In a decision released today by the Supreme Court, Appellate Division (New York’s intermediate appellate court) in White v. Cuomo, the Appellate Division concluded that New York’s daily fantasy sports authorization law is unconstitutional because DFS meets the definition of gambling under New York law. As a result, according to the Court, a constitutional amendment would be required in order to authorize a form of gambling. The 4-1 decision will in all likelihood be appealed to New York’s Court of Appeals, and it is likely that the decision will be stayed and have no immediate effect. The long range consequences for DFS in New York, though, are far less certain.
On September 24, 2019, the Third Circuit Court of Appeals found in favor of the New Jersey Thoroughbred Horsemen’s Association (“NJTHA”) and ruled that the NJTHA is entitled to recover the bond it posted as the result of a temporary restraining order (“TRO”) and subsequent preliminary injunction against the NJTHA in the 2014 case, National Collegiate Athletic Association v. Christie. The issue of recovering posted bond was a matter of first impression in the Third Circuit. The majority opinion, written by the Honorable Marjorie Rendell, concluded “wrongfully enjoined” under Federal Rule of Civil Procedure 65(c) can only be determined after a final judgment on the merits. Moreover, the court found a party is “wrongfully enjoined” when the final judgment concludes that party had a right all along to do what it was enjoined from doing. Also, in accordance with the majority of other circuits, the court found there is a rebuttable presumption that a wrongfully enjoined party is entitled to recover damages up to the bond amount.
On June 3, 2019, Judge Paul Barbadoro for the District of New Hampshire concluded in a 63-page Memorandum Opinion that the purview of the Wire Act is limited to sports wagering. The effect of the Court’s opinion, however, may be limited in states other than New Hampshire.
After determining that the plaintiffs in the case, the New Hampshire Lottery Commission and NeoPollard Interactive LLC, new Hampshire’s iLottery vendor, have standing to challenge the DOJ’s 2018 Wire Act Opinion because they have established a threat of imminent injury, the Court addresses whether the Wire Act applies beyond sports wagering.
On May 29, 2019, the Pennsylvania Gaming Control Board approved a Change of Control petition for the sale of Sands Bethlehem Casino Resort. Two days later, on May 31, 2019, Wind Creek Hospitality officially acquired the casino from Las Vegas Sands Corporation for $1.3 billion, as the transaction closed on Friday. The casino resort facility, which is located in the Lehigh Valley of Pennsylvania, will operate as Wind Creek Bethlehem, and will include amenities such as a 282-room AAA Four Diamond hotel, a 183,000 square foot casino floor featuring slots, table games, and electronic table games, numerous food and beverage outlets, a retail mail, and a multi-purpose event center.
The closing of the transaction comes after approximately fourteen months of regulatory review and, most recently, the PGCB’s approval of the transaction. Duane Morris represented Las Vegas Sands in the transaction, providing gaming regulatory and real estate guidance and assistance in other areas, including serving as co-counsel before the Board for Wind Creek Hospitality. Duane Morris attorneys who assisted on this matter include J. Scott Kramer, Greg Duffy, Frank DiGiacomo, Chris Soriano, and Adam Berger.
On May 29, 2019, at a special hearing convened for this purpose, the Pennsylvania Gaming Control Board approved a Change of Control Petition authorizing the transfer of the entirety of Las Vegas Sands Corporation’s interest in Sands Bethworks Gaming LLC’s to Wind Creek Hospitality, an instrumentality of the Poarch Band of Creek Indians. The Board’s Order, beyond approving the change in control, allows the casino facility to change its name to Wind Creek Bethlehem, reflecting the casino’s new ownership.
Subject to the Board’s conditions, Wind Creek Hospitality is able to acquire all of the interest in Sands, including its licenses, which include a Category 2 License, a Table Games Certificate, and Interactive Gaming Certificates. The Board’s decision comes after over a year of regulatory review.
Scott Kramer, Duane Morris, appeared for joint petitioner, Sands Bethworks Gaming LLC. Also, Duane Morris served as co-counsel before the Board for Wind Creek Hospitality.
Yet again, the DOJ has complicated its stance on the Wire Act. Earlier this month, the DOJ filed a memorandum in its ongoing litigation with the New Hampshire Lottery Commission, which stated that its January 15, 2019 Opinion did not address whether the Wire Act applies to state lotteries and their vendors.
In response to the judge’s order to clarify its interpretation of the Wire Act, on April 25 the DOJ filed a brief stating that “the New Hampshire Lottery Commission fails to demonstrate” that the Commission, its employees, and its vendors may be prosecuted under the Wire Act. Perhaps in an effort to avoid a decision in a circuit with unfavorable precedent and to avoid a judge who has expressed skepticism about its new interpretation, the DOJ has taken the position that the Lottery Commission lacks standing to challenge the statute based on the lack of a present credible threat of prosecution under the Act.
The legal landscape of the Wire Act continues to develop as the DOJ takes a step back from its updated Wire Act stance published earlier this year.
On January 15, 2019, the Department of Justice’s Office of Legal Counsel published a legal opinion that left the future of internet gaming in a state of uncertainty due to its conclusion that the transmission of any bet or wager – not just those on a sporting event or contest – across state lines, violates the Wire Act. The 2019 Opinion reflects a change in the DOJ’s position since 2011, where in an opinion it concluded that the Wire Act only applied to sports gambling. As a result of the 2011 Opinion, several states launched or moved forward with intrastate online lottery, casino gaming and poker.
The DOJ is currently refraining from prosecuting violations of the Wire Act in reliance on the 2011 Opinion until June 14, 2019. Following the release of the 2019 Opinion, however, the New Hampshire Lottery Commission initiated litigation against the DOJ in the United States District Court for the District of New Hampshire, challenging the legality of the 2011 Opinion. Various non-parties have filed amicus briefs in the case, including the State of New Jersey.
On April 8, 2019, the DOJ filed a declaration in the litigation, which includes as an exhibit a memorandum entitled “Notice Regarding the Applicability of the Wire Act, 18 U.S.C. [Section] 1084, to State Lotteries and their Vendors,” from Deputy Attorney General Rod Rosenstein. Continue reading State Lotteries Can Breathe a Sigh of Relief — For Now
On January 9, 2019, the New Jersey Division of Gaming Enforcement (DGE) published a set of regulations related to sports wagering and online sports wagering for public comment. The proposed rules include readoptions, amendments, and proposed repeals of the emergency regulations that were previously adopted on June 13, 2018. The proposed rules can be found at: https://www.nj.gov/oag/ge/proposed_rules.htm. The DGE is accepting written comments on the proposed rules until March 8, 2019, which can be submitted either via mail addressed to Charles F. Kimmel, Deputy Attorney General, or electronically to email@example.com.