Appellate Court Rules Rules Against DOJ, Clears Way for Online Poker
The way may be clear for online poker legislation in the U.S. going forward.
New Hampshire won its second consecutive court victory against the U.S. government, reported Jeff Ifrah, a lawyer in the case. The First Circuit Court of Appeals ruled that the Wire Act applies only to sporting events and contests, meaning online lottery — and, of interest to the poker industry, interstate online poker — does not violate U.S. law.
That followed an initial, identical June 2019 ruling by a U.S. District Court in favor of New Hampshire.
The state had brought suit against the government after a late 2018 memo changed the Department of Justice's stance on the matter.
Short of a final appeal to the U.S. Supreme Court, there's little to stop the continued growth of online poker in the U.S. now.
History of the Case
Originally, the Obama Administration's DOJ had cleared the way for online gambling legislation in the U.S. by releasing an opinion in 2011 that the Wire Act, which dated to 1961, applied only to sports betting.
The Trump Administration somewhat surprisingly reversed this stance with the release of its own memo in 2018.
The content of the opinion didn't wasn't a shock considering Republican megadonor Sheldon Adelson had long pushed for legislation banning online poker. He finally found himself with the influence he'd sought when his backing of Donald Trump helped get the controversial candidate elected. However, the timing struck many as suspicious considering it came in the midst of a government shutdown and right before William Barr, a well-known advocate of states' rights, could be elevated to the top of the DOJ.
New Hampshire donned its battle gear and brought forth its lawsuit, and the poker world, among others, looked on anxiously as the legal fight began.
In the mean time, the government announced a stay of execution on the reinterpreted Wire Act that allowed online poker to go on as normal for the time being. The memo still hung a cloud over the industry, stopping Pennsylvania — which launched online poker in 2019 — from joining the shared player pool, for example.
It didn't take long for the first ruling to come down in favor of New Hampshire, from U.S. District Judge Paul Barbadoro. While he set aside the DOJ's opinion for the moment, he did opine that he expected the matter to eventually be settled by the Supreme Court.
The United States Court of Appeals for the 1st Circuit heard oral arguments in June 2020 via a virtual call. The DOJ's attorney attempted to sidestep the lotteries in hopes of getting the case dismissed, likely so they could target online poker companies down the road.
Reasons for Ruling
Fortunately for poker players in the U.S., the judges weren't having it. One said he didn't see a distinction between lotteries and other entities in the memo, a point conceded by the DOJ's attorney.
That would eventually become one of the reasons why the surviving two judges — Juan Torruella died in the interim — released their ruling in favor of New Hampshire.
"We cannot see why the plaintiffs should be forced to sit like Damocles while the government draws out its reconsideration," reads the ruling, which can be seen in full here.
The biggest issue was the government's interpretation of the Wire Act — that it applied to all wagers, not just sports bets — simply didn't hold up to scrutiny, according to the writing of United States Circuit Judge William Joseph Kayatta Jr.
"The government's reading of the statute, however, would most certainly create an odd and unharmonious piece of criminal legislation," he wrote. "Neither common sense nor the legislative history suggests that Congress likely intended such a result.
"In fact, the legislative history contains strong indications that Congress did indeed train its efforts solely on sports gambling."
Online Poker Report provided a more thorough breakdown of the syntax here.
Good Times Ahead?
Will the Supreme Court hear the case and issue a final ruling, as Judge Barbadoro predicted? Signs point to no.
First and foremost, newly inaugurated U.S. President Joe Biden has already indicated he's against the 2018 reinterpretation. That makes sense since he was vice president during the Obama Administration, whose DOJ released the initial opinion that allowed online gambling legislation to begin in earnest in the U.S.
Plus, the death of Adelson means the end of the most avid and well-bankrolled opponent of online gambling.
What does that mean going forward?
The hope would be that online gambling legislation now has few roadblocks. One prominent law firm in Michigan already predicted the Biden Administration would provide a "clear path for expanded use of internet communications for other gaming products."
While federal legislation would still appear unlikely, proponents of online poker can be hopeful on two fronts: more states will legalize online poker, and those same states can jump into the shared player pool without fear of federal meddling down the line.
Michigan recently passed a bill allowing it to enter the shared liquidity pool, so the ball's already rolling on that front.
As more states enter the pool, online poker will become a more attractive option due to its ability to generate more revenue. The future of online poker in the U.S. now looks the brightest it's been in years.