NJ, PA attorneys general push back against DOJ Wire Act interpretation

The state attorneys general for New Jersey and Pennsylvania are pushing back against the U.S. Department of Justice’s recent strict interpretation of the Wire Act and are seeking documents from the DOJ that could determine whether the move was done at the request of a powerful casino lobbyist and donor.

Both New Jersey Attorney General Gurbir Grewal and Pennsylvania Attorney General Josh Shapiro, in a Feb. 5 letter to the DOJ, said the expansion of the Wire Act to ban any online gambling that crosses state lines could heavily weaken both states’ online gambling and sports betting markets.

In November 2018, the DOJ’s Office of Legal Counsel announced it would expand the Wire Act, a federal law that prohibits certain kinds of gambling and wagering activity, and said on Jan. 15 that it would give businesses and state governments 90 days to comply.

It is not immediately clear how New Jersey’s gambling industry, handled by the Division of Gaming Enforcement, will respond to the DOJ’s ruling. A spokesperson for DGE did not return requests for comment.

“The [Las Vegas] Sands Chief Executive, Sheldon Adelson, established the Coalition to Stop Internet Gambling to lobby against the [2011] opinion,” reads a Feb. 5 Federal Freedom of Information Act Request Grewal and Shapiro filed with the DOJ. “But the coalition was unable to persuade Congress to amend the Wire Act, so certain lawmakers ‘pressed the [DOJ] on its interpretation of the act’,” the request continues.

The Tuesday FOIA request is seeking any documents that might reveal whether Adelson had a hand in the decision, and includes requests for records that contain any combination of the phrases “Coalition to Stop Internet Gambling, Las Vegas Sands, the Lincoln Group, Sheldon Adelson, Blanche Lincoln, Charles Cooper,” and “Darryl Nirenberg.”

Adelson is believed to have pushed for the DOJ’s interpretation out of concerns online gambling could compromise the success of his traditional brick and mortar casino establishments. He has donated hundreds of thousands of dollars to Republicans nationwide.

A three-page letter filed by both AG’s requests the DOJ rescind the Wire Act reinterpretation.

“We can see no good for the DOJ’s sudden reversal,” the letter reads. “This decision puts jobs and livelihoods at risk for the thousands of people who work in the online gaming industry and jeopardizes critical state funding for the public good that is generated by lottery sales and other internet activity that is legal within our states.”

Former state Sen. Ray Lesniak, who played a heavy hand in a U.S. Supreme Court case knocking down the near-nationwide ban on sports betting, said the reinterpretation could ultimately squash online and sports-gambling in the state.

Since internet connection and payment processes cross state lines, that alone could be a violation of the newly defined Wire Act, Lesniak said.

“Bravo to Attorney General Grewal’s strong statement and FOIA request to determine what’s behind this absurd DOJ opinion,” Lesniak told NJIBZ.  “I would add as the sponsor of New Jersey’s internet gaming law that the ‘guarantee’ sought by the AG is insufficient to protect our internet gaming operations and that my advice to Senate President Sweeney is, if the DOJ’s opinion is not withdrawn, to seek a Declaratory Judgement in U. S. District Court that the opinion is arbitrary and capricious as inconsistent with both the clear wording of the Wire Act and its legislative history.”

In 2011, the Obama-era DOJ ruled that in the gambling world, the Wire Act online applied to sports-betting activities, opening the doors for states such as New Jersey, Pennsylvania, Delaware and Nevada to roll out online gambling on a variety of forms.

Lesniak and other state Democrats attributed what they see as Atlantic City’s revitalization, in part to the expansion of sports betting and online gambling.

DGE records from January 2019 show that in 2018, online gaming generated $298 million in revenue for the state’s casinos. Of the $1.2 billion that patrons bet on sports wagers in 2018, $780 million of the bets were made via online or mobile apps, according to the DGE.