IGT Files Suit Against Biden DOJ, Demands Clarity Over Wire Act

Largest provider of iGaming and lottery services in US says it and others in industry face “credible threat of prosecution” by DOJ.
IGT Files Suit Against Biden DOJ, Demands Clarity Over Wire Act
By
December 02, 2021

IGT and its US-based subsidiary filed a lawsuit against the Department of Justice (DOJ) in federal district court over fears that its non-lottery gaming business could be subject to prosecution under the Wire Act.

In a complaint filed last week in District Court for the District of Rhode Island, IGT said a 2018 opinion from the DOJ’s Office of Legal Counsel (OLC) gives the company the stark choice “of either fundamentally restructuring (or closing) its business or risking a federal felony prosecution.” IGT requested that the court declare the 2018 opinion by the OLC “contrary to law” and to find that the Wire Act applies solely to sports betting.

“Virtually all modern lottery and gaming relies on interstate wires [and] lottery and regulated gaming industries were built around the understanding that the Wire Act poses no impediment to those state-regulated activities,” IGT said in its complaint. “The lottery and gaming industry, including IGT and its state partners, developed around a shared understanding that sports betting was the Wire Act’s sole concern.

“The 2018 OLC opinion fundamentally imperils that understanding, and IGT’s businesses and partners face a credible threat of prosecution.”

Last June, the Biden DOJ declined to appeal a January ruling by the First Circuit Court of Appeals that the Wire Act applies only to online sports betting and does not apply to online poker or other forms of iGaming.

But IGT said the ruling in New Hampshire Lottery Commission v. Barr, which it coined as “New Hampshire II” in its complaint, applies only to the plaintiffs in that case, meaning the 2018 opinion by the OLC remains DOJ policy.

“As a result, IGT’s entire non-lottery gaming business is subject to prosecution, and DOJ has offered only the promise of a 90-day heads up before it can subject IGT’s lottery business to the Wire Act as well,” the complaint said. “IGT therefore seeks a declaratory judgment that, under New Hampshire II, the Wire Act does not apply to IGT’s non-sports gaming operations.”

What’s at stake in the case

The issue is vital to IGT, the largest provider of iGaming and lottery services in the US. The company supplies equipment – including tickets, terminals, vending machines and transaction processing systems – to 37 of the 46 lotteries currently operating in the US. IGT is also a top manufacturer and operator of gaming machines for casinos.

IGT argued that it would be prohibitively expensive for the gaming industry to attempt to comply with the 2018 opinion by converting all lottery networks to intrastate data transmissions only. The company said its specific costs would include:

  • Lost book value from existing lottery networks;
  • New capital expenditures for replacing data centers, communications networks and call centers;
  • Additional operational expenses due to redundant and less efficient technology;
  • Lost profits during the time lottery games are offline in order to implement the compliance measures; and
  • Lost profits from not being able to offer multi-jurisdictional games like Powerball and Mega Millions.

The company added that it may also be forced to lay off its employees and would risk “losing goodwill with customers and with the rest of the gaming community” in order to comply.

“Compliance costs would also be devastating for IGT’s state partners,” the company said, adding that state lotteries generated more than $25.3 billion for state budgets in fiscal year 2020. “If lotteries were suddenly illegal or forced to shut down for a prolonged period during restructuring, states would have to scramble to replace millions or even billions of dollars of state revenue. The resulting tax hikes and service reductions would no doubt force state officials to feel the brunt of unpopular federal policy choices.”

The case is IGT et al v. Garland et al (No. 1:21-cv-00463). US District Court Judge William Smith, who was nominated by President George W. Bush in 2002, is the presiding judge in the case.

If you or someone you know has a gambling problem and wants help, call the Virginia Council on Problem Gambling (VACPG) helpline at 1-888-532-3500

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