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DOJ Tries to Sidestep Lotteries, Target Online Poker

Online poker's future in the U.S. could hang in the balance of a current case.

On Thursday morning, two sides took to court for oral arguments in the case of New Hampshire Lottery Commission et al. v. United States Department of Justice et al., which could potentially decide the future of online poker in the United States.

"Took to court" being a loose term here as the actual arguments occurred not in court but in a call thanks to the ongoing response to the COVID-19 pandemic.

In any case, the full 47-minute length of the call was recorded and posted to the YouTube channel of the United States Court of Appeals for the 1st Circuit and can be heard in its entirety at the end of this piece.

The call saw a panel of three judges — Juan R. Torruella, Sandra Lynch and William J. Kayatta Jr. — listen as first Jeffrey E. Sandberg, counsel for the DOJ, then Anthony J. Galdieri and Matthew D. McGill, counsels for the plaintiffs, argued their cases.

Overall, a clear theme emerged from the points made by Sandberg, one that poker players won't be happy to hear: while the DOJ attempts to sidestep the lawsuit by arguing it has no plans to enforce the Wire Act against state lotteries, online poker looks unlikely to be afforded any such luxury.

Sandberg Makes His Point Early and Often

Sandberg opened with the point he'd come back to several times on the call. He attempted to argue that while the 2018 opinion released by the DOJ's Office of Legal Counsel established that the Wire Act is not, in fact, limited to sports betting, the opinion did not single out state lotteries and their vendors. The DOJ had "no position" on that matter.

"The plaintiffs face no threat of prosecution for anything they've done in the past, anything they're currently doing, or anything they will do in the future indefinitely," he said. "There's no threat at all. OLC opinions are advice internal to the federal government. They cannot and do not directly affect the rights of private parties."

Later, he came back to the same point, with a very specific qualifier that he clearly stressed.

"Against these plaintiffs, the deputy attorney general has made clear the department will not pursue enforcement," he said. "As it stands, they will not be subject to prosecution.

"There are entities that are not state lotteries or their vendors that may have acted in reliance on that 2011 OLC opinion. Those parties are not plaintiffs in this court."

What sort of entities might those be? Well, online poker operators seem like a rather obvious possibility. Legalized online poker in the U.S. became a thing precisely because of that 2011 opinion, which spawned the industry as it stands today, limited to a few select states.

In case the DOJ's target with the 2018 opinion wasn't plain enough, Sandberg used a pointed example when prompted by one of the judges with the idea that the opinion was to precipitate judicial review.

"If a U.S. attorney were to pursue, for example, enforcement of the Wire Act against an online poker company, and that company was indicted, the company could move to dismiss the indictment," he said. "There would be judicial review at that point. But OLC wasn't saying that we anticipate pre-enforcement review by parties whose conduct we haven't even opined on yet."

The judge replied that he didn't see any distinction between state lotteries and other parties in that review, which Sandberg conceded was true.

Opposing Counsel Hints at Adelson's Involvement

While Sandberg attempted to frame the 2018 opinion as mere words on paper that did not carry any legal weight or threat of enforcement, McGill attacked that idea directly.

"It's not deliberative advice internal to the department," he said. "It's an edict solicited by an interested private person to the public at-large precisely to end businesses' reliance on the 2011 OLC opinion."

As to who that interested private person may be, OnlinePokerReport pointed directly at Venetian magnate Sheldon Adelson who has long opposed expansion of online poker. Numerous outlets, including non-poker ones, have theorized that Adelson finally got what he desired with his Republican party contributions when the 2018 opinion hit the wire.

The plaintiffs' counsel also pointed out that at any time, the DOJ could change its mind on lottery enforcement and they'd be beholden to an unreasonable 90-day time frame to come into compliance.

Judge Kayatta seemed to agree with this line of thinking.

"These are like aircraft carriers," he said. "You can't turn them around quickly."

"Wiggle Room" to Attack Online Poker?

Judge Lynch hinted at the clear aims of the DOJ to tiptoe by the lotteries and go after their real target: online poker.

"They seem to be attempting to leave some wiggle room," she observed.

Will they succeed? PokerNews' own Mac VerStandig opined on these pages that he sees the New Hampshire side as a sizable favorite.

According to one lawyer, everyone will likely have to wait several months to find out for sure.

Full Audio of Oral Arguments

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  • A Thursday hearing saw the DOJ hint at its continuing attempt to shut down online poker.

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