A new opinion issued by the US Department of Justice on the Wire Act guidance could result in state lotteries losing millions in revenue.
New Hampshire in particular could end up letting go of at least $5 million a year in profits in the wake of the new ruling. Lottery Executive Director Charles McIntyre said the purchasing of lottery tickets through online channels would now become illegal as part of the Wire Act reversal.
The state is expected to bring in between $4 million and $8 million in yearly revenue from its online lottery product, which has been up and running since September 2018. Five other states have also rolled out their own online lottery products and they will also be impacted by the new DOJ interpretation of the Wire Act.
Huge Blow to Lottery Industry – NH To Launch Legal Proceedings
A previous guidance said the Wire Act would only cover interstate sports betting. But the recent reinterpretation now includes traditional lottery games offered online, and other forms of gambling over the internet.
The reversal sparked strong criticism from the North American Association of State and Provincial Lotteries which includes the majority of lotteries in the US and Canada, as well as some suppliers of lottery products.
Lottery executives all over the country have been ringing alarm bells over the new opinion which they say could potentially impact the lottery industry and the billions of dollars it pours in to worthy causes. New Hampshire officials are planning to launch a legal challenge in order to protect the millions contributed by the lottery that help fund schools across the state.
The new interpretation may also lead to criminal charges being brought against online lottery betting, a practice which has been legalized in some states including New Jersey and Pennsylvania. The chief prosecutors of both states said the potential extent of the reversal is deeply troubling and puts at risk the future of multi-state lottery drawings like Mega Millions and Power Ball.
Pennsylvania AG Josh Shapiro and New Jersey AG Gurbir Grewal are now calling on Acting Attorney General Matthew Whitaker to overrule the new guidance. The federal government can also choose not to impose the provision and instead respect existing laws in each state which allow online wagers.
Not A Well-Thought Out Decision
Several states pursued the legalization of online lottery ticket purchases in 2011, When the ruling Obama administration said it did not constitute any violation at that point of time. This new interpretation changes everything.
A leading industry think tank said the reversal may have come about as a result of an unintentional failure by federal prosecutors to think through the consequences of their decision. Jennifer Roberts, associate director of the University of Nevada Las Vegas’ International Center for Gaming Regulation, said the ruling could potentially affect anything that crosses state boundaries via intermediate data routing, including marketing lottery sales and daily fantasy sports.
McIntyre has reached out to Gov. Chris Sununu and Attorney General Gordon J. MacDonald to discuss the serious implications of the new ruling and to explore the best options. The Wire Act reversal could potentially deal a huge blow to a major revenue source.
NH Best Place for Lawsuit
In 2014, the US Circuit Court of Appeals in Boston, Massachusetts ruled that only interstate sports betting would be outlawed by the Wire Act. This is why industry experts from the lottery industry believe that New Hampshire is the best place for legal action if officials indeed wanted to tread that path.
New Hampshire is also looking at legalizing sports betting, with a public hearing on sports betting legislation taking place last week. As part of the proposals mainly sponsored by Rep. Timothy Lang, the state lottery will be allowed to operate its own sports book. Retail businesses will also be permitted to open their own sports book upon obtaining the necessary licenses.
Online sports betting will be allowed in New Hampshire provided that the transaction is only made within the state’s boundaries.
CSIG: Latest Opinion A Win for Families
While the lottery industry is condemning the latest opinion, some groups in the casino industry are welcoming the move. The Coalition to Stop Internet Gambling (CSIG) is particularly pleased with the reversal saying the landmark action is a win for families, parents, children and other populations vulnerable to the negative effects of online gambling.
CSIG is bankrolled by billionaire and Las Vegas Sands chairman Sheldon Adelson, one of President Trump’s close friends and prime supporters.