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Race to Ease Gaming Restrictions Comes Down to the Wire (Act)

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Maurice "Mac" VerStandig is the managing partner of the VerStandig Law Firm, LLC, and focuses his practice on representing poker players, advantage gamblers, and other industry professionals in all manner of legal situations. He can be reached at 301-444-4600 or [email protected]

Disclaimer: The viewpoints expressed by the author do not necessarily reflect the opinions, viewpoints, and official policies of PokerNews.com.

Furnishing a tidy lesson in the doctrine of unintended consequences, Bobby Kennedy’s efforts to fend off organized crime, and Sheldon Adelson’s efforts to fend off online gaming, have invited a perfectly absurd scenario whereby next week a federal appellate court will entertain oral arguments on whether or not the Powerball is felonious. And the implications for the poker community could hardly be greater.

By way of explanatory background, the case in question is New Hampshire Lottery Commission v. Barr, and it will come before the United States Court of Appeals for the First Circuit – a court appealable only to the Supreme Court of the United States – on Thursday, June 18, 2020. Since there is still a pandemic and resultant public health concerns, the actual argument session will be conducted by phone.

What Could It Mean for Online Poker?

The matter is on appeal from the United States District Court for the District of New Hampshire, where last June a federal judge held the Wire Act to only apply to sports betting. The defendant – William Barr (in his official capacity as Attorney General of the United States and, more genuinely, simply the person named on behalf of the Department of Justice) – appealed the ruling, as part of the federal government’s newly-revamped effort to argue for a prophylactic interpretation of the Wire Act.

Here is why this matters: the case is a somewhat naked pretext for online poker and other casino games. While the New Hampshire Lottery Commission brought the action to clarify if its operation of Powerball and app-based scratch-off games run afoul of federal law, no one is actually worried about a team of windbreaker-clad FBI agents busting down the door to a local 7-Eleven and telling the little old lady in the corner to drop her Mega Millions ticket while placing her hands in the air.

"When the internet came around, not a ton of thought was given to this now-anachronistic statute until 2011, when the Department of Justice issued an opinion clarifying that the Wire Act only applies to sports betting."

Rather, the concern is that the Department of Justice has suddenly taken a somewhat draconian view of the Wire Act (perhaps at the urging of Sheldon Adelson, a well-heeled GOP donor and the magnate in control of the Venetian). From the time the law was passed in 1961, just about everyone understood it to be an anti-sports betting statute aimed at curtailing the mafia’s bookie business. When the internet came around, not a ton of thought was given to this now-anachronistic statute until 2011, when the Department of Justice issued an opinion clarifying that the Wire Act only applies to sports betting and, indeed, does not act as a prohibition on other activities involving the use of wires and wagers (like, say, online poker).

Then, after President Trump took office, the Department of Justice did an abrupt about-face and put out a bizarre and painfully strained reading of the Wire Act whereby it prohibits all manner of wire communications (which is legalese for pretty much anything involving a phone or computer) in connection with betting across state lines. The obvious implication was to bar interstate pools of players in online poker games and the creation of interstate jackpots for other casino games as gambling halls increasingly find app-based identities.

New Hampshire Taking One for the Team

Enter the New Hampshire Lottery Commission, which rather kindly took one for the team and sued the Department of Justice for a declaratory judgment establishing the newfangled Wire Act interpretation is, for want of a more eloquent term, the least appetizing residue of a thoroughbred. The entity’s argument is basically that if the Wire Act prohibits all use of wires for interstate wagering – and not just sports betting – then cross-state lotteries, like Powerball, are prohibited.

To be clear, no one actually thinks the feds care about $2 jackpot drawings. But the argument is a simple – if not intrinsically-brilliant – one: if the Wire Act applies to all wagering activities, then it applies to the lottery. The statute itself only speaks to sports betting; the Department of Justice is using a strained parsing of legislative verbiage to argue that one section of the law is not confined to sports betting. But if this is the case, that section of the Wire Act inherently must apply to all betting using wires; there is no intermediate safety net whereby only poker and online progressive slot machines are ensnared. This is very much a black-or-white issue, and by calling attention to one of the perfectly-asinine results of one of those binary options, the New Hampshire Lottery Commission effectively convinced a federal district court to rule in favor of the other option.

"Legally, the New Hampshire Lottery Commission has the better argument here and should prevail."

Now an appellate court gets to consider the matter. There will not be a ruling at the end of oral arguments; the three judges hearing the matter will instead proceed to draft an opinion to be issued at a later date. A majority vote controls in these situations, so only two of the jurists need find the lower court’s holding persuasive to uphold the ruling.

Once the court rules, that should be the end of the analysis for the time being. Yes, the non-prevailing side can ask the Supreme Court to take a look at the case, but it is unlikely the nation’s highest court would do so for numerous reasons. Similarly, the unsuccessful party can ask a larger panel of judges on the appellate court to reconsider the holding with fresh sets of eyes, but that is also a relatively unlikely outcome. Rather, whatever the three appellate judges’ ruling will almost assuredly be the law of the land for the foreseeable future.

Legally, the New Hampshire Lottery Commission has the better argument here and should prevail. But the gaming community has been disappointed by federal appellate rulings in the past – including one particularly harsh holding from last decade where a judge’s brilliantly-detailed finding that poker is a game of skill and thusly beyond the purview of certain gaming laws was quickly and violently shot down by a neighboring federal appellate court.

For now, though, I put the New Hampshire Lottery Commission’s odds of succeeding at -500. And since federal appellate litigation is not a sporting event, you can bet on it. (Okay, not really – there are still a ton of state laws that make that illegal almost everywhere in America, but you get the idea.)

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  • Oral arguments in a case involving the Wire Act interpretation will be heard Thursday, June 18, 2020.

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