States aren’t letting DOJ decision go unchallenged

February 13, 2019 3:00 AM
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Pennsylvania and New Jersey appear ready for war with Washington.

Well, maybe not war. It just that as you read the letter the attorneys general for both states sent to the Department of Justice last week it is clear that they are definitely in a sour mood.

It’s all about legal, state-regulated sports wagering and other forms of online gaming. Take a look at the letter – I’ll get to it in a moment – and you sense the clenched fists, the scowls, frowns and rattling of sabers.

Other states will be watching closely to see how the DOJ responds to the letter sent to Acting Attorney Gerald Whittaker and Deputy AG Rod Rosenstein. Their reaction may affect gaming and developing concepts in a number of states including Nevada.

The two states appear to be leading the way as the gaming industry seeks a reversal of the recent Justice Department opinion that could weaponize the 1961 Wire Act for use against all kinds of online gaming from lottery ticket sales to sports wagering and, well... you name it.

New Jersey is also believed to be wading through the red tape that would give the state access to any written communication between Sands Las Vegas Chairman Sheldon Adelson and the White House and DOJ on the subject of the casino owner’s well-known opposition to online wagering.

Adelson has no problem with gambling since he is one of the world’s richest men on the basis of revenue earned from his casinos in Las Vegas, Macau and Singapore. He, like Steve Wynn, who at the moment is in retirement, would just prefer that a gambler show up at one of his casinos rather than “Sitting in his underwear hunched over a computer in the darkened privacy of his home.”

“What I’m selling is an experience,” Wynn said several years ago, a time when some casino owners were still trying to decide how they felt about online gaming. Maybe Adelson feels the same way, but he does not often make himself available to discuss such matters.

Objections to the AG’s Office of Legal Counsel’s (OLC) opinion announcing that federal criminal law could apply to state-sanctioned online gambling has taken place for years across this country.

The most recent opinion, reverses the Department of Justice’s seven-year-old position expressly allowing online gaming to proceed.

“This about-face is wrong,” they wrote, “raises significant concerns in our states. We ask that DOJ withdraw its opinion altogether or assure us that DOJ will not bring any enforcement actions against companies and individuals engaged in online gaming in our states – where it is appropriate under state law...

“States and the gaming industry have been relying on DOJ’s advice for years to develop online gaming. Almost 10 years ago, two states proposed using the Internet or using out-of-state transaction processors to sell lottery tickets to in-state adults. DOJ asked OLC whether the proposals violated the Wire Act... OLC announced that these proposals – and others just like them – were lawful because the Act’s criminal prohibitions only applied to interstate transmission of information relating to sports wagering and did not apply to other forms of online gaming.

The letter continues: “Following that opinion, online lotteries and other forms of online gaming sprouted up in states across the country. We see no good reason for DOJ’s sudden reversal. First, it runs contrary to plain language of the Wire Act. Second, DOJ has recognized that it should employ considerable caution in departing from... prior opinions, in light of the “strong interests in efficiency, institutional credibility, and the reasonable expectations of those who have relied on prior advice.

“Here, however, DOJ acknowledges that states were relying on its prior advice and did not provide any intervening facts or information to justify such a major departure.”

Press reports instead indicate that this “new advice followed substantial lobbying by outside groups that have long been unhappy with the 2011 opinion – but who were unable to convince Congress of the merits of their view. That is not a good enough reason to trample over the law and states’ rights, and to upend the settled expectations on which we have been relying.”

I don’t know whether other states have sent similar protest letters to Washington. Neither is it known whether the concerns of Pennsylvania and New Jersey will get serious attention as the Department struggles through other issues. 

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