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New Hampshire wins appeal; Wire Act does not apply to lotteries

Jan 24, 2021, 9:16 am

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New Hampshire Lottery

By Kate Northrop

The New Hampshire Lottery has prevailed against the US Department of Justice when a federal court ruled Wednesday that the Wire Act does not apply to lotteries, cementing the legality of participating in the state lottery over the Internet.

In August of 2019, the US Department of Justice (DoJ) filed a notice of appeal following the decision by the United States District Court for the District of New Hampshire to find in favor of the New Hampshire Lottery in the long-awaited ruling on the revised opinion of the Wire Act by the DoJ. This week, the First Circuit Court of Appeals ruled in favor of the lottery and solidified the DoJ's interpretation of the law as invalid.

Jeff Ifrah, a lawyer and founder of iDEA Growth, was the first to announce the verdict of the appeal on social media this past Wednesday, reaffirming that "the Wire Act only (and obviously) applies to sports events and contests!" iDEA Growth is a trade group representing sectors of the mobile gaming industry.

The DoJ's opinion from 2018 reversed a 2011 ruling on the Wire Act that said the law only pertained to sports betting. The revised decision said the Wire Act covers any action where gaming information is transmitted over the Internet.

Gaming law experts and analysts suggested that the new ruling could curtail online gambling activities in three states, the sale of lottery tickets over the Internet, and, potentially, mobile sports wagering, among other activities.

New Hampshire was the first state to legally challenge the DoJ's decision to revise the Act and filed a federal lawsuit that would halt enforcement of the opinion that could keep the state from selling lottery tickets online. The NH Lottery won its lawsuit in 2019, where the judge handed the DoJ a substantial defeat in granting plaintiffs the summary judgment they sought.

"I hereby declare that § 1084(a) of the Wire Act... applies only to transmissions related to bets or wagers on a sporting event or contest," US District Court Judge Paul Barbadoro wrote to conclude his decision. "The 2018 OLC Opinion is set aside."

Two months after the ruling, the DoJ filed a notice of appeal, which Ifrah deemed "hardly unexpected" yet "unwarranted."

"DoJ generally files appeals of adverse district court decisions as a matter of course," Ifrah explained. He said that he hoped the Department would focus the Wire Act and its enforcement resources on the right targets, such as unlicensed illegal offshore Internet gambling operators.

A ruling on the case was expected in November, but it was delayed with the passing of Jan R. Torruella, one of the three judges hearing the case, in October. While there were rumors that this would lead to a rehearing and lengthen the duration of the case, the other two judges, Sandra Lynch and William Kyatta, both ruled in favor of the plaintiff.

In the end, the appellate court reaffirmed the decision that the Wire Act only applies to sports betting.

The DoJ has the option of appealing the case to the Supreme Court of the United States, but it is not certain whether the Supreme Court would agree to hear it, nor is it likely.

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