In January 2019, the Department of Justice (“DOJ”) issued a Wire Act Opinion (“2019 Opinion”) that reversed a prior 2011 DOJ Opinion that held that the Wire Act only applied to sports gambling.  In response to the 2019 Opinion, the New Hampshire Lottery Commission brought suit, arguing that the 2019 Memo was incorrect as a matter of law and that if enforced, would shut down New Hampshire’s online lottery sales.  On April 11, 2019, New Hampshire Federal District Court Judge Paul Barbadoro held a multiple hour oral argument on the DOJ’s motion to dismiss the lawsuit.  Multiple states, including Michigan, as well as industry groups have filed amicus briefs and participated in oral arguments.

DOJ attorneys began the hearing by arguing that New Hampshire did not have standing because there was no “credible fear of prosecution”.  He cited the recent April 8, 2019 memo from DOJ assistant attorney general Rod Rosenstein in which the DOJ indicated that the 2019 Opinion did not address iLottery and that the DOJ was still evaluating whether the Wire Act prohibited that activity.  The judge was skeptical of the argument, pointing out that the 2011 DOJ Opinion was issued at the direct request of state lotteries.  The judge also independently raised the question of whether the Wire Act could apply to states, although he conceded that iLottery not only involves states but also their individual employees and vendors.

The next topic in the oral argument was the previous First Circuit Court and Fifth Circuit Court opinions that addressed whether the Wire Act was only applicable to sports gambling.  The DOJ argued that the language in the First Circuit opinion was not a holding but mere dicta and therefore not binding precedent.  The judge noted that while the Fifth Circuit opinion clearly was a holding, it was not binding on New Hampshire.  It would, however, have influence as he stated: “its reasoning certainly has to be considered.” 

The attorneys next argued about the statutory language, the impact of grammar and whether the language was sufficiently ambiguous to look beyond the plain language.  The judge was adamant that the statute was poorly written: “If you don’t think this is an ambiguous statute, you’re both wrong.  This statute is a mess of a statute.”  The parties also argued whether any ruling by the judge would be in the form of a declaratory judgment, with counsel for NeoPollard (the vendor for both Michigan and New Hampshire’s iLottery programs) arguing that the judge must fully vacate and set aside the 2019 Opinion.  The Michigan assistant attorney general testified that the 2019 Opinion has potentially deprived states of $80 billion in revenue if they are not allowed to sell online lottery tickets.

At the conclusion of the hearing, Judge Barbadoro ruled that the Rosenstein memo does not provide sufficient grounds for dismissal of the case.  He also gave the DOJ 14 days to submit a brief if it wanted to contest the plaintiffs’ argument that the Wire Act does not apply to states.


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