The New Jersey gambling industry is no stranger to waiting on legislation.
A year and a half after Atlantic City casinos waited out the Supreme Court of the United States’ decision regarding the legalization of sports gambling, they’re now in limbo regarding the Department of Justice’s recent reversal of its interpretation of the Wire Act.
In January, the DOJ decided that the Wire Act includes online gambling, a broad regulatory landscape that includes NJ online casinos.
NJ casinos now have until June 14 to make sure their operations comply with the Wire Act.
Implications are fuzzy and New Jersey doesn’t like it
At the heart of the Wire Act is the transfer of information and money across state lines, a nuance that shines a brutal light on the location of online casino operator’s servers as well as the geolocation technology operators use to ensure users are, in fact, located in New Jersey.
Even though everything relevant to running NJ online casino sites is in the state, the nature of the internet and IP addresses is such that things that start and end in one state cross state lines eventually.
What’s difficult about the new Wire Act opinion is that there were no clear explanations of how the act would be enforced, leaving casinos and their online casino partners to scramble to make sure they err on the side of caution.
New Jersey responds
In response to the opinion, NJ Attorney General Gurbir S. Grewal’s office published a press release that challenged the DOJ’s reversal. The letter was co-signed by fellow online gambling state Pennsylvania.
In the release, Grewal pinned the blame on outside forces who influenced the DOJ’s opinion.
“Media reports make clear that pressure to reconsider the opinion came from out-of-state casinos and their lobbyists. That is not a good enough reason to reverse course and undermine the online gaming industry,” Grewal was quoted as saying. “We want to know who Justice Department officials spoke with, and why they decided to change their minds.”
Additionally, NJ Senate President Stephen Sweeney offered the DOJ an ultimatum: rescind the recent opinion or we will see you in court. Sweeney said he would authorize former state Sen. Raymond Lesniak to file suit on behalf of New Jersey.
New Jersey and Pennsylvania aren’t the only states to decry the opinion either. New Hampshire challenged the Wire Act opinion in federal court recently. The Granite State became ground zero for the opposition.
At the time of publishing, there were 20+ legal online casinos and poker sites in operation along with 13 NJ online sports betting platforms. All of these entities will have to be in compliance with the Wire Act by June 14.
DOJ + Wire Act: Keeping up with the times or overreach?
However, aligning operations with the Wire Act is just one pain point for New Jersey. The other point is perhaps the more important one: federal overreach.
The Wire Act reversal is a perplexing one considering the Supreme Court’s overturning of the Professional and Amateur Sports Protection Act (PASPA) seemed to signify a greater federal openness to gambling.
And rightly so, as public opinion has shifted from a decidedly anti-sports betting sentiment at the time of PASPA’s implementation in 1993 to a decidedly pro-gambling stance the past few years.
One could view the Supreme’s Court decision as one that reflects the times. And, on the same hand, one could see the Wire Act interpretation as another step to keep federal regulation in line with what will most likely be a proliferation of sports betting across dozens of states in the next few years.
We haven’t heard any formal statements from the country’s highest prosecutor, US Attorney General William Barr. But we do know he has a long history of opposing federal overreach, particular in America’s white-collar sector.
An article from Bloomberg published in January highlighted a statement Barr made at a 2004 Federalist Society conference.
“He accused prosecutors of abusing their power and overreaching in corporate investigations,” the article noted. “Government lawyers in white-collar cases, he argued, are ‘very young, very inexperienced and don’t have the breadth of judgment that’s necessary.”