IGT Wins Wire Act Case Against Justice Department In Rhode Island

September 20, 2022
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The U.S. Wire Act of 1961 does not prevent International Game Technology (IGT) from continuing online gambling and lottery operations in Rhode Island and other states, a federal judge ruled last week.

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The U.S. Wire Act of 1961 does not prevent International Game Technology (IGT) from continuing online gambling and lottery operations in Rhode Island and other states, a federal judge ruled last week.

The ruling last Thursday (September 15) by U.S. District Judge William E. Smith in Providence, the state capital of Rhode Island, rejected arguments by the U.S. Department of Justice that IGT’s lawsuit should be dismissed because the company does not face a credible threat of prosecution under the Wire Act.

“Threatened prosecution anywhere, if likely enough, is a direct harm to these plaintiffs (IGT), who are properly before this court,” Smith, who was nominated by President George W. Bush in December 2007, wrote in his 24-page opinion.

“And indeed, far from being ‘a concerned bystander,’ there is no question IGT has a sizable ‘direct stake in the outcome.’”

With headquarters in London, IGT needs little introduction as a multinational gambling company that produces slot machines, lottery systems and other gambling technology.

Major offices for IGT in the United States are in Providence and Las Vegas.

IGT sued the Justice Department last November in the wake of a ruling in January 2021 by the U.S. First Circuit Court of Appeals in Boston affirming New Hampshire’s authority to continue online lottery operations.

New Hampshire had sued the Justice Department after its Office of Legal Counsel (OLC) declared in January 2019 that the Wire Act prohibits not only interstate sports betting but also any interstate transmissions related to lottery and casino-style games.

The 2019 opinion by the OLC under the Trump administration reversed a 2011 opinion by the same agency under the Obama administration.

“The fact that IGT has not proactively dismantled most of its business in response to the legal uncertainty created by the DOJ’s (Justice Department’s) waffling should not be held against it,” Smith wrote in his opinion.

A debate continues in the online gambling industry about whether it would be wise to push for the expansion of the New Hampshire decision to other states.

There is a feeling among some gambling officials that the industry would be better off by leaving well enough alone.

“This favorable court ruling ensures that wherever IGT’s U.S. business is located, the Wire Act’s application will be limited to sports betting, and not other types of gaming,” said Phil O’Shaughnessy, vice president of global communications for IGT.

The Justice Department did not immediately respond to a request for comment.

Behnam Dayanim, a gaming attorney with the Paul Hastings firm in Washington, D.C., described the Rhode Island decision as “fundamentally a nothing burger.”

“It merely applies what everyone already knew — that the First Circuit had held the Wire Act only applies to sports betting,” Dayanim said.

The jurisdiction of the U.S. First Circuit Court of Appeals covers Maine, Massachusetts, New Hampshire, Puerto Rico and Rhode Island.

“Courts outside of the First Circuit technically are not bound by the First Circuit’s view and could reach a different conclusion,” Dayanim said.

Bob Jarvis, who teaches gaming law at Shepard Broad College of Law in Davie, Florida, also downplayed the significance of the Rhode Island decision.

“I’m not even sure why the DOJ (Justice Department) appeared in this case in the first place, given that it obviously has no plans to prosecute anyone (under the Wire Act),” Jarvis said.

The Rhode Island decision underscores the need for changes in the Wire Act and other federal gambling statutes, according to Jarvis.

“Congress really needs to get on the stick and replace UIGEA (the Unlawful Internet Gambling Enforcement Act of 2006), the Wire Act, etc. with a sensible, comprehensive and comprehensible regime adapted to the realities of 21st century gambling,” he said.

“Until then, we can expect both the industry and the courts to continue to have to spin their wheels trying to make sense of our current broken system.”

John Holden, an assistant professor of business law at Oklahoma State University who writes about gambling issues, noted there are two federal courts of appeals — the First and Fifth Circuit (whose jurisdiction includes Louisiana, Mississippi, and Texas) — which agree the Wire Act does not apply beyond sports betting.

“However, much of the country has never interpreted the scope of the Wire Act, so there remains reason to be cautious,” Holden said.

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