Biden Administration Opposes Wire Act Change To Expand Online Gaming Protection

March 11, 2022
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The U.S. Department of Justice is asking a federal court in Rhode Island to dismiss a lawsuit by International Game Technology seeking to expand protection of the online gaming and lottery industry from prosecution under the U.S. Wire Act of 1961.

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The U.S. Department of Justice (DOJ) is asking a federal court in Rhode Island to dismiss a lawsuit by International Game Technology (IGT) seeking to expand protection of the online gaming and lottery industry from prosecution under the U.S. Wire Act of 1961.

In its lawsuit in November, IGT relied “on mere speculation to establish a credible fear of prosecution,” and that is not enough, according to principal deputy assistant attorney general Brian Boynton.

“Courts have found it reasonable to infer that where the government has not recently prosecuted or threatened with prosecution the plaintiffs themselves or anyone engaging in like conduct, that may be because either a statutory prohibition may have proven to be an effective deterrent, or the proscribed behavior may be difficult to detect,” Boynton wrote in a 16-page document submitted on February 23 to the U.S. District Court in Providence, Rhode Island.

Hoping to piggyback on a June 2019 ruling by a New Hampshire federal judge who declared the Wire Act does not prohibit his state’s online lottery operations, IGT is pressing the Justice Department to acknowledge lotteries and non-sports internet gambling activity in other states also are protected.

But Boynton noted New Hampshire and Rhode Island are both within the jurisdiction of the U.S. First Circuit Court of Appeals, which affirmed the New Hampshire judge’s ruling in January 2021.

”Thus, … the United States could not successfully prosecute IGT for any of its alleged conduct, absent an overruling [of the New Hampshire lottery case],” Boynton wrote.

Asked for a comment on the Justice Department’s request to dismiss, IGT spokesman Phil O’Shaughnessy said: “We do not comment on litigation.”

The next step in the case will be a reply by IGT to the request for dismissal. After that, the court will determine if a hearing will be scheduled.

“This case is a distraction,” said Behnam Dayanim, an eminent gaming attorney with the Paul Hastings firm in Washington, D.C.

“The most likely outcome is the court dismisses for the reasons DOJ (the Justice Department) cited in its motion — that there is no credible fear of prosecution at present,” Dayanim told VIXIO GamblingCompliance in an email.

The Justice Department is inviting the court to “read between the lines” and realize the federal government “has no interest in prosecuting this activity or contesting the First Circuit’s decision — anywhere,” Dayanim said.

“I think the court will accept that invitation.”

The only way things might change, Dayanim said, is if there is a change of administration after the next presidential election.

A significant segment of the online gaming industry supports the IGT lawsuit as a proactive move to change the Wire Act while Democrats are still in power.

The Biden administration is struggling, and the President’s job approval rating is low at 42.3 percent.

Republicans are confident they will gain control of the U.S. House of Representatives in November’s mid-term elections and growingly optimistic about recapturing the U.S. Senate.

But even if Republicans win the White House in 2024 and Donald Trump returns for another four-year term, it is by no means certain the DOJ’s Office of Legal Counsel would resurrect an opinion which shook the online gaming industry to its core.

The November 2018 opinion concluded the Wire Act prohibits interstate transmissions related to all forms of gambling, including lotteries and casino games.

Many in the gaming industry viewed the move as a payoff by Trump to his biggest financial donor, Las Vegas Sands CEO and chairman Sheldon Adelson, who funded efforts to abolish internet gaming.

As a result, New Hampshire sued and won the 2019 case which was upheld by the U.S. First Circuit Court of Appeals on the same day that President Biden was inaugurated on January 20, 2021.

Just nine days earlier, Adelson died and Las Vegas Sands announced it was exploring investment opportunities to enter the online gaming market in July 2021.

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