DOJ Opinion Closes Door to Online Gambling in the States

In 2011, a Justice Department opinion letter opened the door to online gambling in the United States for the first time since Congress passed the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA).   The opinion abandoned prior expansive interpretation of the Wire Act and limited its application to only sports wagering, thereby giving the green light for states to engage in the intra-state sale of lottery tickets online (and possibly other online gambling offerings).   Four states—Delaware, Nevada, New Jersey and Pennsylvania—currently allow online gambling.

The trend towards greater state gambling was accelerated in 2018, when the Supreme Court held that the Professional and Amateur Sports Protection Act which prohibited states from legalizing sports betting was unconstitutional.

Enter the Trump administration, who has been very attentive to Las Vegas gambling billionaire Sheldon Adelson and his wife who have given more than $200 million to Republicans in 2016 and 2018.  Ignoring, Justice Department guidelines that Office of Legal Counsel opinions should be given “great weight” and “should not [be] lightly depart[ed] from,”” the Justice Department did just that.

In November, the Justice Department issued a new opinion.

This Office concluded in 2011 that the prohibitions of the Wire Act in 18 U.S.C. § 1084(a) are limited to sports gambling. Having been asked to reconsider, we now conclude that the statutory prohibitions are not uniformly limited to gambling on sporting events or contests.

Interestingly, the request to reconsider came from a memo circulated by Adelson’s lobbyists and the updated opinion tracked Adelson’s memo.

The new opinion was not released until January.  At that time, Deputy Attorney General Rosenstein indicated that businesses that relied on the 2011 Opinion would have a 90-day window to comply.  Rosenstein’s press release stressed that “[t]his is an
internal exercise of prosecutorial discretion; it is not a safe harbor for violations of the Wire Act.”