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onlinecasinoselite.org  › Blog  › US DOJ's Judge try to Overrule the 2011 Wire Act
June 18, 2019

What US online gamblers can expect from Judge Barbadoro decision?


CASINO GAME RULES


U.S. District Judge Paul Barbadoro in New Hampshire has overturned the Justice Department's expanded interpretation of the 1961 Wire Act. In a 60-page opinion, Barbadoro said that the “Text, context, and structure of the Wire Act” is “limited to sports gambling.”

This means online gamblers are safe from the ruling that would have made interstate poker, online gambling, and lotteries illegal if the nationwide ban had been set in place.

Barbadoro ruled that the 1961 law only applies to sports betting.

This came after the New Hampshire Lottery Commission sued and requested for summary judgment.

US District Court Judge Paul Barbadoro
US District Court Judge Paul Barbadoro at the 2016 Kenison Award

What is the Wire Act?

The Federal Wire Act or the Interstate Wire Act of 1961 is a federal law in the US that prohibits certain types of betting activities in the country. Over the years, its interpretation has been the subject of debate.

To put it simply, here are the main points of this Act:

  • Certain types of gambling are prohibited
  • The DOJ ruled that the Act relates to online sports betting only
  • Legal actions against the DOJ are now being pursued by several states which made online betting legal

When Assistant Attorney General Virginia Seitz ruled that the Act applies only to sports betting, it paved the way for a rapid growth in online gambling, with Delaware, Nevada, and New Jersey as early adopters.

In late 2018, however, the Justice Department of the Trump administration reversed the ruling and said the 1961 law also prohibits online betting. This will ban all internet gambling with transactions done between states.

AG Steven Engel, DOJ Office of Legal Counsel Assistant, said that the interpretation of the Wire Act made in 2011 was in error. He said that the Wire Act is not an artful drafting model and that the statue’s words are not clear, he concluded.

This caused a sweeping chill among betting operators. In fact, gambling stocks fell several points down.

After the reversal was publicly released, casino operators and suppliers saw a drop of shares. Shares of International Game Technology Plc fell by as much as 3.7%, while MGM Resorts International dropped by as much as 1.3%.

In a memo, the then-deputy attorney general said that the DOJ must wait 90 days after the public release of the legal opinion to enforce the Wire Act. The grace period was later extended to June 14 by Rod Rosenstein to give operators time to get their operations compliant with the federal law.

Barbadoro's ruling was made 11 days before a key deadline that would have cost Mega Millions, Powerball, and other interstate games and lotteries a lot of money. 

Why did New Hampshire take legal action?

After DOJ announced in January 2011 their reversed interpretation of the federal law, the New Hampshire Lottery Commission sued the Justice Department in US district court to have the broader interpretation of the 1961 law returned. Otherwise, their operations will be considered illegal and criminal and may have to be suspended. This will cost the business more than $90 million annual revenue from the sale of interstate lottery.

New Hampshire Lottery
The official website of NHL (New Hampshire Lottery - nhlottery.com)

Michigan, New Jersey, and Pennsylvania backed the state’s lawsuit.

Barbadoro granted the state's request for summary judgment and made a decision on Monday. He said that a big risk is being faced by New Hampshire as their operations may be shot down or they will be made to comply with strict measures. Yet, the threat may not be eliminated at all.

Barbadoro also said that the DOJ’s reversal was based on faulty readings due to the use of ambiguous grammar in a key passage. He had to focus more on the context of the law and not on the grammar to decide on the meaning of the Wire Act. 

Impact of the new ruling on online gambling in the US

Whether the Justice Department will respect Barbadoro’s decision is unclear. A spokeswoman from the department only said that decision is under review and no further comment will be made.

Still, the new ruling has given online gamblers hope that their love for bitcoin casino sites, online casinos, state lotteries, and other betting businesses will not come to an end this June 14. There’s always the possibility that the DOJ will not respect Barbadoro’s ruling, but the judge is confident that the department will agree that the Act is limited to sports betting only. For now, we just have to wait and see.