DOJ Says That Online State Lotteries Not Applicable Under Wire Act Opinion

Legality of Pennsylvania Lottery Games Such as Online Lotteries and Powerball

This week, the United States Department of Justice released a memo stating that the organization did not address online lotteries in its controversial decision to amend its Wire Act position in January.

The move would be a victory for online state lotteries across the country including the PA online lottery, but possibly a negative for online gambling companies who are all trying to figure out what the vague opinion actually means for online gambling in the United States.

Despite the memo, arguments were heard on a lawsuit filed by the New Hampshire on Thursday.

Background of the opinion

In January, the US Department of Justice reversed a seven-year opinion that the 1961 Wire Act only applied to sports betting across state lines. But in its new opinion, the DOJ stated that the law could actually be more broadly applied to many or most forms of online gambling, especially if any part of the online gambling moves across state borders.

The opinion is not new law just a reinterpretation of existing law and opinion that can be used in enforcement.

While the opinion could be applied more broadly to online gambling, nobody truly knows what the actual real-world impact will be in the United States. In the wake of the announcement of the new decision, online state lotteries, interstate online gambling, intrastate online gambling and even interstate lottery programs such as Powerball could be at risk under a strict interpretation.

The state of Pennsylvania has continued to operate its online lottery, which launched in May of 2018. It is also moving forward with an online gambling and online sports betting launch sometime this summer.

A lawsuit shakes things up

In mid-February, the New Hampshire state lottery filed a lawsuit against the U.S. Department of Justice on the new opinion, saying that the opinion puts millions of dollars in funding towards public education at risk by restricting online lotteries.

The lawsuit coincided with other states releasing statements and letters protesting the unpopular opinion.

On Thursday, arguments in that case were heard in a New Hampshire federal court.

The new memo

Virtually nobody in the online gambling or online lottery world appears to be a fan of the January, but states seem to be the biggest threat to the DOJ’s opinion.

Gambling has traditionally been a state’s rights issue and restricting online gambling cuts off a huge channel of revenue for states as well as limits future revenue opportunities.

The memo released this week appears to walk back the bit of the opinion that applied to state lotteries. Whether this position is due to the shaky legal argument of online state lotteries being unlawful or a tactic to remove a powerful online gaming advocate out of the debate remains to be seen.

For now, the decision seems good news for state lotteries including the PA Lottery, and especially those offering both land-based and online activities.