Wire Act Debate - New Jersey and Pennsylvania Representatives Challenge DoJ

Representatives from NJ and Penn Challenge DoJ in Wire Act Debate

Attorney General Gurbir Grewal from New Jersey, along with Attorney General of Pennsylvania, Josh Shapiro, challenged the recent decisions made by the Department of Justice to reinterpret the federal Wire Act.

Both Attorneys General are in agreement that the DoJ is being strongly influenced by lobbyists against iGaming.

New revisions, more restrictions

The DoJ’s Office of Legal Counsel published a revised opinion of the Wire Act in mid-January 2019. This reinterpretation stated that the 1961 Wire Act, originally revised in 2011, now applied to all types of gambling. When previously revised, legislators decided that it would apply only to sports betting. However, with the recent reinterpretation, its restrictions are now much broader.

State approved gambling which was made legal in 2011 with the last revision, is suddenly becoming illegal and the online gambling industry is facing a threat.  

The two Attorneys General constructed a letter to US Attorney General Matthew Whittaker as well as deputy Attorney General Rod Rosenstein. In this letter, Grewal and Shapiro’s judgements of this new revision were strongly expressed.

The two emphasized their concerns for their states as a result of the legislative “about-face.” They explained that this would affect both the state lotteries and the iGaming industry, putting many at risk for losing their jobs. The state would lose critical funding. In their letter they specifically explained that this decision “jeopardizes critical state funding for the public good that is generated by lottery sales and other internet activity that is legal within our states.”

Positive impact of regulated online gambling

When the iGaming market launched in New Jersey in 2013, the state pulled in $60 million in taxes from the legal and regulated gaming industry alone. New Jersey’s state lottery contributed nearly $1 billion of betting revenue every year.

Pennsylvania launched legal online lottery sales as recent as May 2018. The launch immediately pulled in a whopping $23.8 million for the state, which was then funneled into funding to support Pennsylvania’s elderly.

Grewal and Shapiro take action

The duo made it clear that the decision of the DOJ to change its position on the Wire Act came completely out of nowhere.

Grewal explained that “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.”  

The pressure to reconsider this piece of legislation was coming from those who would benefit from the recent revision, such as out-of-state casinos along with their lobbyists. This information was represented by recent media reports on the matter.

Grewal stated that it would not pass as reason enough to reverse the direction of the online gaming industry. He pressed on their wish to know exactly who the Justice Department officials had spoken to and what caused them to change their minds. 

Grewal and Shapiro requested that the DoJ restrain from launching immediate enforcement which would harm licensed iGaming operators. Grewal is also using The Freedom of Information Act on their side, to dig into whether or not the DoJ’s recent decisions were in fact influenced by lobbying groups. One of the suspected groups involved now is the Coalition to Stop Internet Gambling.

“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.”

Grewal expressed that the DoJ really had no good reason to change its opinion on the Wire Act and he filed a request to the DoJ on information and records pertaining to the following:

  • Wire Act
  • Online gambling and betting
  • Records relating to the 2011 and 2018 opinions
  • Records of discussions with anti-gaming lobbying groups, specifically with chief executive Sheldon Adelson of the Las Vegas Sands as well as the Coalition to Stop Internet Gambling
  • Discussions with former Senator of Arkansas Senator along with anti-iGaming advocate Blanche Lincoln
  • Discussions with lawyer Charles Cooper - representing former Attorney General Jeff Sessions
  • Sands lobbyist Darryl Nirenberg

NJ Governor chimes in

New Jersey’s Governor, Phil Murphy supported the efforts by these Attorneys General, stating that the random opinion from the U.S. Department of Justice jeopardizes the future of casino businesses, the gaming industry, along with thousands of jobs. 

He went on to describe the online gambling industry as a major piece of New Jersey’s plan to strengthen its economy. Murphy agreed that the DoJ’s revisions on the Wire Act are unreasonable.

Governor Murphy noted that the Coalition to Stop Internet Gaming recently praised the DoJ’s revisions in a press release. The opinion of the DoJ included arguments which were previously expressed by lobbyists under the employment of Adelson.

This is all being used as evidence of potential lobbyist involvement.

 

Information Sources

https://www.igamingbusiness.com
 

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14 March 2019

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