State Attorney General of New Jersey, Gurbir S. Grewal, is seeking information related to lobbying efforts that may have influenced the reversal in opinion on…

State Attorney General of New Jersey, Gurbir S. Grewal, is seeking information related to lobbying efforts that may have influenced the reversal in opinion on the Wire Act by the US Department of Justice.

In a Freedom of Information Act Request (FOIA), Grewal outlined media reports that suggest influence by billionaire Sheldon Adelson and not “intervening facts or law” may have been the determining factor in the sudden and unsubstantiated reversal that stands to have an adverse impact on well-established online gambling operations in the country.

In particular, Grewal highlights a recent report in the Wall Street Journal that links a 2017 memo promoting the radical view that the Wire Act applies to gambling beyond sports betting to an Adelson lobbying firm. According to the Wall Street Journal, the memo that reached the hands of “a top ranking official in the Justice Department” was provided by “an outside law firm headed by a former Department of Justice official.”

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The requested records include communications between public officials and “[a]ny non-governmental actors or organizations, including but not limited to the Coalition to Stop Internet Gambling, Las Vegas Sands, the Lincoln Group, Sheldon Adelson, Blanche Lincoln, Charles Cooper, and Darryl Nirenberg; or Any organization or individuals in the Executive Office of the President, including but not limited to the Office of White House Counsel.”

Media Reports Point to Adelson

In the last week, several media reports have emerged that point out how closely the new position of the DOJ resembles the lobbying efforts on the part of organizations linked to billionaire casino mogul Sheldon Adelson.

Tom Hamburger of The Washington Post takes a look at the similarities between Aldeson-backed positions on online gambling and those now adopted by the DOJ. Hamburger also highlights questions about the timing of the new opinion which was issued while the federal government was partially shut down, a time during which very high standards must be met for any non-essential government business to be conducted.

The aforementioned article in the Wall Street Journal by Byron Tau and Alexandra Berzon follows the path to the revised DOJ opinion and its intersection with a memo sent to the DOJ outlining the legal analysis of the Wire Act of Adelson’s lobbyists. Though the DOJ has denied that it was influenced by lobbyists, it did acknowledge that it was in possession of the legal analysis at the time it reversed its position.

The WSJ article notes that the new DOJ opinion “adopted arguments similar to those in the [...] memo about the meaning of the words in the law as its primary reason for the new interpretation. Both writings pointed to some of the same case law examples.”

Pennsylvania and New Jersey Join Forces in Resistance

State Attorney General of Pennsylvania Josh Shapiro teamed up with Grewal to express their “strong objections” to the change in position on the Wire Act, in a letter to the DOJ. The pair called on the DOJ to withdraw its new opinion or provide a “guarantee” that it “will not bring enforcement actions against companies in [their] states that are acting lawfully under state statutes.”

The letter further states that the “states’ online gaming industries began to develop in reliance on DOJ’s” previous stance on online gambling and the Wire Act.

In addition, the AGs call into question the motivation for the change, noting that the DOJ cited no “intervening facts or information to justify such a major departure.”

Representatives of state lotteries have also joined in voicing opposition to the new interpretation. In a letter to the DOJ by the North American Association of State and Provincial Lotteries (NASPL), the organization which counts 52 lottery organizations as members, stated that the new interpretation has created “substantial uncertainty concerning the legal status of lottery transactions.”

No Reversal or Exception Expected

So far the DOJ is showing no signs of budging from its position against interstate online poker and other forms of online gaming that expands across state borders.

On Friday, in testimony before the House Judiciary Committee, Acting US Attorney General Matthew Whitaker refuted the notion that corruption played any role in the reversal of opinion on the Wire Act and defended the new position. The defensive position taken by Whitaker makes it unlikely that any reversals or exceptions will be issued under this administration.

However, even if Whitaker had a sympathetic disposition toward online gambling, he has recused himself from issues relating to the Wire Act, and his term as Acting US Attorney General will likely end this week with the nominee for US Attorney General William Barr expected to be confirmed in the Senate.

Barr is known to be a proponent of states’ rights, which could bode well for those seeing the new Wire Act interpretation as an encroachment on state sovereignty as it relates to gambling laws.

Still, short of Barr rescinding the latest opinion (which is unlikely), even “favorable” enforcement guidelines may not be enough to provide the stability the industry needs to grow, as the recent and sudden change in direction serves to highlight the uncertainty surrounding the online gaming industry and its position under federal law.