Wire Act lingers on in IGT lawsuit against Department of Justice

Haley Hintze Author Photo
Haley Hintze
Posted on: December 07, 2021 19:57 PST

"Whoo-hoo-hoo, look who knows so much," said Miracle Max in The Princess Bride, referring to the movie's seemingly dead hero, Westley. "It just so happens that your friend here is only mostly dead. There's a big difference between mostly dead and all dead. Mostly dead is slightly alive." That "mostly dead" description could be applied to something rather more important to online gambling and online poker, and that's the 1961 Wire Act, which was the law of the land in the U.S. for nearly 60 years. The Wire Act was no friend to online poker, but otherwise, the metaphor might apply.

A bit of history: For nearly two decades, the Wire Act was wielded as a major tool against the legalization of nearly all forms of online gambling until it was significantly narrowed in scope by a US Court of Appeals rul ing issued earlier this year. The case involved two agencies working for the New Hampshire Lottery, and they prevailed in the matter when the Department of Justice chose not to attempt an appeal to the U.S. Supreme Court.

Because of the way the Wire Act was written, New Hampshire's win meant virtually all other forms of online gambling, including online poker, were no longer apparently forbidden under U.S. federal law. (Whether they ever were is a separate question.) Yet it turned out that there's still one small hitch in the situation, hence the "mostly dead" description of the Wire Act. Due to the way the ruling in the New Hampshire case was narrowly crafted, there's still a slim chance that the ruling could be deemed to apply only to New Hampshire's lottery interests.

By allowing the matter to drop without attempting to appeal to the Supreme Court, the DOJ left that question technically unresolved, including a 2018 opinion issued by the Trump-era DOJ that actually expanded the Wire Act's reach. It's still on the books and remains in effect, even if the DOJ has shown no interest in attempting to enforce it. And while the U.S. has seen a state-by-state land rush into various forms of online gambling, especially sports betting, there's still a bit of legal concern that under an anti-online gambling administration, the 2018 DOJ reversal on the Wire Act could be re-activated.

IGT sues DOJ, seeks Wire Act clarification

Enter International Game Technology, widely known as IGT. Two weeks ago, IGT sued the Department of Justice in an attempt to force it to formally abrogate the 2018 reversal opinion. Despite its dropping the possibility of its appeal in the New Hampshire case, the DOJ walked away from the matter as something of a sore loser, issuing no further advisory.

The last word on the Wire Act from the DOJ came before its loss in the New Hampshire appeal. That was only an update that the DOJ would provide a 90-day notice to any business entity it deemed to be in violation of the Wire Act, including the 2018 reversal opinion that tried to expand the Wire Act's ban across all of U.S.-based online gambling. Then and now, that's created a chilling effect on certain types of business expansion and investment, as IGT's lawsuit notes. It's an action that's designed to bring clarity and finality to a still murky legal situation.

A recent report at US Gaming Review details why IGT will almost certainly prevail in its lawsuit against the DOJ. IGT seeks declaratory relief, meaning a court ruling that the Wire Act no longer applies to most forms of online gambling. Given the DOJ's refusal to retract the 2018 opinion, it's the only legal way IGT can protect its business interests; the company currently is the largest provider of online-gaming and lottery services across the country.

The US Gaming Review piece surveyed several industry and legal experts, and it's worth a read. The consensus view from those surveyed experts is that IGT will win its case, should the DOJ continue to drag its heels on the Wire Act issue. There is still that small element of legal risk, however, as long as the 2018 reversal opinion remains in effect.

2018 reversal opinion remains Sheldon Adelson's anti-online gambling legacy

While the US Gaming Review piece offers a solid take on the background, it ignores the story of how that 2018 Wire Act reversal opinion came to be. The opinion was one of the final weapons crafted at the behest of U.S. online gambling's greatest foe, the late Sheldon Adelson. Adelson, the multi-billionaire CEO of Las Vegas Sands Corporation, spent tens of millions of dollars over more than a decade to keep online gambling as "illegal" as possible across the U.S., the better to benefit his land-based casino operations, including Las Vegas's Venetian and Palazzo casinos.

The DOJ's 2018 reversal opinion emerged from a shadowy circumstance indeed. It took months for the truth behind the opinion to emerge. It was crafted for the DOJ by Adelson- and LV Sands-funded lawyers and lobbyists, and the opinion itself was never even signed by any DOJ official. It was instead just dropped into the online-gambling debate as a last-ditch effort by Adelson to foil more U.S. online gambling expansion.

Adelson, though, was aged and ailing, and he died in January at age 87 from non-Hodgkins lymphoma. Adelson was a kingmaker amid the conservative political scene, spending an immense fortune over at least two decades on politicians who shared his views, including being against online gambling.

The 2018 reversal opinion could perhaps be thought of as Adelson's ghost. It reflects his wishes and it technically remains on the books, but without Adelson's financing continuing to back its potential enforcement, the opinion's effective power continues to wane. There's another factor in play as well: IGT ultimately will not be alone in trying to force the DOJ's hand. More and more states have legalized online gambling, whether online casino-style games (including poker), online lotteries, or the big action driver, online sports betting.

As the saying goes, it's hard to unring a bell. All that online expansion means there are hundreds of gambling-related US businesses that face the same sort of legal exposure that IGT cites in its lawsuit. So if the DOJ does attempt a legal fight, expect amici (friends of the court) to appear from everywhere, including many pro-gambling states themselves. Several of the experts cited in the US Gaming Review feature declared the Wire Act matter effectively moot. It's indeed getting close, but there's that "mostly dead" chance lingering once again.

Whatever happens in the IGT case won't emerge until some time in mid-2022 at the very earliest. The DOJ has a long history of delaying action on such matters for as long as possible, just a matter of enforcement principle. The agency is used to declaring not what the laws are, but rather what they mean and how they are to be enforced. In the case of the Wire Act, what the DOJ enforced was never precisely what the law actually stated. That's left 60 years of history to be undone.

Featured image source: US Department of Justice