IGT fires latest salvo at DOJ in ongoing Wire Act legal battle

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Haley Hintze Author Photo
Haley Hintze
Posted on: April 08, 2022 05:42 PDT

International Game Technology (IGT) and the U.S. Department of Justice continue to duel in a U.S. federal court over the DOJ's refusal to withdraw completely a 2019 reversal opinion that attempted to re-expand the reach of the 1961 Wire Act over various channels of online gambling.

IGT was forced to file its lawsuit after the DOJ reneged on its own promise to issue a clarification on the Wire Act's reach after a legal victory by the State of New Hampshire and its two lottery agencies that effectively ended the Wire Act's potential impact against multistate lottery enterprises. Though hailed as landmark decision for online gambling, however, that decision is technically narrow in scope, applying only in the U.S.'s First Circuit. That circuit encompasses only a handful of New England states, including New Hampshire.

IGT is the U.S.'s largest provider of interstate services related to online gambling, and last November, after three years of waiting, the IGT finally sued the DOJ in an effort to clarify the issue. Rather than accede, the DOJ moved a month ago to dismiss IGT's lawsuit. Over the last week, the two sides traded legal salvos, with the DOJ reasserting its claim that IGT lacks the standing to file, and IGT exposing the DOJ's current stance as a shell game designed to keep prosecutions on the table elsewhere in the U.S. despite the New Hampshire decision.

DOJ memo reasserts claim that IGT lacks standing

In support of its motion to dismiss, the Department of Justice filed a reply memorandum that reiterates its previous claims. Simply put, the DOJ asserts that because none of the 43 states and assorted territories in U.S. Circuits other than the first have filed a Wire Act-related prosecution, it means that IGT faces "no credible threat" of future prosecution.

The DOJ's claim is ludicrous on its face, given the aim of the 2018 Wire Act opinion reversal, its technical stance as still being the law of the land, and the DOJ's own failure to issue the promised clarification. Yet the DOJ has few other arguments it can offer. Instead, the DOJ asserts that while IGT is afforded protections wherever it operates within the First Circuit states, it simply must wait to see if other Circuits' federal prosecutors choose to litigate.

It's the very definition of the "chilling effect" that led IGT to file its lawsuit, though the DOJ stubbornly evades that wordage. Yet the meaning remains. "Indeed," the DOJ writes, "the only dispute between the parties is whether IGT is entitled to the benefit of favorable First Circuit precedent in any of the '43 states and territories not subject to the First Circuit’s precedential authority' where it conducts business — most of which have not yet had occasion to interpret the scope of the Wire Act as to non-sports gambling."

IGT assails DOJ's stance in response

In Wednesday's response memo, IGT's lawyers quickly shred the DOJ's claims, including citing the First Circuit ruling in New Hampshire that pared back the Wire Act's reach. That ruling included this quote about the DOJ's tactics: "The First Circuit squarely held that the 2018 OLC memorandum gives rise to 'an ‘imminent’ Article III injury in fact', and that the Department of Justice’s forbearance memoranda and 'prolonged coyness' do not defeat jurisdiction."

"Instead," IGT's lawyers wrote, "the government again contends that IGT lacks standing, but [New Hampshire] resolved this issue as well. ... The government has left fully intact the 2018 OLC memorandum and has provided no further guidance about the applicability of the Wire Act to lotteries. The government’s legal position on the scope of the Wire Act remains the same, and, after more than three years, the forbearance period for lotteries is still in effect. The government could have eliminated the threat of prosecution, but it has chosen not to do so.

"Faced with binding First Circuit precedent on standing, the government ironically argues that the First Circuit’s decision defeats standing because IGT would prevail in any prosecution within the First Circuit, and thus the government would have to bring a prosecution elsewhere. Tellingly, the government does not dispute that IGT does face a threat of prosecution in the other eleven regional circuits, which include 43 states where IGT does business. Indeed, the entire basis for the government’s motion is to retain its flexibility to bring a prosecution against IGT" -- or any other entity -- "outside of the First Circuit."

The DOJ's legal shell game, as IGT continues to point out, couldn't be any more blatant. "Far from renouncing the 2018 OLC opinion and foreclosing prosecution, the government explicitly has left its options open. If the government had no intention of prosecuting IGT, it could have simply acquiesced in judgment."

Despite the DOJ's dissembling, IGT then cites other cases supporting its claim of having proper legal standing, then added, "IGT faces the threat of prosecution, just like the plaintiffs in NHLC did, and IGT therefore has standing, just like the plaintiffs in NHLC did. The government’s strategic calculus on where it might bring the prosecution does not make the injury any less imminent or cognizable for constitutional purposes."

DOJ tactics sadly typical in Wire Act cases

The DOJ has long chosen to employ such tactics in matters where the common-sense legal decision runs counter to the preference of many of its most prominent officials. The DOJ's 2018 Wire Act opinion reversal was written by attorneys and lobbyists from noted online-gambling opponent Sheldon Adelson. Though Adelson has since died, many of his allies within the DOJ remain in place and have sought to blunt the advance of online gambling across the U.S. in many ways.

A decision in IGT's lawsuit against the DOJ could be issued in the coming months, though the DOJ could still appeal such a ruling and further stall the matter. Eventually, however, the Wire Act's near-total downfall appears certain, no matter how many more years it might take.