Court rejects DOJ’s 2019 reinterpretation of Federal Wire Act

A Federal Circuit Court Wednesday rejected the Justice Department’s 2019 decision to revise the Federal Wire Act, agreeing with a lower court in New Hampshire that the 1961 law relates only to interstate sports betting.

The ruling by the First Circuit Court of Appeals favored the case brought by the New Hampshire Lottery, which sought to vacate the 23-page opinion from the Justice Department’s Office of Legal Counsel.

The opinion, dated Nov. 2, 2018, reversed a 2011 ruling on the Wire Act that said the law only pertained to sports betting. The revised decision said the Wire Act covers any action where gaming information is transmitted over the Internet.

Gaming law experts and analysts said the new ruling could curtail online gambling activities, which is now legal in a half-dozen states, the sale of lottery tickets over the Internet, and, potentially, mobile sports wagering, among other activities.

“We find the plaintiffs’ claims are justiciable and that the Wire Act applies only to interstate wire communication related to sports events or contests,” the justices wrote in the opinion.

Legal experts believe the Justice Department, including incoming Attorney General Merrick Garland who is awaiting Senate confirmation after being nominated by President Joe Biden, will have a different view of the Office of Legal Counsel opinion.

Daniel Wallach, an attorney specializing in gaming and sports wagering, said it was ironic the court’s decision was released on Inauguration Day. He suggested the Wire Act reinterpretation would have had “a short life-span anyway,” since a Biden Administration Justice Department would likely have reverted back to the 2011 interpretation of the Wire Act.

“The First Circuit’s decision probably makes that step unnecessary, as a federal appeals court opinion carries greater weight than an agency interpretation,” Wallach said. “Under a new administration, the DOJ will likely not pursue a rehearing of the First Circuit ruling or petition the Supreme Court to review the case.”

Wallach suggested the Justice Department would allow the deadline for seeking rehearing or Supreme Court review to pass “with no further action taken, which would make the First Circuit’s decision the final ruling on the issue.”

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at [email protected]. Follow @howardstutz on Twitter.

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