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State lotteries line up against DOJ reversal on Wire Act

Mar 11, 2019, 9:26 am

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Online Gambling

State lotteries continue to fight back against a January Department of Justice reversal of its interpretation of the Wire Act, threatening every form of online gambling in the country.

(See DOJ reverses 2011 opinion of the Wire Act; legal online gaming in question, Lottery Post, Jan. 14, 2019.)

Now the Commonwealth of Pennsylvania joined a New Hampshire lawsuit challenging the validity of the new Wire Act opinion.

Before joining the lawsuit, Pennsylvania Attorney General Josh Shapiro co-authored a letter to the Trump administration along with the New Jersey Attorney General Gurbir Grewal. In the letter, the two bluntly state that "the latest reversal is wrong."

Since that mid-February letter, the challengers of the new opinion continued emerging.

New Hampshire Lottery filed a lawsuit on Feb. 15 seeking an emergency injunction to enforcement of the new opinion. The NH Lottery supplier Pollard Banknote filed a separate suit on the same day.

Since then, the court consolidated the suits into a single action. Additional plaintiffs and those seeking to file an amicus brief had until midnight on Friday to submit.

Late on Friday, Pennsylvania, acting through the Department of Revenue and Pennsylvania Lottery, filed a request to join the suit.

Like New Hampshire, Pennsylvania Lottery offers online lottery games in addition to standard lottery fair. Nonetheless, in the brief, the Commonwealth noted that even the big draw games like Powerball are now at risk:

"Given the use of wire transmissions for Pennsylvania Lottery games as described above, the broadest interpretation of the 2018 Opinion could result in the suspension of all state lottery sales, resulting in an immediate annual loss of over $1 billion in Lottery proceeds that benefit older Pennsylvanians."

Pennsylvania Lottery was not the only group that filed paperwork on Friday. The state of New Jersey, where online casino, online poker, and online sports betting is fully operational, filed an amicus brief.

Like Pennsylvania and New Hampshire, New Jersey fears the new Wire Act opinion allows for such broad application that even intrastate gambling is at risk.

The reason for this is the issue of intermediary routing. When you play an online lottery game in Pennsylvania, you may start a transaction at your computer or phone and it may end on the PA Lottery servers, but in the path from one to another, the transaction could end up briefly out of state.

Those worried about the scope of the Wire Act suggest that a strict view of intrastate gaming with no intermediary routing would render just about all internet transactions in violation of the law.

Additionally, the state of Michigan and the Michigan Lottery filed an amicus brief. The paperwork was signed by the state of Michigan as well as these other groups:

  • Kentucky Lottery Corporation
  • Tennessee Education Lottery Corporation
  • Virginia Lottery
  • Rhode Island Lottery
  • Colorado State Lottery Division
  • North Carolina Education Lottery
  • State of Delaware
  • State of Idaho
  • State of Vermont
  • State of Mississippi
  • State of Alaska
  • District of Columbia

Pennsylvania Lottery filed to be a co-plaintiff, but the court will first need to rule on whether or not PA should be allowed to join the case.

The focus on state lotteries makes sense as a strategy given the massive sums of money that go to the state from lottery proceeds. It is important to note that Kentucky, Michigan, New Hampshire, North Carolina, Pennsylvania, and Virginia all offer online play in one form or another, in addition to traditional physical store purchases.

Nearly all state lotteries are in various stages of adding online gaming and/or sports wagering.

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