Pennsylvania Attorney General Josh Shapiro and New Jersey Attorney General Gurbir S. Grewal sent a letter to the Department of Justice regarding the new DOJ opinion on the Wire Act. The letter, dated Feb. 5, rebukes the DOJ for its recent change of heart.
The letter’s stated purpose is to express both men’s “strong objections” to the DOJ’s change of heart. The letter asks its recipients, Acting Attorney General Matthew Whitaker and Deputy Attorney General Rod Rosenstein, to withdraw the opinion. Failing that, the letter asks the officials to direct DOJ prosecutors to refrain from bringing any action against online gaming companies or players in Pennsylvania or New Jersey.
The reasoning behind the letter
The AGs side with the 2011 Wire Act interpretation
The attorneys general reiterated that the 2011 opinion, which interpreted the Wire Act only applied to sports betting because of the inclusion of the phrase “any sporting event or contest.” They questioned the need for a reversal. The letter goes as far to say, “[the new opinion] runs contrary to plain language of the Wire Act.”
States launched online gambling based on 2011 decision
The more troubling aspect of the opinion is the fact that the states have developed their gambling programs under the guise of the old interpretation. The development of appropriate infrastructure has been both expensive and time-consuming. These activities even occurred under the guidance of DOJ officials in the past.
As a result, says the letter, this radical change of direction threatens to unemploy thousands of residents in each state and render the state’s prior accomplishments unnecessarily moot. Also, the opinion may jeopardize groups that rely on gambling-provided state funds to survive.
The letter cites language from the agency itself, which states that there are “strong interests in efficiency, institutional credibility, and the reasonable expectations of those who have relied on our prior advice.”
PA Lottery part of another DOJ letter
The strongly worded letter from the AGs is not the only mail the Department of Justice received lately. The top lobbying group for state lotteries, the North American Association of State and Provincial Lotteries (NASPL), also sent an irate letter about the Wire Act.
The group is very clear about what is at stake thanks to this new Wire Act opinion:
“The recent United States Department of Justice, (DOJ) reinterpretation of the Wire Act of 1961 creates a substantially detrimental impact on the lottery industry, including traditional retail-based draw and instant lottery games, as well as traditional lottery games offered over the Internet, and the billions of dollars for good causes lotteries provide.”
The lottery is a billion-dollar industry in many states, including Pennsylvania. As such, the states are ready and willing to fight the DOJ on any changes that would compromise those budget dollars. If the DOJ does not back down, expect this battle to end up in court.
There might be some trouble brewing for the DOJ and Adelson
Instead, the attorneys general allude to the fact that several press reports indicate the opinion originated under lobbying pressure. Specifically, media has suggested that the Coalition to Stop Internet Gambling (CSIG) played a major role.
CSIG is the most prominent lobbying group to oppose online gaming. Not coincidentally, the group has long been rumored to receive its financial backing from Las Vegas Sands owner Sheldon Adelson.
Shapiro and Grewal doubled down on this allegation with a concurrent Freedom of Information Act (FOIA) request to the Department of Justice. The attorneys general want to compel the DOJ to detail the extent of CSIG’s influence over the decision.
One group who might watch the FOIA request with more-than-usual interest are the Poarch Creek Band of Indians. Right now, the tribe is in the midst of paying Adelson $1.3 billion for his Sands Bethlehem property. Needless to say, the tribe’s lawyers would likely be quite interested if Adelson’s actions directly or indirectly devalued the property ahead of the closing.