Big Win on Wire Act

The inauguration of a new US President was the big news on January 20, but elsewhere in the US, there was a big win for the betting industry. 

On the same day that Joe Biden was taking the oath of office, the First Circuit of Appeals issued a ruling in ruled in favor of the New Hampshire Lottery Commission together with other plaintiffs. The decision found that the federal Wire Act will only apply to sports betting events and not to all forms of betting, such as online casino games and lottery sales. 

That decision, combined with the arrival of the Biden administration, is effectively the end of a saga that started in 2018 with a controversial opinion from the Office of Legal Counsel (OLC) that the Wire Act included online lottery retail. 

Wire Act Saga

The ongoing controversy dates back to 2011. At that time, the OLC wrote an opinion that concluded that the Wire Act only applied to sports betting and did not include lottery. That opinion was effectively reversed in 2018 when Assistant Attorney General Steven Engel argued that the 2011 opinion was incorrect and the Wire Act should cover all internet gambling. 

In response, the New Hampshire Lottery Commission, along with lottery suppliers, filed a lawsuit against the Department of Justice to stop enforcement of the new opinion. In June 2019, the New Hampshire District Court found in their favor, but the federal government appealed. That appeal has now been heard, and the verdict is a victory for lottery and online casino operators. 

Judicial Scepticism

The appeal hearing was overseen by Judges Torruella, Lynch, and Kayatta, and the oral arguments showed that they were skeptical of some of the government arguments. The decision ended up as a 2-0 verdict due to the sad death of Judge Torruella some months after oral arguments. 

The Court found that the plaintiffs had standing, even though the government had made no formal attempts to enforce their opinion. Another important issue was whether the opinion itself was legally subject to review by a court. In the end, the justices found that it could be reviewed. 

Of most significance was the conclusion to the case. The First Circuit concluded that the Wire Act did indeed only apply to wire communications that were related to sports events and denied the government motion to dismiss the decision of the New Hampshire District court. As a further bonus, the federal government was also ordered to pay the New Hampshire Lottery’s costs. 

Decision Implications

So what does this mean for the gambling industry? There is no doubt that it is a big win, as there had been a cloud of uncertainty hanging over the sector since 2018. It is particularly good news for lottery organizations and for online casino operators. 

For the sports betting sector, the status quo continues, but even there, it is possible to see some room for optimism. There are strong reasons to assume that the Biden administration will be considerably more friendly towards the sports betting sector than the previous administration, and some even hope that the Biden team may take the step of amending the Wire Act to permit interstate sports betting. 

There is also no indication that the new administration would consider taking the Appeals Court decision to the next step of the Supreme Court, which means that the saga of the Wire Act has likely reached a conclusion, at the same time as the federal government gets a new leader.