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
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.
Frank DiGiacomo, partner with the Duane Morris law firm, said the distinction comes from a 2014 court case out of Beaver County.
To read the full text of this article, please visit the WESA 90.5 website.
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.
Read the full Duane Morris Alert.
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.
Continue reading Preparing Your Casino For Iran Sanctions Compliance
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”.
Continue reading Loot Boxes: Gaming or Gambling?
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.
Listen to Chris’ segment on the Good Law | Bad Law podcast.
Duane Morris LLP will present “Gaming in New York and Beyond – Looking to the Future,” to be held on Wednesday, August 15, 2018 at the firm’s New York office.
In the wake of the recent U.S. Supreme Court decision overturning the Professional and Amateur Sports Protection Act (PASPA), states now have the ability to legalize and regulate sports betting. Duane Morris has assembled a panel of gaming industry veterans and lawyers to help you understand the opportunities and challenges in this new era of gaming in New York and beyond. Partner Christopher Soriano and associates Adam Berger and Samantha Haggerty will be panelists.
For more information or to register, please visit the event page on the Duane Morris website.
Duane Morris’ Christopher Soriano will be speaking at a telephonic seminar about fantasy sports, online gaming and digital sports gambling on February 28, 2018 at 12:00 p.m.
The teleconference will discuss the latest on Mastering Fantasy Sports and Online Gaming Law. The seminar will introduce the most relevant issues and solutions along with latest legal developments and Supreme Court decisions affecting the industry.
For more information and to register, please visit the event website.
Duane Morris’ Adam Berger, an associate in the firm’s Cherry Hill office, is featured in the July 2017 Global Gaming Business Magazine article, “The Art of Watching, Listening and Learning.”
Read Mr. Berger’s profile on the Global Gaming Business Magazine website.