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DOJ Seeks to Cripple Online Gambling With Wire Act Appeal

In a move that shouldn’t shock anyone that has been following the story, the United States Department of Justice will continue their fight to try and redefine the Federal Wire Act. According to a court document filed on Friday, the DOJ plans to appeal the June 20th decision declaring that the Wire Act only applies to sports betting.

As such, the regulated online poker market is once again facing a nightmare scenario that could threaten to cripple the industry.

Notice of Appeal Filed by the DOJ

On Friday, August 16th, the U.S. Department of Justice filed a Notice of Appeal on the Judgment to the United States Court of Appeals for the First Circuit on June 20, 2019. The judgment that the DOJ is speaking about is the New Hampshire lawsuit against the DOJ regarding their 2018 revised opinion regarding the Wire Act.

Under that new opinion, the DOJ broadened their interpretation of the Wire Act to include all forms of online gambling. Initially, the DOJ intended to start enforcing the Wire Act opinion by the Summer, but New Hampshire filed a lawsuit in February over the matter.

Fast forward to June and US District Court Judge Paul Barbadoro effectively overturned the memo, stating, “I hereby declare that § 1084(a) of the Wire Act… applies only to transmissions related to bets or wagers on a sporting event or contest. The 2018 OLC Opinion is set aside.”

Shortly after the judgment, the DOJ revealed that they would delay taking action on the new opinion until 2020, or until 60 days after legal resolution of the matter in court. This effectively told the world that the DOJ was planning on appealing the case, and they did so on Friday.

DOJ Must Now Petition First Circuit to Hear Appeal

Now that the DOJ has officially filed an appeal, they must now head to the First Circuit and petition the court to hear their appeal. Once that happens, the First Circuit will either approve or reject the request. However, it will be a while before we get an answer either way.

The First Circuit will not take oral arguments until October, meaning that the online gambling industry will have to wait in a semi-limbo state until that appeal happens. While we wait, the online gambling industry will continue as normal.

West Virginia is the latest state to regulate online gambling and Pennsylvania is the latest state to actually launch online gambling products. Sports betting continues to expand, but that is not even an issue in this case. The Wire Act already applies to sports betting and an interstate network is not even in play.

However, we cannot say the same about online poker. The interstate online poker network between New Jersey, Delaware, and Nevada is in jeopardy should the Wire Act opinion remain upheld. Furthermore, it would also severely cripple any state that is looking to regulate online gambling in any form in the future.

The new interpretation of the Wire Act would mean that states would have to ensure that all processes and advertising regarding online gambling stays intrastate, creating a greater burden on operators. Furthermore, it would mean that some states will likely abandon attempts to regulate online gambling and some revenue streams, such as the interstate online poker network, would not be available.

We would like to say that this is a slam dunk case for the iGaming industry, but the fact that we are even to this point shows just how stubborn that government is and there is no guarantee that the DOJ will lose. As further developments break on this story, we will keep you informed.

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