New Hampshire Lottery Files First DOJ Wire Act Lawsuit

It took just one month for the first lawsuit to be filed after the latest Wire Act opinion was made public. The Department of Justice’s Office of Legal Counsel revealed the full opinion on January 15, 2019. And one month to the day, the first lawsuit is on the books.

There have already been several lawsuits threatened, the most prominent one being from Pennsylvania and New Jersey Attorneys General. They penned a letter to US Acting Attorney General Matthew Whitaker and US Deputy Attorney General Rod Rosenstein on February 5 to object to the most recent Office of Legal Counsel opinion, requesting it be withdrawn or that their states be protected from federal overreach infringing upon their state laws.

Though New Jersey seemed the most likely to file a lawsuit due to the danger of losing its billion-dollar internet gaming sector, it was a state at risk of losing its online lottery.

New Hampshire was the first to file a civil lawsuit against the Department of Justice to seek injunctive relief against the DOJ and its newly-instated Attorney General William Barr.

News : State of New Hampshire Challenges U.S. Department of Justice Wire Act Opinion : https://t.co/hm9Si66aDI

— NHgov (@NHgov) February 15, 2019

New Hampshire Bands Together

New Hampshire Governor Chris Sununu, Attorney General Gordon MacDonald, and Lottery Executive Director Charlie McIntyre made the announcement on February 15. The complaint was filed by the state AG’s office on behalf of the New Hampshire Lottery Commission (NHLC) in the US District Court for the District of New Hampshire. The defendants were listed as Barr and the US Department of Justice.

New Hampshire Lottery has filed suit re: Wire Act. This had been rumored for a while and many legal experts believe that NH is the optimal plaintiff because of their jurisdiction in the First Circuit Court of Appeals which has already ruled on the limited scope of the Wire Act.

— Poker Alliance (@ppapoker) February 15, 2019

The complaint challenges the DOJ opinion dated November 2, 2018 (and released to the public on January 15, 2019) entitled “Reconsidering Whether the Wire Act Applies to Non-Sports Gambling.”

The basis of the suit, according to Sununu’s office, is that NHLC offered online lottery sales based on the 2011 opinion, and those sales contribute significantly to net profits that support education in the state. In a press release, McIntyre said that the lottery generated $87.5 million for education last year, and they expect that number to rise above $90 million in 2019.

Sununu noted, “Today, New Hampshire is taking action to protect public education in New Hampshire. The opinion issued by DOJ puts millions of dollars of funding at risk, and we have a responsibility to stand up for our students.”

Today, in a joint announcement with the @NH_DOJ & @NHLottery, New Hampshire became the first State to file a lawsuit challenging the US @TheJusticeDept's online gambling opinion. We are taking action to protect public education funding in New Hampshire.https://t.co/bAmER0NaQ2

— Chris Sununu (@GovChrisSununu) February 15, 2019

NHLC Civil Complaint

The civil complaint asserts that the latest Wire Act opinion will have the effect of extending criminal liability beyond sports betting “to include virtually any conceivable form of gambling, which would encompass state-conducted lotteries.”

However, New Hampshire believes the latest opinion is inconsistent with the original intent of the Wire Act, and the DOJ’s new interpretation of it makes the Wire Act “unconstitutionally vague, as well as unconstitutional under the First Amendment.” It also intrudes upon New Hampshire’s “sovereign interests,” which puts it at odds with the Tenth Amendment per US Supreme Court precedent as cited in the complaint.

Ultimately, the NHLC asserts the following:

“Consequently, the 2018 Opinion is contrary to law and beyond the defendants’ statutory authority to enforce. The 2018 Opinion also exposes the New Hampshire lottery system to substantial uncertainty as to the continued legality of its operations, which fund New Hampshire’s public education system.”

As a result, the NHLC is demanding a declaratory judgment to define the state’s and lottery commission’s rights, as well as an order vacating and setting aside the new DOJ opinion.

The complaint goes on to detail the New Hampshire lottery system and offerings, the NHLC’s role and standing, and the differences between the 2011 and 2018 Wire Act decisions and their consequences.

As for the official counts of the complaint:

Count 1:  Declaratory Judgment as to the Wire Act’s application to state-conducted lotteries

Count 2:  Violation of the Administrative Procedure Act of the US Code under which under which the DOJ is required to act

Further, the NHLC demands that the latest Wire Act interpretation be vacated and set aside because “no other adequate remedy at law exists to remedy the harm the NHLC and other state lottery commissions across the country in the wake of the 2018 Opinion.”

Accompanying Filings

Several other documents were filed along with the primary civil complaint.

One is a declaration from NHLC Executive Director McIntyre in support of the plaintiff’s motion for summary judgment. In it, he included information about the iLottery platform that New Hampshire launched in September 2018 for the purchase of e-instant lottery tickets and select draw-based tickets on the internet. He explained the technology behind it and safety precautions inherent in it. And he noted that from September 2018 to the end of January 2019, NHLC took in more than $3 million in deposits and $12 million in tickets through the iLottery alone. They anticipate $4-6 million in 2020 and $6-8 million in 2021 if the program continues uninterrupted.

The law memo submitted in support of the summary judgment is a 25-page detailing of the basis for the complaint and legal precedents for every piece of it.

The motion for a speedy hearing requests a “speedy hearing and expedited resolution” of the motion for summary judgment. The request is based on Federal Rule of Civil Procedure 57 and aims to prevent the DOJ from beginning the enforcement of the new Wire Act opinion, which would result in the loss of millions of dollars. Essentially, the NHLC is requesting summary judgment within 30 days.

Finally, the motion for summary judgment notes, “Expedited Treatment Requested.” The document again asks for the vacating and setting aside of the new Wire Act opinion.

The NH Lottery vs. DOJ lawsuit has been assigned to Judge Paul J. Barbadoro. He was appointed by President GW Bush, and served as a New Hampshire Assistant Attorney General (1980-1984). Also practiced law in Concord, NH, right down the street. Good draw for @NHLottery.

— Daniel Wallach (@WALLACHLEGAL) February 15, 2019

NH Lottery poised for win at the district court level. Lower court must follow Lyons decision from 1st Circuit. Binding precedent. Key battleground will be CA1, possibly on rehearing en banc.

— Daniel Wallach (@WALLACHLEGAL) February 15, 2019