Lotteries and poker are not controlled by Wire Act

A fight spanning more than a decade over varying interpretations of the Interstate Wire Act of 1961 may finally be reaching its end after a Rhode Island District Court judge ruled that the US Department of Justice must formally state that the law only applies to sports betting.

The ruling, a significant victory for online poker in the US, was made in a November 2021 lawsuit filed by International Game Technology (IGT) against the DOJ in an attempt to get the justice department to clarify its position on the Wire Act and requesting "a declaratory judgment that the Department of Justice may not prosecute them for non-sports betting under the Wire Act."

In a summary judgement issued on Sept. 15, District Judge William E. Smith ruled in favor of IGT and denied the DOJ's motion to dismiss the case, allowing the gambling company to freely operate across dozens of states without fear of federal prosecution.

Siding with IGT

IGT filed its lawsuit after a 2019 suit between the New Hampshire Lottery Commission and the DOJ. In that case, a Federal District Court judge ruled against a Trump-era DOJ interpretation of the Wire Act stating that the law applies to all forms of gambling — a reversal of the DOJ's 2011 opinion under President Barack Obama — and the US District Court later upheld that ruling.

The justice department accepted the court's decision and let a June 2021 deadline to file an appeal with the Supreme Court pass by. However, the DOJ refused to formally denounce the 2018 opinion, leaving plenty of room for worry among stakeholders and players that the DOJ could flip its position.

In its lawsuit, IGT requested "a declaratory judgment that... the Wire Act does not apply to IGT's non-sports gaming operations," noting that the New Hampshire ruling was narrow in scope and arguing that IGT was at risk of prosecution from the DOJ.

The DOJ maintained that there was no risk of IGT being prosecuted. But Judge Smith disagreed in his summary judgment, noting that "the DOJ's shift in positions has created substantial uncertainty for broad swaths of IGT's business."

"Like the NHLC plaintiffs, IGT 'should not have to operate under a dangling sword of indictment while DOJ purports to deliberate without end the purely legal question it had apparently already answered and concerning which it offers no reason to expect an answer favorable to the plaintiffs,'" Smith wrote.

Smith also argued that "there is no question that a judgment 'will serve a useful purpose in clarifying and settling the legal relations in issue' and afford significant relief 'from the uncertainty, insecurity and controversy giving rise to the proceeding.'"

Smith's ruling was unambiguous and left little room for interpretation: "The Court declares that, as to the parties now before it, the Wire Act applies only to 'bets or wagers on any sporting event or contest.'"

What it means for online poker

IGT's victory in the DOJ lawsuit could have broader implications for the US online poker market, which has remained ruptured since 2011's Black Friday. When the DOJ does abrogate the 2018 decision, there will be no question that the Wire Act applies narrowly to sports betting and does not apply to poker, lottery or other forms of online gambling.

Such clarity on the Wire Act could clear the way for more states to legalize online poker, joining the likes of New Jersey, Nevada, Michigan and Pennsylvania.

It could also encourage states that already have legal online poker to combine player pools across state lines through interstate poker compacts. One such compact is the Multi-State Internet Gaming Agreement (MSIGA), which Michigan joined earlier this year.

Whatever happens, the ruling the IGT suit clearly legitimizes the DOJ's 2011 ruling that the Wire Act only applies to sports betting, while also doing away with the 2018 reversal of that ruling.