Attorney General Gurbir S Grewal of the New Jersey Attorney General’s Office has filed a lawsuit against the US Department of Justice (DoJ). The suit alleges that the DoJ violated the Freedom of Information Act (FOIA) by failing to provide answers in response to New Jersey’s demand for any documents linking the department’s recently revised opinion of the Federal Wire Act to the lobbying efforts of casino magnate Sheldon Adelson.
Outlining his complaint, Grewal said in a statement: “Online gaming is an important part of New Jersey’s economy, and the residents of New Jersey deserve to know why the Justice Department is threatening to come after an industry we legalized years ago. It’s especially important that we figure out whether this federal crackdown is the result of a lobbying campaign by a single individual seeking to protect his personal business interests.”
Almost a decade ago, the DoJ found that most forms of online gaming were legal under the federal Wire Act. Following that opinion, online lotteries and other forms of online gaming sprouted up in states throughout the country.
In January, however, the Justice Department issued a formal opinion explicitly reversing that stance. The revised opinion indicated that, starting later this year, federal prosecutors could bring criminal charges under the Wire Act against individuals and companies that offered or facilitated online gaming services, even in states like New Jersey where online gaming was legal under state law.
Several weeks later, on February 5, 2019, Grewal responded to the DoJ with a letter characterizing the new opinion as an unfounded “about face.” On the same day, he filed a FOIA request seeking documents regarding press reports that the department’s decision was the result of intensive lobbying efforts by Adelson, who reportedly opposed the expansion of online gaming as a threat to his brick-and-mortar casino businesses.
In March 2019, the DoJ confirmed that it had received New Jersey’s FOIA request and that it would be granted expedited processing. In its initial request, New Jersey made clear that expedited processing was particularly important for this case, given that the new DoJ opinion will go into effect on June 14, 2019.
According to the New Jersey Attorney General’s Office, to date the DoJ has provided no records in response to its request and provided no legal grounds for withholding responsive material. Filed in the US District Court in New Jersey, Grewal’s lawsuit notes that an expedited FOIA request should be fulfilled within 20 days according to the DoJ’s own FOIA guide. It also points out that, despite a claim by DoJ that “unusual circumstances” surrounded New Jersey’s request, it has not explained such a characterization.
SBCA takeaway: Grewal’s lawsuit serves as a spiky rejoinder to what many industry observers are already viewing as a questionable volte face over the Wire Act by the DoJ. It was a revision that came out of the blue without warning and any logical rationale other than the text of the Act was missing a crucial comma!
As punctuation marks go, that could prove to be a very costly one should the DoJ opt to chase down those who disregard its new opinion. Online gaming in New Jersey generates $352.7m in annual revenue and $60m in direct gaming taxes. One can expand those figures several times over when factoring in state lotteries who, according to the DoJ’s new take on the Wire Act, are falling foul of the law.
It will be interesting to see what Grewal’s lawsuit will achieve in terms of hard and fast answers to the alleged connection with Adelson. But one thing’s for certain; the DoJ’s revised opinion on the Wire Act has created one hell of a mess. Does it stand by its new approach and prosecute, or will it attempt to find a way of putting the toothpaste back in the tube in the hope that no-one will ever notice?