Exclusive: DOJ Files Motion Asking Court to Dismiss IGT’s Wire Act Lawsuit

One US gaming law attorney calls motion “an unmistakable wink and nod” to the gaming industry that lawful iGaming and sports betting won’t be subject to prosecution. Others aren’t so sure.
DOJ Files Motion Asking Court to Dismiss IGT's Wire Act Lawsuit
By
February 24, 2022

IGT fails to establish a credible threat of prosecution even in those jurisdictions The Department of Justice (DOJ) asked a district court judge to dismiss a lawsuit filed by IGT over the department’s stance on the federal Wire Act, arguing that the company has failed to prove that it faces a credible threat of prosecution.

DOJ filed the motion to dismiss in District Court for the District of Rhode Island on Wednesday. The department faced a Thursday deadline to respond to the lawsuit that IGT and its US-based subsidiary filed in November 2021.

At issue are conflicting opinions issued by the DOJ’s Office of Legal Counsel (OLC) during the Obama and Trump administrations. While the Obama DOJ held in 2011 that the Wire Act applied only to sports betting, the Trump DOJ disagreed and reversed the department’s position on the matter in 2018.

IGT, the largest provider of iGaming and lottery services in the US, sued over fears that it was vulnerable to prosecution under the Wire Act for its non-lottery gaming business.

But the government pushed back, saying that, since IGT “does not allege that it engages in sports gambling,” the company is not at risk for prosecution. It added that IGT has not alleged that the Wire Act limited its business activities, or that the company has either been prosecuted or threatened with such.

The perceived threat that IGT may be prosecuted in some other jurisdiction for its non-sports gambling activities is merely speculative & certainly not imminent or substantial.Instead, the DOJ said IGT “implicitly seeks to extend the benefit of favorable First Circuit precedent to other jurisdictions where it engages in non-sports gambling – jurisdictions where courts have not yet decided whether the Wire Act reaches any non-sports gambling.”

The government’s reference is to a January 2021 ruling by the First Circuit Court of Appeals that the Wire Act applies only to online sports betting — not online poker or other forms of iGaming. That case was New Hampshire Lottery Commission v. Barr.

IGT fails to establish a credible threat of prosecution even in those jurisdictions,” the DOJ said. “Under these circumstances, the perceived threat that IGT may be prosecuted in some other jurisdiction for its non-sports gambling activities is merely speculative and certainly not imminent or substantial.”

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Gaming Attorneys React to DOJ’s Motion to Dismiss

US gaming law attorneys had different takes on the government’s motion to dismiss the case.

Jeffrey Silver said IGT picked the First Circuit, which includes the district court in Rhode Island, in an attempt to broaden the appellate court’s ruling into a universal ruling across every other Circuit.

[The DOJ] is telegraphing that it has no intention of pursuing prosecutions against lawful internet gambling under the Wire Act.“Obviously, in the world of ‘forum-shopping,’ the plaintiffs in this case chose well,” Silver told US Gaming Review. “However, the US Supreme Court has reserved the right to make such interpretations to itself, primarily when a conflict is brought to them between Circuits. Until that happens, the First Circuit decision is only applicable to that Circuit.

“While the AG has made a technical argument concerning IGT’s ‘standing,’ the underlying meaning of their pleading is to inform IGT that their operating ‘safe harbor,’ is only applicable to that one geographic area. If the court agrees, there will be an additional period of uncertainty.”

Behnam Dayanim, a partner in the Washington, DC office of Paul Hastings LLP, called the DOJ’s filing “an unmistakable ‘wink and nod’” to the gaming industry.

“The DOJ evidently does not want to go on record disavowing the prior administration’s position but is telegraphing that it has no intention of pursuing prosecutions against lawful internet gambling under the Wire Act,” Dayanim said. “The message is impossible to miss. Of course, by leaving the OLC opinion in place, the DOJ leaves open the possibility that a future attorney general might take a different view.

“But, for now, at least, the Administration’s position seems clear: lawful iGaming, online lotteries, and sports betting will not be subject to federal prosecution.”

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That said, the DOJ “made that argument before, and the court rejected it,” said Jeff Ifrah, of Ifrah Law PLLC.

“The question now is whether the prior court’s decision rejecting the OLC opinion impacts the likelihood of future prosecution,” Ifrah said. “Has the analysis of the facts necessary to resolve the question of future prosecution changed? It is possible the IGT court could answer ‘yes’ and agree with DOJ on this issue.”

Gregory Gemignani, an attorney with Dickinson Wright PLLC, called the motion to dismiss “a procedural move to avoid having to defend the 2018 Wire Act opinion on the merits by stating there is no case in controversy for the court to adjudicate.

I am disappointed that DOJ effectively concedes that the 2018 opinion is legally incorrect yet is willing to let it stand“I would not read too much into this. My gut tells me it is an effort by the DOJ to get one more thing off its plate without spending significant time on the matter. It has nothing to do with the interpretation of the Wire Act or this administration’s willingness to support the Trump DOJ interpretation of the Wire Act.”

Anthony Cabot, Distinguished Fellow in Gaming Law at the Boyd School of Law, University of Nevada-Las Vegas (UNLV), called the DOJ’s response “disappointing.”

“Effectively, the DOJ is saying, ‘we haven’t prosecuted anyone for some time, and we do not have plans on doing so, so IGT should just go away.’ However, this hardly settles the issue and would leave standing the erroneous 2018 opinion despite its weakened state from the New Hampshire Lottery case.

“I am disappointed that DOJ effectively concedes that the 2018 opinion is legally incorrect yet is willing to let it stand. A change of administration, a couple of key donors, an ineffective Congress, and a hyper-partisan US Supreme Court could bring this full circle in a couple of years.”

The case is IGT et al v. Garland et al.

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