While it may not be as significant as the 2018 Supreme Court ruling to overturn PASPA, the state of New Hampshire won an important court victory this week. A federal judge ruled in favor of the New Hampshire Lottery Commission in a lawsuit they brought against the Department of Justice over its decision to reinterpret the Federal Wire Act.
At the end of 2018, the Department of Justice claimed that the Federal Wire Act didn’t just apply to sports betting, but all forms of online gambling. This included online casinos, online poker, and online lottery games. This was a big decision for online gambling and multi-state lottery operators.
This ruling now reverts the Wire Act back to its 2011 opinion in which it only applies to sports betting. That 2011 opinion is what allowed for lotteries to operate online, as well as allow for online casinos and poker.
While we probably haven’t seen the last of this issue, the ruling at least keeps the Department of Justice from issuing a surprise crackdown. The Department of Justice very well might appeal the judges ruling, possibly even taking this case to the Supreme Court.
History of the Wire Act
The Federal Wire Act passed back in 1961. Its goal was to crack down on the organized crime associated with illegal sports betting. These groups that were involved with illegal sports betting would use telephones and telegrams to conduct their businesses across state lines.
Once the Internet was born, the Wire Act stretched into new territory. The Wire Act eventually covered online gambling as well. This is what made all of those off-shore gambling sites illegal in the United States and is what prevents a majority of them from operating in the country to this day.
The Department of Justice claimed that the Wire Act applied to all forms of online gambling, not just sports betting. This prevented states from legalizing online lotteries as well as online casinos and poker rooms.
Taking A Stand
Finally in 2009, New York and Illinois state lotteries took a stand. They knew that online sales would be a great chance to generate lottery revenue. They asked the Department of Justice what their stance was on potential online lottery sales.
In 2011 the Department of Justice responded to New York and Illinois. From that point forward, the Wire Act would only apply to sports betting. Now states were free to move forward with legalizing online lotteries, casinos, and poker.
Everything was fine for about seven years. That is when the Department of Justice surprised everyone and issued a new opinion that reverted the Wire Act opinion back to its pre-2011 interpretation. They even went as far as targeting multi-state lottery games like the Powerball, since they use interstate communications. This “new” opinion on the Wire Act is what caused states like Pennsylvania to continually delay their online sports betting launch.
Hopefully, if the Department of Justice does appeal, they will not be victorious. This outdated Wire Act was aimed at cracking down on organized crime, not the entire U.S. population. Going after multi-state lotteries, online poker and online casino games was not the original intention of this Act.