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 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.
Last week, the United States District Court for the Eastern District of Pennsylvania, Judge Jeffrey Schmehl, granted the Motions to Dismiss of Sands Bethlehem Casino Resort and other Pennsylvania casinos, which were alleged to have engaged in a retaliatory boycott impacting a mixed martial arts (MMA) promoter’s events. Sands Bethlehem was alleged to have engaged in a boycott of plaintiff’s events as a retaliation for a prior lawsuit promoter Ryan Kerwin filed against Valley Forge Casino and Harrah’s in Chester, Pennsylvania.
Sands, Parx and Sugarhouse Casinos and their respective event directors faced allegations that certain emails cited in the Complaint established a conspiracy. The plaintiff alleged that the defendants’ “horizontal group boycott” would put the plaintiff promoter out-of-business. The Court found the emails, at best, demonstrated nothing more than unilateral action by the individual casinos. There was no “plus factor” in the complaint’s allegation that would have shown a motive, actions that were against the individual casinos’ economic interests or, evidence that implied a traditional conspiracy. In the Sands instance, it was alleged that Sands actually emailed with plaintiff offering to contract for MMA events but plaintiff would not agree to Sands’ “inflated terms”.
Judge Schmehl found that nowhere in the Amended Complaint did there appear evidence of “a conspiracy that supports an inference of collusion.” The Court’s holding that plaintiff failed to plead an unlawful agreement precluded an analysis of the other elements of the Section I Sherman Act claim.
The Court also dismissed claims that the defendant casinos (and Harrah’s and Valley Forge) were collective monopolists by keeping essential facilities from the MMA promoter. The plaintiff’s own pleadings that MMA events were staged elsewhere in Pennsylvania, other than the casinos’ event centers, convinced the Court that defendants’ properties were not “essential facilities”.
Sands was represented by Duane Morris lawyers – Manly Parks and Sarah O’Laughlin Kulik.
Pennsylvania State Police seized 414 illegal gaming machines in southwestern Pennsylvania in 2018.
Currently, people can gamble at state-regulated casinos, through the Pennsylvania Lottery, for horse races and, after the expansion of the law last year, online and at some truck stops. But the changes didn’t include gaming machines in bars and restaurants. In those venues, if a game is mostly chance, like a slot machine, it’s illegal. But if it requires skill, like poker, it’s legal.
On January 14, 2019, the U.S. Department of Justice published a legal opinion that may restrict online gambling. The opinion, dated November 2, 2018, (although only now published) reconsidered the DOJ’s 2011 opinion that declared the Wire Act (18 U.S.C. § 1084) only applied to sports gambling. After the release of the 2011 opinion, several states, including New Jersey, Delaware and Pennsylvania, launched or moved forward with intrastate online lottery, casino gaming and poker. The new opinion, however, somewhat clouds the landscape regarding these operations. Online gaming businesses would be well advised to quickly determine whether their operations comply with the DOJ’s new reading.
The reconsideration stems from one phrase in the Wire Act: “on any sporting event or contest.” In 2011, the DOJ opined that the Wire Act was ambiguous and “that the more logical result” was that the phrase “on any sporting event or contest” applied to the entirety of the Wire Act, thereby prohibiting only the transmission of “bets or wagers” or “information assisting in the placing of bets or wagers” across state lines, if the bet or wager were on a sporting event. This logic follows in part from the Act’s legislative history, which reveals that Congress’ overriding goal in passing the Wire Act was to stop the use of wire communications by organized crime for illegal sports gambling. In 2018, the Supreme Court of the United States, in Murphy v. Nat’l Collegiate Athletic Ass’n—a decision that paved the way for states to authorize sports betting,in dicta—noted Congress’ original intent in characterizing a general federal approach to gambling: Operating a gambling business violates federal law only if that conduct is illegal under state or local law.
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 firstname.lastname@example.org.
As a result of the previously reported reimposition of United States nuclear-related sanctions against Iran, on October 11, 2018, the Financial Crimes Enforcement Network (FinCEN) released an Advisory that provides casinos, and other financial institutions, updated guidance for identifying possible Iranian related criminal transactions.
Just as the growth of fantasy sports, sweepstakes and online poker were curtailed by the reach of gambling laws, the latest trends in the $138 billion video gaming industry are attracting an increasing level of unsolicited attention from gambling regulators across the globe. Much of this attention is focused on “loot boxes”.
Yesterday, the District Court for the Middle District of Pennsylvania struck down Section 1513 of the Pennsylvania Gaming Act, 4 Pa. C.S. § 1513, as unconstitutional under the United States Constitution. Section 1513 prohibits gaming license applicants, licensees, and principals of licensees from making any political contributions. Judge Sylvia H. Rambo of the Middle District applied the modified intermediate scrutiny analysis applicable to restrictions on direct campaign contributions under the First Amendment to determine that, although Pennsylvania demonstrated a sufficiently important interest in preventing quid pro quo corruption or the appearance of such corruption, the Commonwealth failed to craft legislation that was closely drawn to achieve that important interest. Continue reading Federal Court Strikes Down Pennsylvania’s Ban on Political Contributions from Casino Interests→
Duane Morris partner Chris Soriano was a guest on the Good Law | Bad Law podcast, “Game on! After a historic Supreme Court decision, sports betting is a go.”
Chris joined podcast host, Aaron Freiwald, to discuss the recent Supreme Court decision that in effect legalized sports betting across the country and the implications this decision may have for the future of gambling, as well as professional sports. Chris also talks about how his interest in the gaming area introduced him to gaming law.