Rosenstein to Leave DOJ, Giving Wire Act to New AG
The state of online gaming in the United States is in flux. The most recent Department of Justice decision about the Wire Act put it there, but it is now flailing about with no clear direction.
To be more specific, the DOJ’s Office of Legal Counsel reversing the 2011 Wire Act opinion was only the first step to complicating matters. Online poker and casino games, internet lottery ticket sales and interstate gaming are all subject to analysis and awaiting clarification from the US Attorney General.
Further complications are a result of the revolving door at the Justice Department.
After US Attorney General Jeff Sessions was instructed to resign, Matt Whitaker was appointed to stand in as the Acting AG until a new could be nominated, vetted, and approved. Meanwhile, Deputy AG Rod Rosenstein seemed to be the one most aware of the Wire Act opinions, and though he put a 90-day hold on the latest decision, he will not be around to follow up on his own request for a review because he is now reportedly resigning from the DOJ in mid-March. New AG William Barr was sworn in last week, but it is unclear what he knows about the Wire Act’s history, how he will handle the recent decision and associated lawsuits already in progress, or if he – as did Sessions – has any ties to Sheldon Adelson that will force him to recuse from the matter. And it is unclear who will be appointed to replace Rosenstein.
There are, in fact, many questions swirling around the online gaming and lottery industries in America as a result of the latest Wire act interpretation. Maybe it’s best to take a look at what is known.
How We Got Here
On January 15, 2019, the DOJ published its Office of Legal Counsel’s opinion about the Wire Act, which was actually dated November 2, 2018. It overturned the 2011 decision that allowed states to legalize and regulate online lotteries, poker, and casino games.
Rosenstein immediately issued a memo about the new opinion, giving businesses a 90-day period to come into compliance with the new opinion. The memo also instructed the Criminal Division’s Organized Crime and Gang Section to review the new Wire Act changes for approval.
Many believe the DOJ’s opinion was influenced by casino magnate Sheldon Adelson, as reported by multiple, reputable media outlets.
— Dustin Gouker (@DustinGouker) February 15, 2019
Legal Threats and Actions
New Jersey and Pennsylvania were not having any of it. New Jersey AG Gurbir Grewal and Pennsylvania AG Josh Shapiro co-wrote a letter to Whitaker and Rosenstein asking for the DOJ’s opinion to be withdrawn. Grewal took things a step further by using the Freedom of Information Act to demand all records pertaining to the Wire Act from 2011 to 2018 to see Adelson’s influence.
New Hampshire was fed up as well, having just launched its online lottery last year. New Hampshire AG Gordon MacDonald filed a complaint in the US District Court on behalf of the New Hampshire Lottery Commission and with the support of Governor Chris Sununu and NHLC Executive Director Charlie McIntyre. They sued the DOJ and newly-sworn-in AG Barr for a declaratory judgment to set aside the recent DOJ opinion.
MAJOR DEVELOPMENT: New Hampshire has been considered the ideal jurisdiction to bring a suit against the DOJ re: the Wire Act. Now we watch the legal drama unfold. https://t.co/sq2FxitslK
— Poker Alliance (@ppapoker) February 15, 2019
The company that provides the technology and platform for the New Hampshire online lottery, NeoPollard Interactive, followed suit, so to speak. Its civil complaint names the DOJ, Barr, and the entire United States of America as defendants. NeoPollard seeks declaratory relief in the form of a reversal of the latest Wire Act decision and payment for costs and attorneys’ fees.
New Jersey is also contemplating a lawsuit of its own. The state’s Senate President Stephen Sweeney penned a letter to Rosenstein at the DOJ to request that the latest Wire Act opinion be rescinded. If that does not happen, he has instructed former New Jersey Senator Raymond Lesniak to file suit in the US District Court on behalf of the state for a declaratory judgment that the Wire Act pertains only to gambling on sporting events or contests.
Massachusetts is considering legal action. The North American Association of State and Provincial Lotteries issued a statement of objection to the Wire Act decision and may consider legal action. Other organizations, companies, and states have also expressed concerns and the possibility of legal actions.
NASPL Responds To The DOJ Reversal Of Opinion: On February 4, 2019, the North American Association of State and Provincial Lotteries (“NASPL”) issued a statement responding to the Department of Justice’s January 14, 2019, opinion regarding the Wire Act… https://t.co/gLQQJJ69qu
— AssistMyCase (@AssistMyCase) February 6, 2019
DOJ Revolving Door
As mentioned, CNN confirmed with a DOJ official that Rosenstein is expected to leave his position as Deputy AG in mid-March. There had been rumors that he was going to leave after Barr was confirmed, but this is the closest that officials have come to an actual confirmation of Rosenstein’s departure.
Barr is prepared to appoint his own Deputy AG, which is not an unusual move. He is reportedly considering longtime friend and Deputy Transportation Secretary Jeffrey Rosen for the position. Rosen’s experience in the federal government date back to the George W. Bush administration, during which time he served in the Office of Management and Budget. However, he has no DOJ experience.
Since Rosen has no DOJ experience, it is difficult to know how he might handle the Wire Act kerfuffle. But if Barr doesn’t recuse himself, it will be Barr that handles any instructions going forward.
The Intercept provided some insight into Barr’s feelings about states’ rights in that he is a staunch supporter, evident by his feelings on marijuana legislation. During the preparation for his Senate confirmation hearing, Barr also let it be known that he opposed revising the 2011 Wire Act decision. This is reportedly why DOJ officials released the latest opinion the night before Barr’s hearings began.
After years of failing 2 ban Internet gambling, opponents (opponent, really) had a few short weeks between Sessions (recused on igambling) & Barr (federalism supporter) to get what they paid for. https://t.co/HZNmkzZeb9
— michelleminton (@michelleminton) February 8, 2019
Barr to the Rescue?
There is no way to know how Barr will handle the lawsuits, inquiries, and requests directed at the DOJ about the Wire Act. It is a good sign that he opposes the new decision, but it is unclear as to what – if anything – he will do about it.
With the top brass at the DOJ coming and going, clearing out desks and getting new name plates for doors, things at the Department are in flux. There are also other pressing matters – anyone heard about the Mueller investigation? – that take precedence.
The New Hampshire case will go in front of the court, so there is little way to know what will happen on that front, either.
The next few months should provide answers.