Wire Act Goes Back Before Courts

In February of 2019, the US Department of Justice laid out a new interpretation of the Wire Act of 1961. The new interpretation stated that the Wire Act, which makes the funding of gambling accounts by wire illegal, pertained to all forms of gambling, including online lotteries, horse racing, casinos, and sports betting. The New Hampshire Lottery Commission /NHLC immediately filed a suit against the DOJ's new interpretation and won in court in June of 2019.

While the DOJ's new interpretation was in stark contrast to a 2011 opinion by the DOJ, the courts ruled in favor of the plaintiff, supporting the contention that the Wire Act was only applicable to sports betting. In August of 2019, the DOJ under the direction of US Attorney General Barr filed an appeal against the US District Court for District of New Hampshire. The appeal was filed in the First Circuit Court of Appeals with the DOJ filing its brief in December of 2019.

This week, the NHLC and the two companies that provide software solutions for its operations, NeoPollard Interactive LLC and Pollard Banknote, were in court to file their briefs on the appeal. It's noteworthy that any hearing dates are likely to be extended due to coronavirus issues.

What's at Stake

If the DOJ were to prevail, the decision would effectively paralyze the online gambling industry. It would leave gamblers with only one deposit option, that being to appear in person at designated deposit/withdrawal locations. It's noteworthy that the only designated locations are in the casinos or racetracks where betting is now permitted. That's quite prohibitive for gamblers who don't live in close proximity to gambling locations.

To be clear, the DOJ is basing this new interpretation on assumption. The language of the Wire Act is clearly addressing sports gambling. However, the DOJ contends that the intent was to prohibit wires to cover any gambling costs. The fact the internet didn't exist back then is of no consequence to the DOJ.

For the gambling industry, this could be a make or break decision. A lot of time, effort and money has gone into getting online gambling operations in place in at least 20 states. If gamblers were unable to fund their accounts with debit/credit cards, PayPal or wire transfers, billions in gambling revenue could be lost. At this point, it would be fair to say this could end up before the US Supreme Court by next year.