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DOJ Extends Grace Period Regarding Wire Act to December 31

It shouldn’t be a surprise that the Wire Act saga shows little signs of slowing down despite the recent federal ruling against the DOJ. According to a post from Online Poker Report, it appears that the DOJ is still planning to move forward with enforcing their 2018 revised opinion on the DOJ, but it appears they are giving some time to let the appeal process play out.

DOJ Plans to Move Forward With Wire Act Enforcement

On Wednesday, the DOJ released a memo regarding the new interpretation of the Federal Wire Act. As you may already know, New Hampshire was successful in a lawsuit against the DOJ regarding their 2018 revised Wire Act opinion. A federal judge ruled that the Wire Act was only applicable to sports betting.

The memo states that due to the ruling on June 3, they are extending the forbearance period through December 31, 2019, or 60 days following the final judgment in the New Hampshire case. Furthermore, the memo reminds everyone that the forbearance period does not create a safe harbor situation for violating the Wire Act. In other words, the DOJ can still choose to prosecute anyone that is currently violating the 2018 revised opinion.

So what exactly does all this mean? Basically, it is a fancy way of the DOJ kicking the can down the road while they pursue an appeal. It is expected that the DOJ will appeal the matter to the First Circuit Court of Appeals, and if that’s the case, it appears they expect the matter to be resolved by the end of the year.

Wire Act Reversal May Not Apply to Everyone

Something that has been discussed at length lately is whether or not the decision by a federal judge regarding the Wire Act is a nationwide injunction or specific to the New Hampshire case. The primary opinion is that the decision is a blanket one and applies to all forms of gambling and all US market, not just New Hampshire.

If it was a blanket decision then the DOJ extending the forbearance opinion only matters if they are successful in their appeal. While most would prefer this to be a blanket judgment, there are others that argue that this only applies to New Hampshire.

Some point to the wording of the judgment, stating that it primarily addresses the New Hampshire case and New Hampshire as plaintiffs. This interpretation would effectively give the DOJ the ability to move forward against other states on most forms of gambling. The reason we say most is that this ruling was primarily tied to the lottery.

There is a scenario where the DOJ loses, but since it only applies to the lottery, the DOJ could move forward with other forms of gambling. As such, some believe that summary judgment or a clearer definition of the scope of the Wire Act opinion needs to be spelled out to prevent the DOJ from finding a legal loophole to move forward with prosecution.

What Happens from Here?

For now, states that are already operating in the United States will continue to operate as usual while others that are just getting started will surely try and meet the 2018 revised Wire Act decision. Of course, legal challenges and appeals will continue in the federal court system as the DOJ tries to overturn the June 3rd decision.

The only downside to this prolonged battle is that some states may decide to ramp back efforts to regulate online gambling outside of sports betting. This is naturally a logical course of action considering the uncertainty surrounding the Wire Act, but we do expect this process to largely play out by the end of the year.

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