NJ and Penn Attorneys General wade into Wire Act debate

6 February 2019

New Jersey Attorney General Gurbir Grewal and his Pennsylvania counterpart Josh Shapiro have attacked the Department of Justice’s (DoJ) decision to revise its interpretation of the Wire Act and suggested that the department was influenced by anti-iGaming lobbyists.

The pair have asked for assurances that the Department will not launch any enforcement action against licensed iGaming operators in either state. Grewal has also filed a Freedom of Information Act request to ascertain whether the Department’s decision to shift its opinion could have been influenced by lobbying groups such as the Coalition to Stop Internet Gambling.

In a letter addressed to acting US Attorney General Matthew Whittaker and deputy Attorney General Rod Rosenstein, Grewal and Shapiro state their strong objections to the revised opinion. Published on January 15 and issued by the DoJ’s Office of Legal Counsel, this stated that the 1961 Wire Act applied to all forms of gambling, not just sports betting, as outlined in a 2011 interpretation of the Act.

This revised opinion, the pair said, effectively meant that state-sanctioned gambling, launched in the wake of the 2011 ruling, had abruptly been made illegal.

“This about-face is wrong and raises significant concerns in our states,” the pair wrote. “We ask that DOJ withdraw its opinion altogether or assure us that DOJ will not bring any enforcement actions against companies and individuals engaged in online gaming in our states—where it is appropriate under state law.”

They described the potential breadth of the opinion as “deeply troubling”, with scope to affect state lotteries as well as iGaming offerings.

“This decision puts jobs and livelihoods at risk for the thousands of people who work in the online gaming industry and jeopardises critical state funding for the public good that is generated by lottery sales and other internet activity that is legal within our states,” they added.

They also noted the positive impact on regulated gambling in each state. In New Jersey, which opened its iGaming market in 2013, Grewal noted that the state received $60m in taxes from licensed gaming each year. The state lottery, meanwhile, contributed about $1bn of revenue to state coffers each year. In Pennsylvania, meanwhile, Shapiro said that the launch of online lottery sales in May 2018 had generated $23.8m for the state, increasing funding for programmes to support the elderly.

Grewal has also filed a request for information on all records relating to the Wire Act, online gaming and wagering, as well as those relating to the 2011 and 2018 opinions. In particular he has asked for records of any discussions with anti-iGaming pressure group the Coalition to Stop Internet Gambling, Las Vegas Sands and Sands chief executive Sheldon Adelson.

They have also asked for any similar records of discussions with former Arkansas Senator and anti-iGaming advocate Blanche Lincoln or her policy consultancy the Lincoln Group. Details of discussions with lawyer Charles Cooper - who represents former Attorney General Jeff Sessions - and Sands lobbyist Darryl Nirenberg are also being sought.

In his request, Grewal noted that there appeared to be no good reason for the DoJ to abruptly reverse its stance on the Wire Act.

He also noted that the eventual opinion used similar arguments to those pushed by lobbyists employed by Adelson. The fact the Coalition to Stop Internet Gaming published a press release praising the reinterpretation “immediately” after the opinion was released was also cited as evidence of potential lobbyist involvement in the decision.

“Nothing changed in the years since the Justice Department allowed online gaming to move forward, and there was no good reason for the Justice Department to rethink its prior decision,” Grewal explained. “Instead, media reports make clear that pressure to reconsider the opinion came from out-of-state casinos and their lobbyists.

“That is not a good enough reason to reverse course and undermine the online gaming industry. We want to know who Justice Department officials spoke with, and why they decided to change their minds.”

Grewal and Shapiro’s intervention was hailed by New Jersey Governor Phil Murphy, who described iGaming as a key component of the state’s plan to revitalise Atlantic City and strengthen its economy.

“This unexpected opinion from the U.S. Department of Justice not only jeopardizes the future of our casinos and gaming industry, but also threatens the jobs of thousands of New Jerseyans,” Murphy said. “I am pleased to see that Attorney General Grewal is committed to challenging the Justice Department’s unreasonable interpretation of the Wire Act.”