday. It was only last week that speculation subsided somewhat, after the DOJ issued a memorandum extending the forbearance period during which it would not enforce its broadened interpretation of the Wire Act, until the later date of June 30, or the conclusion of the appeal of the New Hampshire decision.
Now that the government has filed its appeal brief, the spotlight shifts to NHLC and NeoPollard which, provided there are no further extensions, are scheduled to submit their appeal briefs by Jan. 21.
It remains a possibility that the government may still dismiss its appeal prior to the case being argued sometime later in 2020, but for now, indications are that the DOJ remains interested in expanding the scope of Wire Act enforcement beyond sports wagering.
An early analysis of DOJ’s brief suggests that the government is aware of the strengths and weaknesses of its case. Indeed, rather than focus on its arguments related to the actual substance of the Wire Act and its potential applicability beyond sports wagering, which the New Hampshire court roundly rejected, the government seems far more focused on technical legal arguments.
For example, DOJ spends the opening 14 pages of the “argument” section of its brief — over a third of its entire argument — claiming that the court in New Hampshire should have found that NHLC and NeoPollard lacked standing to challenge the OLC’s Wire Act memorandum.
Essentially, as the argument goes, DOJ claims that because NHLC and NeoPollard have not actually been “harmed” by the 2018 memorandum — because the DOJ has not yet attempted to enforce the Wire Act against them — it is not legally permissible for them to go to court to get the opinion vacated.
The court in New Hampshire rejected this argument in its June decision, but DOJ only spent four pages making that argument in New Hampshire, indeed focusing more heavily on the substance of its Wire Act analysis.
Similarly, in its appeal, DOJ spends ten pages arguing that the OLC solely putting forth the 2018 memorandum did not constitute “final agency action,” and, therefore, the court in New Hampshire could not set it aside and prevent it from being enforced.
This is another technical legal argument to which the government gave short shrift in its arguments in New Hampshire (which the New Hampshire court also rejected) — spending less than two pages on it — that the DOJ now highlights in its appeal submission.
In its appeal filing, DOJ’s actual argument in support of its broadened interpretation of the Wire Act is far more concise than the argument that it made before the court in New Hampshire.
Indeed, the DOJ’s argument regarding the actual substance of the Wire Act spans just over one-third of its First Circuit appeal brief (with the rest devoted to technical arguments discussed above), as compared to it having devoted two-thirds of its argument to the Wire Act in its filing in New Hampshire.
By playing up the “standing” and “final agency action” issues more heavily in its appeal than the discussion of the actual substance of the Wire Act, DOJ’s strategy can be interpreted to be an admission that it knows that its arguments about the scope of the Wire Act are weak.
Even if the government manages to prevail on one of its technical arguments on appeal, it may be a Pyrrhic victory. Unless it manages to convince the First Circuit to rule that the Wire Act should apply to all gambling — highly unlikely given DOJ’s focus on technical arguments and the New Hampshire court’s sound rejection of this interpretation — the possibility that DOJ will one day be able to successfully prosecute a person, business, or state government for a non-sports-wagering Wire Act violation seems quite low.
This is because even if one of the technical arguments wins the day (without the court addressing the substance of the Wire Act) and the 2018 OLC memorandum is reinstated, all that will do is bring DOJ back to square one.
At that point, if the DOJ actually attempts to initiate a non-sports-wagering Wire Act prosecution, any defendant will be able to make all of the arguments that NHLC and NeoPollard made regarding the substance of the Wire Act.
And given the history of courts rejecting efforts to apply the Wire Act beyond sports, it stands to reason that any future effort by the DOJ to initiate a non-sports-wagering Wire Act prosecution will not be successful.
So, although the best possible result for the industry would be a complete victory on appeal, given the government’s focus is on technical legal arguments rather than the substance of the Wire Act, a win for the government does not seem as if it would be much of a long-term win at all. With that in mind, the real question presented by the DOJ’s appeal is “why are we here?”
The answer is the same as it has been for almost a year: the DOJ hastily released the misguided OLC memorandum during the early 2019 government shutdown, and even when faced with legal analysis identifying the error in its ways, it is desperately attempting the resuscitate the 2018 memorandum.
Until the government either walks away from the 2018 memorandum or is handed a final defeat in court, the iGaming industry will be hindered by the continued uncertainty regarding the scope of the Wire Act.