Federal Judge Rules Against Department of Justice

Earlier this week, Federal Judge Paul Barbadoro ruled in favor of the state of New Hampshire. At stake was the DOJ’s fresh interpretation of the Wire Act, which held that its prohibitions applied to all forms of interstate gambling.

New Hampshire feared the implications it would have on its own state lottery service, and filed suit in federal court to block the DOJ from interfering. Had the DOJ’s opinion been upheld, it would have led to massive losses of revenue for certain states.

For example, New Jersey’s online gambling industry is estimated to be worth $350 million. As an effect, any change in regulation could be detrimental to its economy.

Lobbyists no more

Under the Obama Administration, the DOJ had limited the scope of the Wire Act, saying it only applied to sports betting. However, once the Trump Administration took office, the DOJ changed its legal opinion, which some legal pundits blamed on outside interference.

The DOJ’s reversal represented a massive blow to the budding online casino industry. It would have meant that payment processors could no longer transmit funds across state lines. In turn, this would have stripped online casinos from their ability to receive customer deposits.

What lead to this change

Plaintiffs claimed that the Justice Department’s recent reversal was due to lobbying efforts from the land based casino industry. Furthermore, they asserted that the law infringed upon states’ constitutional rights of self determination.

In addition, plaintiffs pointed out the opaque and cozy relationship between lobbyists and government officials in the DOJ. They specifically questioned the DOJ’s refusal to publish documents that relate to its internal processing of the case.

Expect great change

The new Wire Act interpretation will positively affect New Jersey and other state’s online gambling industry. It ensures that online casinos and payment processors can move funds across state lines, without the fear of reprisal from government officials.

Another result of this ruling is that more states will likely seek to legalize online casinos and sports betting. The Wire Act has long been interpreted as an impediment to further expansion of legalized online gaming. Yet, it remains to see whether the US government will appeal the ruling, which could lead to another outcome.

Should the appellate court side with the government, the case could end up reaching the Supreme Court. For that reason, several states and casino operators are still sitting on the fence, waiting for a final outcome.