iGB North America’s regulation advisor Mark Balestra of Segev LLP discusses the Department of Justice’s challenge against the New Hampshire ruling setting aside its reinterpretation of the Wire Act.
What is your opinion on the New Hampshire court ruling on the Wire Act?
Obviously it’s good news for anyone who supports the expansion of regulated online gambling in the United States, but the issue remains unresolved. The argument over whether the Wire Act applies only to sports betting would only be settled if and when the Supreme Court rules on the matter.
Considering the DoJ’s arguments failed to sway the judge in New Hampshire, do you expect it to present its argument differently in its appeal?
The DoJ must reshape its argument to focus on the trial judge’s interpretation of the law, but that is always the case with appeals.
Is the key issue here that the Wire Act is too vague and unfit for purpose?
Ambiguity is certainly an issue, and the trial judge rejected both parties’ arguments that the statute unambiguously supports their case. He instead focused context, and the contextual interpretation of the Wire Act strongly favors the position that the statute only applies to sports betting.
Intending the prohibition to extend beyond sports betting is illogical when looking at the statute in its entirety and the legislative intent behind other federal gambling statutes enacted during that period. My hunch is that the government’s best chance of winning on appeal lies in its argument that the lottery lacks standing.
Could Congress address this issue by passing federal gaming legislation? Is this possible?
The ambiguity of the Wire Act has been an issue at least as far back as the early days of online gambling in the mid ‘90s, and the sensible fix would be amending it. This was the crux of the failed 2015 Restoration of America’s Wire Act (RAWA), which sought to clarify that the statue applies to all types of gambling.
And actually, it was a strategy employed in early efforts to prohibit online. The original prohibition bill introduced by Sen. Kyl back in 1995 was merely an amendment to the Wire Act. The road block over the years, of course, has been the opposition to prohibition.
Was the amendment to the appropriations bill looking to block the Department from using its budget for enforcing the revised Wire Act opinion indicative of the prevailing mood towards this case?
Not necessarily. Like virtually everything else these days, online gambling is a partisan issue, and most Republicans favor prohibition.
With a Republican administration and Republicans controlling the Senate, I wouldn’t expect pro-online gambling policy to get anywhere right now at the federal level. The proposed appropriations amendment felt to me like a shot in the dark.
It has been suggested that this issue will continue to run until it reaches the Supreme Court. Do you think this is likely?
I would not be shocked if this gets to the Supreme Court, but it is worth noting that a decision that disfavors the government would extend the precedent beyond the First Circuit. The Fifth Circuit (in Re MasterCard) held in 2002 that the Wire Act applies only to sports betting, and afterward the DoJ continued to effectively assert its contrary position throughout the country. Perhaps the Department would be content to confine an unfavorable holding in this case to the First Circuit.
History suggests that a scarcity of definitive case law bodes well for the DoJ in its efforts to shut down online gambling operations, and you don’t get any more definitive than a Supreme Court holding.