New Jersey And Pennsylvania Voice ‘Strong Objections’ To Recent DOJ Wire Act Reversal

Posted By Bill Gelman on February 7, 2019

New Jersey ended its silence.

Since the Department of Justice released its new opinion on the Wire Act last month, we have barely heard much response from the Garden State. That all ended Tuesday afternoon when the Attorney General Gurbir S. Grewal issued a press release stating that the new opinion is “wrong” and “deeply troubling.”

But Grewal is not alone in registering “strong opposition” to the new opinion. Josh Shapiro, Pennsylvania’s attorney general, issued the same opposition, with the neighboring states submitting a joint letter.

As both states have online gambling plans at some level, with NJ online casinos heading into their sixth year of operation, the two had every reason to be concerned by the recent reversal.

The letter concludes by asking 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.”

Seems simple, right?

Here is a more detailed excerpt from the release:

“In a letter today to Acting U.S. Attorney General Matthew Whitaker, Attorney General Grewal characterizes DOJ’s new opinion as an unfounded ‘about face’ with potentially devastating economic consequences for families and businesses in New Jersey.”

Read the full letter here.

Wire Act + NJ online gambling

New Jersey’s stance on this hot political issue comes down to numbers and how a change could have a negative impact on the economy.

In online gambling alone, New Jersey generates $352.7 million in annual revenue and $60 million in direct gaming taxes, according to the letter. Both figures are considered key to New Jersey and to Atlantic City’s future.

Pennsylvania, for its part, wants to open its online gambling doors this year and PA online casinos are a big part of that. But, since May 2018, PA’s online lottery generated $23.8 million in gross gaming revenue. Much of that revenue benefits older citizens in the state.

Here is an excerpt from the two-plus page letter addressed to Acting Attorney General Matthew Whitaker and Deputy Attorney General Rod Rosenstein:

“We, the undersigned State Attorneys General of New Jersey and Pennsylvania, write to express our strong objections to the Office of Legal Counsel’s opinion announcing that federal criminal law could apply to the state- sanctioned online gambling that has taken place for years across this country. That new opinion, “Reconsidering Whether the Wire Act Applies to Non-Sports Gambling,” reverses the Department of Justice’s 7-year-old position expressly allowing online gaming to proceed.

“This about-face is wrong and raises significant concerns in our states. 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.”

Among the most pressing issues for PA and NJ 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.”

More about New Jersey’s FOIA

In a related move, Grewal filed a Freedom of Information Act (FOIA) request on behalf of New Jersey seeking records pertaining to the new DOJ opinion.

One of the big mysteries surrounding the new Wire Act opinion seems to be a timing issue. Why now?

There are a lot of fingers pointed at Sheldon Adelson, the CEO and chairman of Las Vegas Sands. Published reports in the Wall Street Journal hint that the pressure to reconsider the “legality of online gaming” followed lobbying efforts under the direction of Adelson.

According to the press release, after Adelson’s Coalition to Stop Internet Gambling was unable to persuade Congress to address the issue, then-U.S.-Attorney General Jeff Sessions agreed to look into it.

You can read the full FOIA request here.

The New Jersey FOIA seeks information on any communication involving Adelson, his lobbyists, the White House, and DOJ regarding the relevant federal law and online gaming.

Those records, according to the request, should come from several 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

The letter makes it clear that the two states are concerned with the reasons why such a reversal was taken in the first place:

“Press reports instead 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.”

Support for NJ online gambling

The joint letter marks the first official response from Pennsylvania and New Jersey regarding the Wire Act. While former state Sen. Ray Lesniak said he is willing to come out of retirement to help states fight the OLC opinion, other NJ government officials have likewise offered their support.

The bottom line is there are $1 billion reasons why New Jersey is fighting this new opinion. That number is the amount NJ online casino revenue generated since its 2013 launch.

David L. Rebuck, director of the New Jersey Division of Gaming Enforcement, 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.”

New Jersey Gov. Phil Murphy also weighed in with his support:

“I am pleased to see that Attorney General Grewal is committed to challenging the Justice Department’s unreasonable interpretation of the Wire Act.”

To Grewal and New Jersey, the five years since the online casino industry opened its doors have been a boon for the state. Closing those doors would be harmful not just to state revenue but also to the job market and to the gambling industry as a whole.

“The Justice Department’s latest action is wrong on the law and wrong for New Jersey. … I’m committed to standing up for New Jersey and challenging this misguided opinion.”

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Bill Gelman

Bill Gelman is a veteran sports writer based just outside of Philadelphia and not too far from the Jersey Shore. Bill spends time in Atlantic City writing about casino openings and expansions, special events and now NJ sports betting and online gambling.

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