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.
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Duane Morris partner Christopher Soriano of the firm’s Cherry Hill office appeared on a recent broadcast of the “Wagner & Winick on the Law” radio program, during which he joined co-hosts Dean Mitchel Winick and Professor Stephen Wagner, both of Monterey College of Law, to discuss the interplay of federal and state laws in the United States related to regulating gambling and how many of these laws are outdated. A sampling of the topics discussed include Internet gaming, office brackets, fantasy sports, casinos and the lottery.
Within the context of the NCAA March Madness Tournament, Mr. Soriano provided insights on the gaming law implications of office bracket tournaments, which, as in most instances where people put in money on the results of a sporting event, are illegal for the most part. Mr. Soriano also commented on the developing area of fantasy sports and the important distinction to be drawn between games of skill and games of chance. For example, the traditional season-long fantasy sports contests are considered legal because skill is involved; while daily fantasy contests have been viewed as being illegal games of chance. Therefore, where is the line between when something is a contest of skill and when it is a contest of chance?
To listen to the radio program in its entirety, please visit the Recent Podcasts, Webcasts and Audio section on the Duane Morris website.
The New Jersey State Lottery, in existence for more than 42 years, has been a source of significant profit for state institutions and state aid for education. Even so, New Jersey has commenced efforts to privatize certain functions of the lottery, with the ultimate goal of increasing revenue and improviing the lottery’s operation. As the process has moved forward, the coexistence between lottery and casinos has become a topic of possible concern, particularly with the legalization of Internet wagering. Partner Frank DiGiacomo takes a closer look at the relationship between lottery and casinos in New Jersey, and what the partial privatization of the lottery may mean for the casino industry going forward in this article published in New Jersey Lawyer.