If a lawsuit that IGT and its US-based subsidiary filed last month against the Biden DOJ goes the way US gaming law attorneys expect, US online poker could expand to several more states in short order, and it could open the doors to shared liquidity with Michigan and Pennsylvania.
That’s because IGT, the nation’s largest provider of iGaming and lottery services, has taken the DOJ to task over its continued silence regarding the Wire Act. Regulators in Michigan, Pennsylvania and elsewhere frequently label the law as the primary obstacle to their states joining interstate compacts that could provide the shared liquidity needed to support online poker.
“I think IGT wins this case and hopefully earns the decision and protection it hopes for,” Jeff Ifrah, of Ifrah Law PLLC, told pokerfuse.
How the Parties Got Here
Late last month, IGT filed suit in District Court for the District of Rhode Island that asks the court to declare a 2018 opinion by the DOJ’s Office of Legal Counsel (OLC), issued during the Trump Administration, as “contrary to law.” The company said the 2018 opinion puts it at risk of prosecution, unless it undertakes a prohibitively expensive restructuring effort.
At issue is a decision by the Trump DOJ to reverse a 2011 opinion by the Obama DOJ that the Wire Act applies only to sports betting. But the 2018 opinion didn’t get far in court: a district court in New Hampshire ruled against the Trump DOJ in 2019, and the First Circuit Court of Appeals upheld the lower court’s ruling in January 2021.
The Biden DOJ then declined to appeal before a deadline to do so in June. But to the annoyance of state officials and the industry, the DOJ has been tight lipped about what the missed deadline means. To date, states have been wary of joining interstate compacts like the Multi-State Internet Gaming Agreement (MSIGA), which currently includes Delaware, Nevada and New Jersey.
“The Biden DOJ agenda is focused on other matters that are the priority of the administration,” said Jeffrey Silver, of counsel with Dickinson Wright. “Gaming is not one of them and never has been. Courts are reluctant to issue broad decisions, so there is a likelihood that the issue will remain ‘unsettled.’”
Gregory Gemignani, an attorney with Dickinson Wright PLLC, said it was unclear what will happen next. “The Biden DOJ has signaled that it has no intention of relying on the 2018 opinion,” he said. “The DOJ could rescind the 2018 opinion and the matter would be moot. However, whether the DOJ will do so remains unknown.”
Recission of the 2018 opinion is the same step that attorneys general (AGs) from 25 states and the District of Columbia urged Attorney General Merrick Garland to take in a letter they sent in June.
Lawsuit Designed to Seek Clarity
IGT argues that the appellate court ruling in New Hampshire Lottery Commission v. Barr applies only to the plaintiffs in that specific case, including the Lottery and its services provider, NeoPollard Interactive. And since the DOJ hasn’t come out and disavowed the 2018 opinion, it technically remains DOJ policy.
“That is why IGT wants clarity,” Silver said. “They do business in many jurisdictions besides the First Circuit and must demonstrate to the various state gaming regulators that it is in compliance with federal law.”
Anthony Cabot, Distinguished Fellow in Gaming Law at the Boyd School of Law, University of Nevada-Las Vegas (UNLV), said the district court’s initial ruling in the New Hampshire case, coupled with the appellate court’s backing and the Biden DOJ’s decision not to appeal “makes any attempt to enforce the 2018 opinion very unlikely.
“If this went to a court decision, IGT would press for a decision that had broader implications than the impact of the 2018 opinion on its Rhode Island operations. The better case scenario is for the DOJ to repudiate its blatantly incorrect and politically motivated 2018 opinion and reaffirm the proper analysis from its 2011 opinion that the Wire Act only applies to sports wagering. This may be the course the DOJ takes as it is correct, expedient and cost efficient.”
But Ifrah doubted the Biden DOJ would issue such a public pronouncement. He added that he has seen “zero evidence” that the department still considers the 2018 opinion as its official policy. “No one can possibly believe this administration will use the 2018 opinion against this industry,” he said. “Even a future administration would be unlikely to do so.”
Deputy AG Had Promised 90-day Review
IGT also revealed in its complaint that the DOJ had offered to conduct a 90-day review of its lottery business to determine whether it runs afoul of the Wire Act.
Cabot said the 90-day review “may be a ploy by the DOJ to convince the court to avoid making a definitive ruling on the basis that the controversy is not ripe for review until the DOJ actually threatens IGT’s business. Why the DOJ would want to kick this can down the road to leave an incorrect opinion pushed by Trump to placate campaign supporters would be puzzling.”
But Ifrah said the Deputy Attorney General at the time, Rod Rosenstein, had “promised [a 90-day review] when the 2018 opinion was first issued.” And Gemignani said the reasoning behind such a review was to prevent otherwise law-abiding citizens from going to prison.
“The Federal Wire Act is a criminal statute with jail time as a potential penalty,” Gemignani said. “The Trump DOJ issued the 90-day warning regarding enforcement of the 2018 opinion because they realized many otherwise law-abiding people and companies relied on the 2011 opinion to conduct business in compliance with that opinion.”
Regardless of what happens in court, Cabot said the gaming industry “needs to be proactive and convince Congress to amend the Wire Act to assure its viability against illegal operators while removing any ambiguities and unnecessary burdens on state-authorized sports wagering. This should not be difficult as the Wire Act is poorly drafted and outdated.”
Still, IGT “will be grateful for any forbearance declaration that can give it a reasonable, albeit tentative safe harbor, to continue its operations,” said Silver.
For its part, the Trump DOJ acknowledged at the time of the 2018 reversal that the issue was likely to be challenged in court.
“Reaching a contrary conclusion from our prior opinion will also make it more likely that the executive branch’s view of the law will be tested in the courts,” wrote Steven Engel, the former Assistant Attorney General and head of the OLC who authored the 2018 opinion.
“That sentence might be the only thing the 2018 OLC opinion got right,” said David Gzesh of Gzesh Law Ltd.
The case in Rhode Island District Court is IGT et al v. Garland et al (No. 1:21-cv-00463).