US AG Barr and DOJ File Reply Brief in Wire Act Case

Last updated on May 27th, 2020

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Remember the Wire Act case? It was kind of a big deal before the coronavirus pandemic flipped everyone’s worlds upside down.

The case of the New Hampshire Lottery Commission and NeoPollard Interactive versus United States Attorney General William Barr and the US Department of Justice (DOJ) just inched forward a bit in the past few days. It was a healthy reminder that the interpretation of the US Wire Act still faces scrutiny and could upend the entirety of the online lottery and online gaming and poker industries in America.

A refresher is in order.

From 1961 to 2020

The Federal Wire Act (also known as the Interstate Wire Act) dates back to September of 1961. The US Attorney General at that time, Robert Kennedy, wanted to combat money laundering that had been rampant in organized crime circles. The purpose of the new law was to prohibit the transmission of bets and wagers using wired communication.

In November 2011, at the request of states interesting in offering online lottery ticket sales, the DOJ under the Obama Administration issued a memo to clarify and update the Wire Act. That interpretation limited the Wire Act’s applicability to sports betting only. Online lotteries, online poker, and online casino games were considered legal.

In late 2018, years of attempts to “restore the Wire Act” by casino mogul and billionaire Sheldon Adelson took hold in the Trump Administration. US AG Barr issued a new reading of the Wire Act in November 2018, one that set aside the 2011 memo and restored the Wire Act to its original meaning…mostly.

The most obvious problem was that numerous states had already legalized, implemented, launched, and garnered revenue from online wagering activities.

–January 14, 2019: Wire Act (under AG Barr) opinion made public
–January 16, 2019: Deputy AG issues 90-day implementation delay
–February 15, 2019: New Hampshire Lottery Commission and NeoPollard (lottery platform provider) file lawsuit against Barr and DOJ
–March 4, 2019: Deputy AG extends new Wire Act application to mid-June 2019
–April 11, 2019: US District Court in New Hampshire hears oral arguments, Judge Paul Barbadoro predicts case will reach US Supreme Court
–June 3, 2019: Barbadoro rules for plaintiffs, sets aside Barr-DOJ Wire Act interpretation
–June 12, 2019: DOJ extends new Wire Act application through December 2019
–August 16, 2019: Barr and DOJ appeal case in First Circuit Court of Appeals
–December 20, 2019: DOJ and Barr file initial brief, extend application through June 30, 2020
–February 26, 2020: New Hampshire Lottery and NeoPollard file briefs

From there, one entity after another – states with lotteries, suppliers, and organizations – filed amicus curiae briefs in support of the plaintiffs’ arguments. That process continued through March and April, and into May.

The DOJ and Barr had 21 days to file their reply, but the court granted an extension to April 22. Somehow, with interference from the coronavirus pandemic but not recorded officially online, the court granted yet another extension for the defendants.

Just under the wire, Barr and the DOJ filed their reply brief at 11:30pm on May 22.

https://twitter.com/sierotyfeatures/status/1265658341511987200?s=20

Defendants File Reply Brief

The defendants summarized their argument at the beginning of their reply brief. And it seems to simply reiterate the DOJ’s confusing argument from which its Office of Legal Counsel (OLC) drafted the opinion on the Wire Act in the first place.

“OLC did not address whether, and if so how, the Wire Act would apply to state lotteries or their venders. The Deputy Attorney General specifically instructed officials not to attempt enforcement action against state lottery systems until the Department can address that question.”

The DOJ has yet to address that question. Thus, the lawsuit moves forward.

Barr and the DOJ contend that the plaintiffs have not shown that Wire Act enforcement, per the recent OLC memo, against them is “imminent.”

And further, they contend that the US District Court “erred in taking the remarkable step of ‘setting aside’ OLC’s opinion.” Somehow, Barr and the DOJ argue that only when an agency like the DOJ takes action can that action be final and, thus, reviewable. Since the DOJ took no action regarding the plaintiffs, “there certainly was no basis for invalidating OLC’s internal advice.”

Their more detailed arguments in the brief are:

–US District Court erred in exercising jurisdiction as plaintiffs did not identify a particularized basis for fearing prosecution.
–The Wire Act is not uniformly limited to sports gambling; that modifier in the law does not apply to every prohibition in the Wire Act, and the statutory text and structure clearly favor the government’s reading.
–US District Court erred in purporting to set aside the 2018 OLC opinion, as the Administrative Procedure Act does not authorize the plaintiffs to demand judicial review of any legal interpretation by the government.

The defendants’ bottom line is that the US District Court judgment should be “vacated for lack of jurisdiction or, alternatively, reversed.”

DOJ files brief in 1st Circuit Court re NH Lottery/Wire Act case that basically says "hey, it was just a toothless Opinion, so it doesn't threaten anyone": https://t.co/0u9wKJtpIO big ramifications for lotteries and online casino gaming including interstate poker compacts
— John Brennan (@BergenBrennan)
DOJ files brief in 1st Circuit Court re NH Lottery/Wire Act case that basically says "hey, it was just a toothless Opinion, so it doesn't threaten anyone": https://t.co/0u9wKJtpIO big ramifications for lotteries and online casino gaming including interstate poker compacts
— John Brennan (@BergenBrennan) May 26, 2020

?ref_src=twsrc%5Etfw”>May 26, 2020