The decision of the Biden administration not to appeal the New Hampshire decision should cement the legality of interstate non-sports wageringAttorneys who specialize in gaming law said the decision by the Biden DOJ not to appeal an appellate court ruling that the Wire Act applies only to sports betting means online gaming activities such as casino and poker are legal in most cases.
Despite lingering uncertainty over the DOJ’s official position on the Wire Act moving forward, attorneys said some states are likely to move forward with plans to create new agreements with operators and to set up interstate player pools.
But they disagreed over whether the DOJ will ultimately respond to a letter from 26 AGs seeking clarity on the issue.
Some Attorneys Say “It’s Legal”
For many gaming law attorneys, the fact that the Biden DOJ didn’t ask the US Supreme Court to review the case New Hampshire Lottery Commission et al. v. Rosen means forms of interstate gambling like online poker are now legal.
With the DOJ refusing to appeal the case, they have essentially succumbed to the correct interpretation of the Wire Act.An opinion from the DOJ’s Office of Legal Counsel (OLC) from 2018, enacted during the Trump administration, had argued the opposite.
“The decision of the Biden administration not to appeal the New Hampshire decision should cement the legality of interstate non-sports wagering at this time and lead to more compacts,” Cooper Levenson’s Lynne Kaufman told pokerfuse. “Barring an errant prosecutor, it certainly eliminates the risk of enforcement actions under the 2018 [OLC] opinion.”
Mark Starr, with Brownstein Hyatt Farber Schreck LLP, said “with the DOJ refusing to appeal the case, they have essentially succumbed to the correct interpretation of the Wire Act.”
And Saiber LLC’s Jeremy Kleiman told pokerfuse that “online casino gambling and online lotteries are now legal under federal law.”
“By failing to appeal, DOJ allowed the [First Circuit] Court of Appeals to have the final word,” he added. “Effectively, the court interpreted the intent of Congress in enacting the Wire Act and determined it definitively applies only the sports betting. So, subject to state laws, online gaming is legal.”
Other Attorneys Say “It’s Complicated”
But other gaming law attorneys said the issue is more complex and that further action by the DOJ, Congress or both is needed for clarity.
Anthony Cabot, Distinguished Fellow of Gaming Law at UNLV’s Boyd School of Law, said interstate online gaming is “not necessarily” legal just because the DOJ didn’t appeal the New Hampshire decision.
“This case only determined that online gambling does not violate the Wire Act,” Cabot said. “It could violate other federal laws if an operator offered it in violation of state law where either the operator or the player is physically located. As an example, an offshore operator that accepts players from a state without the required state licenses is still violating federal gambling law other than the Wire Act.”
In 2011, the Obama-era DOJ issued an OLC opinion reaffirming its earlier stance that the Wire Act applied only to sports betting—effectively making interstate online poker legal in the US for the first time.
Scott Andress, with Balch and Bingham LLP, said states will continue to hesitate to embrace expansion of the online gaming industry “without any clear indication by the Biden DOJ [on] reinstating or reaffirming the Obama OLC’s opinion.”
States that wish to pass online gaming laws, such as mobile poker, and pool liquidity with other states offering legal mobile poker can and should immediately do so.“Only certain federal courts of appeal circuits (e.g., First, Fifth) have opined on the issue of applicability of the Wire Act to more than sports betting; the others have not, nor has the US Supreme Court had the opportunity to consider it,” Andress said. “Thus, there has been no nationwide determination on the issue.”
Uncertainty May Continue
Hesitation on the part of state regulators was on full display earlier this month when attorneys general from 25 states and the District of Columbia sent a letter to US Attorney General Merrick Garland.
They urged the Biden DOJ to rescind the 2018 OLC and to endorse the January 20 decision by the First Circuit Court of Appeals to uphold a lower court ruling that the Wire Act applies only to sports betting.
“In my opinion, the best short-term solution, consistent with the New Hampshire case, is to reaffirm the DOJ opinion from 2011 that determined that the Wire Act applied only to ‘sports-related gambling activities,’” Cabot said.
“In the long term, the Wire Act needs to be substantially revised to address half of the states that now permit sports wagering,” he added. “The [amendments] should make it easier for states to allow shared services, cross-border risk management and common pooling.”
Attorneys Divided Over Whether DOJ Will Respond
Jeff Ifrah, founding member of Ifrah Law in Washington, DC, said the AGs were “hoping to obtain absolute comfort” from Garland. “However, the likelihood that a Biden DOJ or any future DOJ would seek to again broaden the scope of the federal Wire Act is extremely low, almost non-existent. States that wish to pass online gaming laws, such as mobile poker, and pool liquidity with other states offering legal mobile poker can and should immediately do so.”
DOJ does not need to take any action, as the law is now clearBut Kaufman pointed to a statement by New Jersey AG Gurbir Grewal that the DOJ needed to “lift the fog of ambiguity” on the issue. She cautioned that “failure to disavow the 2018 OLC opinion and provide direction to courts could lead to a situation where a court isn’t able see through that fog—which is why the AGs are asking for action and why states are hesitating.”
When asked if he thought the DOJ would respond in some form, Cabot said, “certainly not to try to stop the growth of internet gaming. The DOJ has no motivation anymore to interfere in the states’ decisions to permit online gaming, lotteries or sports wagering within their borders. The only reason that the Trump administration did so was as a political favor.”
Andress and Kleiman also said they did not expect the DOJ to respond. “DOJ does not need to take any action, as the law is now clear,” Kleiman said. “The only thing that could prohibit online gaming at this point is an act of Congress amending the Wire Act, and there does not seem to be the appetite to do so.”
Response Would Provide Clarity
Nevertheless, Starr said he expects the DOJ will respond in some form “purely for clarity.”
The uncertainty will not prohibit their continued proliferation but can add costs and unnecessary hurdles to the process.“A big driving factor of this is lottery,” Starr said. “This was going to essentially destroy the lottery business. A lot of us in the gaming industry don’t necessarily think about how much revenue lottery generates for states, but it generates quite a bit. There were 25 states that signed that letter, but only four to five have online casino or online poker. It’s really to protect and give comfort to the lottery industries.”
While the DOJ is “not technically” required to respond to the AGs, Cabot said that if the DOJ did clarify its position on the Wire Act it would “provide clarity to the states as to how they can structure their legal online gaming industries.”
“The uncertainty will not prohibit their continued proliferation but can add costs and unnecessary hurdles to the process,” Cabot said. “For example, most states require licensed operators to maintain game servers within their borders. This may be more costly and less secure than how other retail businesses handle online transactions.”
What Happens Now?
Despite the ongoing uncertainty, the attorneys said states were likely to proceed with plans to make agreements with operators and with other states to create interstate player pools. States could opt to join the Multi-State Internet Gaming Agreement (MSIGA) or could create their own similar interstate compact.
“States are free to enter into compacts to allow interstate gambling, and player pools, which is exempted from the Unlawful Internet Gambling Enforcement Act (UIGEA), so long as the participating states authorize it under state law,” Kleiman said. Added Starr: “States are certainly free to go ahead and create compacts that allow them to pool their iGaming pools together.”
Michigan and Pennsylvania joining MSIGA could lead to the creation of a true cross-border partypoker US network and a PokerStars USA network. That in turn could spark interest in the game and lead other operators to offering online poker products to a much larger player pool.
“The model for sharing poker liquidity created by Nevada and Delaware can either be the vehicle or model for further expansion,” Cabot said.