Five Important Takeaways From The New Hampshire Wire Act Hearing

The first oral arguments for the lawsuit between the New Hampshire Lottery Commission and the US Department of Justice occurred in a New Hampshire federal court on April 11. We want to share the five most relevant takeaways from yesterday’s proceedings.

Background

However, here’s a bit of backstory on the lawsuit. The DOJ issued an opinion in January 2019 regarding the 1961 Wire Act‘s applicability. In this new opinion, the DOJ reversed its previous stance and claimed that the Act rendered all forms of igaming illegal, not just sports betting. Needless to say, the opinion has drawn outrage from the gambling industry, particularly those members involved in state or multistate lotteries. Within days of the opinion, the New Hampshire Lottery Commission filed suit, seeking an injunction to bar the DOJ from enforcing its new position.

Effect on sports bettors

For sports bettors, the DOJ opinion creates a couple of hurdles for playing with the same level of freedom and flexibility as before. For one thing, the nationwide daily fantasy sports contests would likely become a thing of the past. The multistate tournaments simply would not pass legal muster anymore. The enforcement of the opinion would also remove any chance of player pooling between states. In turn, in-state sportsbooks might be less inclined to offer deep promotions to their clients. So, the April 11 hearing was an important insight as to the condition of the case. Here’s what happened:

Takeaways

Eric Ramsey attended the hearing in New Hampshire. Based upon his updates, here are the five main observations we have about the direction of the case.

The Wire Act itself is a poorly-written piece of legislation

Both parties and Judge Paul Barbadoro spent over an hour debating the grammar of the Wire Act itself. The law’s opaque language confounded even the experts in the room. “If you don’t think this is an unambiguous statute, you’re both wrong,” the judge said, at one point. “This statute is a mess of a statute.” In fact, a great deal of court time elapsed during conversations about comma placement, the rule of the last antecedent, and other grammatical devices. The way that one groups elements of the law together can change the interpretation of the law almost completely. In the end, Barbadoro seemed to agree with the Lottery’s interpretation. However, he was not without some reservations about both arguments.

The Rosenstein memo from April 8 did not have the desired effect

US Deputy Attorney General Rod Rosenstein issued a memo last Monday to opposing counsel and the general public. In the memo, Rosenstein attempted to claim that the DOJ’s new interpretation did not extend to state lotteries. It is clear that the objective of the memo was to eliminate the lotteries’ complaints entirely. Indeed, counsel for the DOJ opened yesterday’s proceedings with a motion to dismiss, claiming that the NH Lottery no longer possessed standing to bring suit. Unfortunately for the DOJ, this argument did not impress Barbadoro. He flatly denied that Rosenstein’s memo had reduced any of the lottery commission’s concerns, and more or less dismissed it as a relevant document.

The DOJ doesn’t seem to understand what it’s done

One of the more surprising aspects of the proceedings was the DOJ’s overall attitude about the opinion. The government agency’s counsel indicated that there had been no “final agency action” yet, and so there were no legal ramifications merely from the existence of the opinion. However, neither the plaintiffs nor the judge seemed to buy that argument. Opposing counsel argued that the opinion itself was causing expansion plans to dry up. In other words, it creates a tough proposition for potential vendors and employees if there is uncertainty about whether or not the work they’re doing is illegal. The judge rightly identified the fact that the opinion creates the possibility of prosecution in the future, and that possibility has a tangible effect on actions in the present.

The breadth of the Wire Act and the opinion makes a ruling quite tricky

Barbadoro also lamented the complexity of issues that must inform his ruling. Part of the problem is that a ruling in this case does nothing for other parties affected by the opinion. Even if he rules that the DOJ cannot enforce its opinion on states, the decision would do nothing to protect parties ancillary to the states. So, states might find themselves in a position where they have the right to do something, but could not do so because any potential partners would find themselves unprotected.

This case is not going to end here

Lastly, there is no way that this case, no matter the ruling, ends its life at this level of the court system. There’s no reason that either side would not appeal an unfavorable verdict. Barbadoro even questioned the DOJ counsel about whether or not the government would appeal any decision against it. The government’s attorney, Steven Myers, merely responded to the judge’s question with a cryptic “it would depend on how the order is written.” On the other side, the Lottery’s attorneys rejected the judge’s notion of issuing a declaratory judgment that granted relief. The plaintiffs asserted that only an order to vacate and set aside the DOJ opinion would satisfy them. So, no matter what happens, this case will be moving on to a higher court shortly. Potentially, it could mean that the US Supreme Court would adjudicate two high-profile gambling cases in as many years.