Update: State Lotteries Contend with Reinterpretation of the Wire Act

New Hampshire filed a lawsuit against the Department of Justice’s November 2018 opinion on the 1961 Wire Act on Feb. 15, 2019.  An amicus brief was filed by New Jersey and Michigan. The Michigan brief included signatories from the Michigan Lottery; Kentucky Lottery Corporation; Tennessee Education Lottery Corporation; Virginia Lottery; Rhode Island Lottery; Colorado Lottery Division; North Carolina Education Lottery; and the states of Delaware, Idaho, Vermont, Mississippi and Alaska as well as the District of Columbia.

Pennsylvania filed to be considered a co-plaintiff in the suit but was denied. On April 11, Judge Paul Barbadoro heard oral arguments for the case and did not grant the DOJ’s request for dismissal. Judge Barbadoro gave the DOJ two weeks to explain whether the opinion applied to the state lottery system. If the opinion does apply to the state online system, it could cost states $220 million. If the opinion applies to all lottery-related activities that use the internet, like the Powerball and Mega Millions, states could lose more than $23 billion.

The DOJ released a supplemental memo on April 25 stating that it is “currently reviewing ‘whether the Wire Act applies to State lotteries and their vendors,’ and it will not bring Wire Act prosecutions of state lotteries and their vendors for the operation of lotteries authorized under state law while that review continues.” The DOJ still maintains that because “there is no credible threat of prosecution, the Court should dismiss this case for lack of standing.”

Judge Barbadoro is expected to make a final ruling sometime in May but says that regardless of how he rules, he believes that it will ultimately be settled by the US Supreme Court.