Yesterday’s Wire Act decision from the US District Court District of Rhode Island about the online gambling industry couldn’t have been simpler. The court sided with the industry.
Everything past that gets more complicated.
However, US online casino and poker operators and their suppliers can rejoice about this opinion on IGT vs. Merrick B. Garland:
Judgment is in favor of the Plaintiffs, International Game Technology PLC and IGT Global Solutions, and against the Defendants, Merrick B. Garland and The United States Justice Department.
Garland is the US Attorney General.
So far, London-based International Game Technology (IGT) hasn’t issued a statement about winning its lawsuit against the US Department of Justice‘s 2018 anti-iGaming interpretation of the Wire Act, once and for all.
What the Decision Means
IGT argued in the case that the DOJ’s interpretation of the Wire Act left it and, by extension, any non-sports betting online gambling company, in legal limbo.
They were worried about the possibility of prosecution for transmitting data across state lines. Not transmitting data limits companies’ technological and logistical options, which is why IGT sued.
At the moment, online casinos are legal and available in six states:
- New Jersey
- West Virginia
There is also Nevada, where online gambling is legal, but the regulators have so far only authorized poker, but not casino gaming.
Wire Act History
The DOJ’s interpretation of the 1961 Interstate Wire Act as it relates to online gambling dates back to 2011. The law itself was obviously not originally about the internet and especially not about online betting, as consumers didn’t use either in 1961.
The Wire Act was supposed to regulate bets placed over the phone and across state lines. Now, the definition of “wire communication” includes the internet. That means the Act applies to online gambling, or at least some forms of online gambling.
In 2011, the DOJ issued an opinion stating that the Wire Act only governed sports betting. That helped New Jersey and Delaware to lead the way in legalizing online casinos.
In May 2018, the US Supreme Court advanced things further by repealing the Professional and Amateur Sports Protection Act (PASPA). This law, separately from the Wire Act, made all sports betting illegal (except in Nevada).
With PASPA out of the way, states begin to legalize online sports betting. This has outpaced online casinos by a large margin and is now permitted in 22 jurisdictions.
Returning to DOJ opinions, the department released a new directive in January 2019. Its new interpretation of the law was that it would apply to all interstate online gambling, not only sports betting. Violators would be subject to fines and imprisonment. Yesterday’s decision may impact that, too.
Wire Act Confusion Put the Industry in Chaos
States reacted immediately with everything from strongly worded letters to the DOJ to court cases.
In June 2019, the New Hampshire Lottery Commission (NHLC) won its lawsuit against the DOJ in US District Court for the District of New Hampshire.
The DOJ appealed and lost in January 2021.
Former President Donald J. Trump left office that month, shortly after Attorney General William Barr resigned.
President Joe Biden nominated Garland and Congress confirmed him in March 2021.
This current DOJ is calling the NHLC decision the legal precedent regarding the Wire Act.
Still, after more than a decade of the DOJ’s different Wire Act interpretations, IGT filed suit on Nov. 23, 2021. In it, IGT named the Office of Legal Counsel (OLC) at the DOJ as disseminating the DOJ’s 2018 opinion.
IGT’s 2021 complaint read:
“Gaming operators such as IGT face a credible threat of prosecution that poses a present and identifiable hardship as a result of OLC’s new interpretation of the Wire Act.”
In other words, whether or not the DOJ actually planned to prosecute IGT or anyone else was irrelevant. The possibility alone was enough to be disruptive, which is why IGT asked the courts to provide clarity when the DOJ won’t.
It’s also why this IGT victory is meaningful.