Lotteries in the clear as First Circuit repudiates DoJ Wire Act interpretation

Image source: Shutterstock

The US lottery sector will not be subject to the strictures of the Wire Act according to a ruling issued this week by the First Circuit clarifying that the legislation remains in place solely to prevent the incidence of interstate online sports wagering. 

The decision overrules efforts by the US Department of Justice (DoJ) in 2018 to criminalize a broad swath of the gambling sector when it reinterpreted the Act to include all forms of mobile gambling including the sale of lottery products online as well as interstate wagers on sports. 

That move was thwarted temporarily in June 2019 when the United States District Court for the District of New Hampshire found in favor of the New Hampshire Lottery Commission (NHLC) which had challenged the Justice Department’s latest interpretation.

The DoJ, in line with expectations from industry stakeholders, subsequently filed a notice of appeal in August with the First Circuit, casting a further shadow over the lottery sector and leaving it to consider potential losses running into billions of dollars.

This week’s ruling, delivered by US Circuit Judge William Kayatta, will bring a huge measure of relief to lottery, poker and casino operators across the country. Summarizing, the Judge cited a lack of coherence in the government’s proposed reading of the Wire Act saying that it strained common sense. 

The final line of the ruling was as blunt as it was emphatic, reading: “In conclusion, we find that the plaintiffs’ claims are justiciable and that the Wire Act applies only to interstate wire communications related to sporting events or contests.”

Huge credit for this week’s successful ruling must go to the New Hampshire Lottery Commission which took the fight to the DoJ to ensure its internet lottery offering would remain legal. 

Executive Director Charlie McIntyre said at the time: “The New Hampshire Lottery has a responsibility to support education in New Hampshire. Just last year, the New Hampshire Lottery generated $87.5m in net profits, all of which supports education in New Hampshire, and we expect to generate more than $90m for education this year. This reversal by DOJ puts that support for education in question.” 

The upshot of this week’s ruling is that it should put to bed the DoJ’s ambitions to broaden the scope of the Wire Act to ensnare forms of gambling beyond sports wagering. iDEA Growth Founder Jeff Ifrah, who has previously cited the DoJ’s actions as unwarranted, responded to the latest development on social media saying: “And we win. The 1st Circuit upholds the District Court’s Opinion and rejects the OLC’s opinion. The 1st Circuit holds that the Wire Act only (and obviously) applies to sports events and contests! Big Win!”