First Round In Wire Act Court Battle Seemed To Favor NH Lottery

The highly anticipated oral arguments in the 2018 Wire Act opinion lawsuit concluded Thursday afternoon. The two sides presented arguments for nearly five hours to the US District Court in Concord, New Hampshire. Judge Paul Barbadoro is presiding over the case. The court date ended with no decision, but things look good for New Hampshire.

To recap, the state lottery filed a lawsuit against the US Department of Justice, which issued a reinterpretation of the 1961 Wire Act that could criminalize all forms of interstate online gambling.

Earlier this week, Assistant Attorney General Rod Rosenstein sent a memo to DOJ employees. In it, he advised them not to apply the recent opinion to state lotteries once the enforcement deadline of June 14 comes down.

Such a memo appeared to be an attempt by the DOJ to undercut the NH Lottery lawsuit, potentially leading the court to dismiss it. Barbadoro, however, was not swayed by the new filing. He issued no formal ruling but did tell both sides he did not plan to dismiss the case based on the new memo.

Judge unconvinced by DOJ lottery memo

“That letter does not convince me that I should dismiss this case for lack of standing,” the judge said, “nor does it convince me that this case is moot.”

Barbadoro noted that Rosenstein’s memo did not affect the case’s ripeness. From the judge:

“I have a very difficult time seeing how the Rosenstein letter would deprive the plaintiffs of the standing they would otherwise have.”

Because the memo said there could be pending similar opinions issued about state lotteries and their vendors, Barbadoro said the threat remains, memo or no memo.

Multi-state lotteries take center stage

On several occasions, the plaintiffs requested a declaratory judgment. They asked for such the court to make several rulings:

• The Wire Act does not apply to non-sports gambling
• The Wire Act does not apply to individual states like it does to private companies
• The 2018 opinion is invalid

Barbadoro wondered if relief, such as ruling the new opinion didn’t apply to the NH state lottery, would meet the satisfaction of the plaintiffs. They declined, asking him to completely “vacate and set aside the 2018 opinion.”

The plaintiffs contended that the DOJ opinion essentially criminalized the lottery’s “entire business.”

“We cannot grow. We cannot generate capital.”

Still, Barbadoro clearly stated expedience might not be possible.

“I have to do my best and get it right, and that’s going to take some time because it’s a complex issue.”

Other states offer support of NH

Along with Pennsylvania, which acted on behalf of the Department of Revenue and Pennsylvania Lottery, both Michigan and New Jersey also filed amici briefs in the case. Additionally, 11 other states as well as the District of Columbia, co-signed Michigan’s brief.

Michigan’s assistant attorney general testified that the DOJ created an $80 billion hole in state budgets. He requested “complete relief,” but Barbadoro noted that nationwide relief is essentially not within his jurisdiction.

“Fortunately,” Barbadoro said, “you have very able federal judges in your district.”

Even so, as the topic of Powerball arose, the judge seemingly identified how a declaratory judgment might be needed.

“Among the things that the New Hampshire lottery is concerned about is the ability to carry on its pact with these states. … If [I] just declare that the New Hampshire Lottery Commission is not in violation of the Wire Act, they don’t get accorded complete relief because they’re not able to conduct the lawful activity with their partners.”

More to come, but time is of the essence

As noted, the DOJ has pegged June 14 as the date of enforcement. This obviously creates a bit of a time crunch for this case.

Counsel for the defense contended that existing state law only allows Barbadoro to provide relief to the NH Lottery and NeoPollard but not to any other party, such as Pennsylvania.

Interestingly, Barbadoro questioned New Hampshire’s strategy. He indicated that it might have been easier to come to a decision if other Powerball states were as co-defendants. This thought came after Barbadoro directed other states to their respective circuit courts. However, Barbadoro was also the judge who denied Pennsylvania’s attempt to be a co-plaintiff.

Naturally, the DOJ complained that it would need to travel around the country and win within every circuit. Barbadoro noted that consolidating these cases here would be easier. However, as the June 14 deadline is just over two months away, that does not seem possible now.

While much was discussed on the first day of the hearing, one thought from Barbadoro early in the proceedings suggested there is a long road to a resolution in this case:

“I have a strong feeling that however I resolve the case, or however the First Circuit resolves the case, it is likely going to be resolved by the US Supreme Court either way.”

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