NJ Senate President Ready To Defend Online Gambling Against Recent Wire Act Opinion

With NJ online gambling at stake, Senate President Steve Sweeney told the DOJ to either rescind the 2019 Wire Act opinion or get ready for a court battle.

New Jersey Senate President Steven Sweeney is making his position crystal clear when it comes to the Department of Justice’s recent opinion on the Wire Act.

He disagrees with it

In a letter addressed to US Deputy Attorney General Rod Rosenstein last week, Sweeney defined what he sees as flaws to the latest interpretation.

And the Garden State is ready for a legal battle, if necessary.

Sweeney concluded the three-page letter from Feb. 13 with the following:

“If the OLC 2019 Wire Act Opinion is not rescinded, I have authorized former Senator Raymond Lesniak to file suit in U.S. District Court on behalf of the New Jersey Senate for a Declaratory Judgment that the 2019 OLC Opinion is arbitrary and capricious and that the statutory prohibitions of the Wire Act are uniformly limited to gambling on sporting events or contests.”

You can read the full letter here.

Sweeney’s letter follows the Feb. 5 joint letter by Pennsylvania and New Jersey’s attorneys general that called the opinion “deeply troubling.”

More from Sweeney’s letter

Sweeney’s letter mentions a separate 2011 letter written by then-Assistant Attorney General Robert Weich to then-US Sens. Harry Reid and Jon Kyl as evidence that “the 2011 OLC opinion was well-reasoned and not in need of reinterpretation.”

Sweeney continued:

“The 2019 opinion, which took 26 pages of tortured analysis of sentence structure and comma placements to determine that the clear language of the Wire Act applied to all forms of gambling, was contrary to the much better reasoned opinion of the 5th Circuit and the ‘thorough review’ of the Department of Justice in 2011.”

Furthermore, Sweeney states that the 2019 Wire Act opinion is an unreasonable about-face for the DOJ. NJ online gambling relied on the 2011 opinion to authorize its online casinos, online poker sites, and NJ online sports betting sites.

Sweeney also pointed out that the DOJ ignored previous interpretations that clarified the plain language of the Wire Act.

“By reversing its own opinion, the OLC admits the language is not plain and would require an analysis of the legislative history of the Wire Act, which would demonstrate that the Wire Act targeted only sporting events or contests to assist prosecution of organized crime run betting operations on sporting events and horse racing.”

The billion-dollar problem for NJ casinos

The stance Sweeney is taking against the DOJ and its new Wire Act opinion is for good reason. The NJ sports betting and online gambling industries are generating billions of dollars of revenue for Atlantic City casinos and the state treasury.

Numbers released by the New Jersey Division of Gaming Enforcement earlier this month are just the latest examples of why NJ officials and representatives are willing to fight.

NJ online gambling operators are coming off their best month ever with a reported $33,594,391. It’s the highest figure since the industry’s 2013 launch. It also marks the first time NJ online casino revenue surpassed $30 million.

NJ sports betting, which launched in June, is coming off a record January sports handle of more than $385 million.

But the majority of that number comes from online sportsbooks — $304,973,986.

Keep in mind, this only includes 11 mobile sportsbooks. Another, BetAmerica, had its soft launch earlier this month, and Golden Nugget only recently soft-launched its online sportsbook.

In a nutshell, NJ online gambling is a billion-dollar industry that has helped the once-struggling casino industry in the Garden State. It has also created thousands of jobs.

The new opinion, Sweeney wrote, “nullifies the intent of our legislation to make New Jersey a national and international hub for Internet gaming.”

DOJ unlikely to rescind the opinion

The Wire Act of 1961 focused on illegal forms of sports betting (back then, nobody knew about this thing called the internet). The 2011 opinion clarified that the Wire Act only applies to sports betting and not other forms of online gambling.

The new opinion reverses course entirely, saying the Wire Act applies to all forms of online gambling.

Suddenly, the future of the lottery, online casinos, NJ sports betting, and even horse racing are left hanging in limbo.

Despite Sweeney’s wish, getting the DOJ to reverse course again is likely easier said than done.

Sweeney’s ultimate point is that reversing course eight years later and five years after New Jersey has a fully entrenched online gambling industry and other states (Pennsylvania) are in the process of launching, is the wrong move.

Sweeney, New Jersey not alone in the Wire Act battle

Sweeney is not alone in his fight against the DOJ and its new Wire Act opinion.

Legal Sports Report reported Friday that the New Hampshire Lottery has filed suit in federal court against the DOJ. Its goal is an attempt to stop the opinion from being enforced against the lotteries.

According to the story, NeoPollard Interactive — the technology and service provider of the NH lottery — also filed suit in federal court.

Earlier in the week, Jim Murren, chairman and CEO of MGM Resorts International, shared his thoughts on the Wire Act opinion during Wednesday’s conference call with shareholders.

“Perplexing is an understatement,” Murren said about the opinion.

MGM owns the Borgata, Atlantic City’s top-grossing casino. Besides being part of the NJ mobile online sports betting industry via its playMGM sportsbook, the company has four online casinos operating under its license.

Add to this the North American Association of State and Provincial Lotteries, the top lottery group in the US, which issued a statement calling the reversal bad for the industry.

MGM’s CEO Sounds Off On ‘Perplexing’ New Wire Act Opinion

MGM Resorts International Chairman and CEO Jim Murren weighs in on the Wire Act: “It’s just we think an absurdly, poorly written and unenforceable opinion.”

The Department of Justice’s new interpretation of the Wire Act does not have too many fans.

Count Jim Murren, chairman and CEO of MGM Resorts International, among them. He addressed the controversial topic during the company’s earnings call on Wednesday.

Murren doesn’t sugarcoat things either.

“This latest missive from the DOJ, perplexing is an understatement.

And if read as words, it would mean that Powerball as it exists in 44 states in the United States isn’t legal anymore. It’s just we think an absurdly, poorly written and unenforceable opinion. I don’t think anyone in the industry, the gaming industry or the sports betting industry, feels any differently [in the wake of the opinion].” 

MGM is all in with NJ online gambling, sports betting

If strictly enforced, the opinion could have far-reaching effects on all sections of legal online gambling in the US. The uncertainty, therefore, is real for MGM.

The MGM-owned Borgata in Atlantic City is fully invested in the NJ mobile online sports betting and online gambling industries.

The PlayMGM Sports app was one of the first to join the NJ sports betting market on Aug. 22.

Borgata also has four NJ online gambling brands under its license.

Murren isn’t alone in his thinking

Last week, New Jersey Attorney General Gurbir S. Grewal issued a press release stating that the new opinion is “wrong” and “deeply troubling.” Joining him in the “strong opposition” was Josh ShapiroPennsylvania’s attorney general.

The joint letter follows a string of opposition to the opinion from all corners of the US gambling market. The lottery, as well as individual states like Massachusetts, have decried the recent opinion.

For its part, NJ and PA asked that the administration either withdraw the new opinion or “guarantee that DOJ will not bring enforcement actions against companies in our states that are acting lawfully under state statutes.”

The two-plus page letter addressed to Acting Attorney General Matthew Whitaker and Deputy Attorney General Rod Rosenstein includes a number of pressing issues. Among them is in regards to interstate transmission of information that is “merely incidental,” according to the letter.

“The opinion casts doubt not only on traditional online gaming, 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.”

As such, Murren’s comment follows a similar path.

NJ online gambling is in the billions

The previous Wire Act opinion helped clear the path to launch NJ online gambling in 2013.

The industry has generated more than $1 billion in its five-plus years of existence.

The New Jersey Division of Gaming Enforcement released the latest figures on Wednesday, and the monthly figures shattered the $30 million mark setting a new all-time record in the process.

NJ sports betting continues to set records, too.

January’s reported handle came in at $385 million. But the majority of that number came from NJ online sports betting — $304,973,986 to be exact.

David Rebuck, director of the DGE, believes the current regulatory model is fine the way it is.

“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.”

In other words, with so much at stake, MGM may not be the only gambling company to question the OLC opinion.

New Jersey, Pennsylvania Combine To Fight Against Latest Wire Act Opinion

In the letter, New Jersey and Pennsylvania’s attorneys general call out the DOJ for a “deeply troubling” opinion on online gambling.

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.”