On the last morning of President Donald Trump’s tenure, Judge William Kayatta Jr. of the Boston First Circuit Court of Appeals rejected an interpretation of the Wire Act that could have made state lotteries illegal and threatened the viability of online gambling. Some believe the interpretation reflected lobbying by groups sympathetic to stationary casinos and the recently deceased casino magnate – and Trump supporter – Sheldon Adelson.
The ruling is a critical victory for the New Hampshire Lottery Commission and, more broadly, for the 48 states and territories that operate lotteries. Under the direction of Executive Director Charlie McIntyre, the New Hampshire lottery filed a federal lawsuit in 2019. She was faced with the daunting task of convincing judges that the US Attorney General had misunderstood the law.
The Justice Department could petition the US Supreme Court to hear the case, but that department is now under the direction of President Joe Biden and Attorney General Merrick Garland.
“Hopefully,” McIntyre Sportico said in an interview after the decision, “this brings the problem to an end.” I never doubted for a moment that we were right, and because we couldn’t reach an agreement with the Justice Department, we had to appeal to the courts. Ultimately, some fights just have to be fought. “
The case revolved around how the Federal Wire Act, signed by President John F. Kennedy in 1961, should be understood in a world of online transactions. The law prohibits individuals and businesses from using wired communications (such as bank transfers, telephones, and now the internet) to transmit bets on sporting events or information related to bets across state borders. In fact, the law criminalizes such activities.
Until 2017, the law was interpreted to only apply to sports games. A simple reading appeared to support this conclusion. Consider the instrumental role that the phrase “sporting event or competition” plays in the law:
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Those who knowingly place bets or bets knowingly use a wired communication device for the transmission of bets or bets or information in international or international trade which is helpful in the placing of bets or bets on a sporting event or competition or for the transmission of bets or bets A wired communication authorizing the recipient to receive money or credit as a result of betting or wagering, or to obtain information useful in placing bets or bets, will be fined under this heading or not more than two Imprisoned for years or both.
In 2018, the Justice Department’s Legal Department contradicted this conventional interpretation. It was justified that the law provides for sports betting as well as – note the “or” after “a sporting event or competition” – other transmissions of wired communication with bets such as lotteries.
This more expansive view worried some states, particularly those with successful lotteries. Banks, recognized states, may no longer accept and process lottery transactions that contain or may have elements that cross state lines.
The New Hampshire lottery is a useful example. Although the lottery requires physical, personal purchases, aspects of lottery transactions extend beyond the borders of the granite state. Internet-based systems are used, for example, for routing data. The lottery also uses non-government backup servers, as well as websites and social media, to post results, advertise, and educate consumers.
New Hampshire Lottery winnings are earmarked for the State Education Trust Fund. As Judge Kayatta noted, the lottery contributed $ 82.7 million to the fund in fiscal 2018.
The New Hampshire Lottery has warned that the state could potentially withdraw from multi-jurisdiction games if the lottery activity constitutes unlawful conduct. One popular game is Powerball, the loss of which would cost the state an estimated $ 40 million a year.
McIntyre led a legal challenge in which one of the lottery providers, NeoPollard Interactive, participated. They were successful at the district court level and were reviewed by the First Circuit. Judge Kayatta wrote pages on behalf of himself and Judge Sandra Lynch with analysis of how to correctly read the language and syntax of the Wire Act. The court finally concluded that any reference to “wagering or betting” means “betting or wagering on a sporting event or competition”.
McIntyre suspected that the real winner would be the New Hampshire education system. “Now I don’t have to worry about being burdened for my job,” he said, “and we can continue to raise much-needed funds for education.” “
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