Ahead of his contribution to next week’s SBC North America Digital Summit, GVC Holdings Director of Regulatory Affairs Martin Lycka turns his attention to the Wire Act. The battle lines are clearly drawn around what he describes as “not necessarily the clearest piece of legal prose”.
Two scores and 19 years ago, the brother of the President at the time brought forth a statute intended to clamp down on all forms of organised crime and racketeering, including by means of abuse of gambling operations. The section in the statute designed to achieve this objective, Section 1084(a) of the Wire Act, has generated a legislative and grammatical riddle that is yet to be conclusively resolved, and for that reason leaves the online gambling industry’s flanks open to attack.
1084(a) is not necessarily the clearest piece of legal prose. The Section prohibits 1) transmission of bets and wagers or information assisting in placing them and 2) transmission of communication entitling its recipient to receive money as a result of placing bets and wagers.
However, unlike its second part, the first part of the Section refers to bets and wagers “on any sporting event or contest”. Was this a deliberate omission? Oversight, or even just good old sloppy drafting? Whatever it was, the outcome of the epic legal battle of late between the Department of Justice (DoJ) on one side and the New Hampshire Lottery and NeoPollard, supported by the US online gambling industry, on the other rides on the interpretation of these six words.
A reversal of opinion
The opening salvo of the battle came from the troops of General Sessions, subsequently replaced by General Barr, in November 2018. In reversal of its 2011 Opinion, DoJ opined that the prohibitions set out in 1084(a) were from that point onwards supposed to apply to all types of interstate gambling transactions, not just sports betting.
DoJ platoons up and down the country began gearing up towards potential action against breaches of the 2018 Opinion. This war cry has caused uproar in the ranks of US lotteries as well as the recently formed army of online gambling operators and their purveyors; the latter still being buoyed by their glorious victory in its PASPA campaign.
Under the overall command of General McIntyre of New Hampshire, the Allied Army of Regulatory Progress, has first engaged Barr’s troops in the pitched battle of Concord, with U.S. District Judge Paul J Barbadoro serving as the arbiter of the outcome.
At the end of the day, following a number of heavy skirmishes, the Progressivists’ charge to the effect that an interpretation of an Act, let alone the fate of a whole industry, must not depend on misplaced punctuation prevailed.
More regulatory confusion
In his battle report, relying on coherence and pragmatism arguments, Barbadoro concluded that the DoJ’s 2018 Opinion would have led to even more regulatory confusion and set it aside. The battle troops disengaged and General Barr stood his other platoons down granting the Progressivists and the states that support them the necessary respite to further shore up their regulatory defences.
However, frustrated by the initial defeat, Barr and his staff ended up deciding to summon their troops again and launch a campaign against the Progressivists in the Boston area. A three-judge panel of the 1st US Circuit Court of Appeals has been designed to serve as referees of the renewed strife. The engagement took place on June 18, 2020.
The federal government troops have opted for a change of tactics – having issued an ex post statement on the 2018 Opinion to the effect that the Wire Act does not apply to state lotteries, their line of attack was led along diversional procedural lines: the legal hostilities should have never commenced because the lotteries amongst the Progressivists had never been under any threat from Barr’s army. This would rather indicate that that DoJ is reluctant to resume attacks on the grounds of the merits of the case, possibly believing that they would once again prove futile.
The final report will only be ready in the months to come. However, the battle observers have opined that the arbiters are once again expected to lean in favor of the Progressivists, considering that the charges of the DoJ troops will not have managed to tear down their defenses.
It did not appear that Judges Torruella, Kayatta Jr and in particular Lynch would have had too much sympathy with the legal and other motives that had led DoJ to start the whole Wire Act campaign in the first place. Their potential positive decision would help towards achieving the conquest of one of the last remaining opposition bastions on the way to successfully regulating online gambling in the United States.
Both parties may however conceivably choose to meet each other again on the banks of Potomac in the foreseeable future as we are still engaged in this strife, testing whether the gambling nation, so recently conceived, can long endure.
Lycka will be speaking as part of the Regulatory Track at next week’s SBC Digital Summit North America on a panel dedicated to ‘Being Proactive About Problem Gambling’. Full details including information about how to register and discounts available on company group passes can be found at the event’s official website. All delegates will also be able to invite a colleague who has been laid-off or furloughed due to the pandemic to join them at the event free of charge as part of the Pay it Forward initiative.
To find out more about the remaining exhibition and sponsorship opportunities, please contact [email protected]