New Jersey has finally responded to the latest Wire Act opinion made by the Department of Justice. And the state has Pennsylvania in its corner.
In a letter written Tuesday to acting US Attorney General Matthew G. Whitaker and Deputy Attorney General Rod J. Rosenstein, New Jersey Attorney General Gurbir S. Grewal and Pennsylvania Attorney General Josh Shapiro expressed “our strong objections” to the DOJ’s opinion that state-sanctioned online gambling could become a federal crime.
That opinion, issued earlier in January, reverses the previous position of the DOJ that allowed online gaming.
“This about-face is wrong and raises significant concerns in our states,” the two state AGs wrote.
“We ask that DOJ withdraw its opinion altogether or assure us that DOJ will not bring any enforcement actions against companies and individuals engaged in online gaming in our states — where it is appropriate under state law.”
In addition, Grewal submitted a Freedom of Information Act (FOIA) request to “obtain critical information” about the opinion of the DOJ Office of Legal Counsel (OLC).
Specifically, Grewal wrote, “information relating to outside groups’ lobbying efforts urging the Department of Justice to reconsider this position.”
DOJ opinion ‘wrong’ and should be withdrawn
The letter explicitly expressed the “strong opposition” of both New Jersey and Pennsylvania.
“We can see no good reason for DOJ’s sudden reversal,” the letter said. “First, it runs contrary to plain language of the Wire Act. Second, DOJ has recognized that it should ’employ considerable caution in departing from … prior opinions,’ in light of the ‘strong interests in efficiency, institutional credibility, and the reasonable expectations of those who have relied on our prior advice.'”
It is this area in which the state attorneys general agree that the DOJ “acknowledges that states were relying on (the department’s) prior advice.”
Grewal and Shapiro noted that industries, such as NJ online gambling, developed their infrastructures based on the DOJ’s advice from eight years ago.
The DOJ “did not provide any intervening facts or information to justify such a major departure” from the 2011 opinion.
The department’s reversal, the letter concluded, “is wrong, and it undermines the values of federalism and reliance that our states count on.”
Latest Wire Act opinion vs. NJ online gambling
In the eight years since the DOJ issued its previous Wire Act opinion, state-sanctioned online gambling has taken off. Particularly in New Jersey.
Launched in 2013, NJ online gambling has generated more than $350 million in annual revenue and $60 million in gaming taxes, the letter said.
Additionally, annual state lottery sales hover around $3 billion and contribute about $1 billion to the state, making it the fifth-largest source of revenue in New Jersey.
Similarly, Pennsylvania rolled out its online lottery in May 2018. Since that time, iLottery generated $23.8 million in gross gaming revenue.
The Keystone State uses funds from lottery sales to benefit older citizens in the state.
Now, though, the DOJ says the “transmission of information relating to any kind of online wagering can violate federal criminal law.”
This includes interstate transmission of information that is “merely incidental,” according to the letter.
“The opinion casts doubt not only on traditional online gaming,” the letter said, “but also multi-state lottery drawings (such as Power Ball and Mega Millions) and online sales of in-state lottery tickets. While regulators and the industry are reviewing the full range of impacts this opinion may have, each potential implication is of concern.”
Among the implications listed in the letter include jobs, the health of Atlantic City, and state funds for the public good.
FOIA request also issued
Meanwhile, Grewal submitted an FOIA request seeking information as to whether lobbyists spurred the DOJ to reverse its opinion.
From the letter:
“Press reports … indicate that this new advice followed substantial lobbying by outside groups that have long been unhappy with the 2011 opinion — but who were unable to convince Congress of the merits of their view. That is not a good enough reason to trample over the law and states’ rights, and to upend the settled expectations on which we have been relying for nearly a decade.”
Grewal asked for expedited results and requested records addressing communications, consultations, or meetings relating to the Wire Act and online gambling, among other things.
Those records, per the request, should stem from a variety of sources:
- Office of the Attorney General
- Office of the Deputy Attorney General
- Office of the Associate Attorney General
- Office of the Assistant Attorney General, Criminal Division
- Office of Legislative Affairs
- Office of Legal Policy
- Office of Public Affairs
- Office of the Executive Secretariat
In addition, Grewal requested any information relating to “non-governmental actors or organizations” and “any organization or individuals in the Executive Office of the President.”
Such a request comes on the heels of a Wall Street Journal report that billionaire and longtime opponent of online gambling Sheldon Adelson was the major force behind the opinion’s reversal.
Fighting back against Wire Act opinion
The letter stands as the first official response of New Jersey and Pennsylvania.
Former New Jersey state Sen. Raymond Lesniak told Online Poker Report that he is willing to answer the call to help states stand tall against the DOJ opinion.
New Jersey Gov. Phil Murphy also offered his support of the letter.
“Our growing online gaming industry is a key component in revitalizing Atlantic City and strengthening New Jersey’s economy,” Murphy said in a statement. “This unexpected opinion from the U.S. Department of Justice not only jeopardizes the future of our casinos and gaming industry, but also threatens the jobs of thousands of New Jerseyans.”
“I am pleased to see that Attorney General Grewal is committed to challenging the Justice Department’s unreasonable interpretation of the Wire Act.”
Also chiming in was David Rebuck, director of the NJ Division of Gaming Enforcement:
“New Jersey has regulated online gaming for five years and has developed the most successful regulatory model in the world. The State is fully committed to maintaining and ensuring the highest regulatory standards for New Jersey’s evolving online gaming industry, including the most recent addition of sports wagering.”
Grewal noted that the DOJ’s latest opinion “is wrong on the law and wrong for New Jersey.” For five years, since New Jersey introduced online gambling, the state “relied on the Justice Department’s promises to develop a strong online gaming industry that generates hundreds of millions of dollars.”
Now, Grewal added:
“With the stroke of a pen, the Justice Department is trying to take that all away. I’m committed to standing up for New Jersey and challenging this misguided opinion.”