SALT LAKE CITY — Just eight months ago, the Trump administration signaled a crackdown on internet lotteries, saying the same law that prohibits sports betting through wire transmissions should apply to online gambling.
But enforcement is now on hold because of a recent court ruling in New Hampshire that allows the state’s iLottery to proceed.
It’s the latest in a back-and-forth struggle over a law enacted decades ago. At stake is the future of not just online lotteries, but also internet poker and casino-style games played on smartphones and computers, as well as fantasy football betting.
The Interstate Wire Act of 1961 prohibits "bets or wagers" transmitted over wires, and some people believe the law's scope extends to internet gambling of all forms, not just bets related to sports.
The Trump administration took this position in a memo issued in November 2018. “While the Wire Act is not a model of artful drafting, we conclude that the words of the statute are sufficiently clear and that all but one of its prohibitions sweep beyond sports gambling," the government's lawyers wrote last year.
In the latest ruling, however, the U.S. District Court for the District of New Hampshire said the Interstate Wire Act applies only to "activities associated with sports gambling," which is what the Justice Department under President Barack Obama had concluded.
One analyst says the decision represents "just about the greatest win imaginable at this stage of litigation" for states that have legalized online poker, including Delaware, New Jersey and Nevada.
And the decision prompted the Justice Department to issue another memo, telling prosecutors to hold off on enforcement through the rest of this year.
Here's how the New Hampshire decision changes the stakes for internet gambling — and why you still can't buy iLottery tickets in Utah.
In January, The Washington Post noted that a key opponent of online gambling is Sheldon Adelson, "a GOP megadonor" who contributed $20 million to President Donald Trump's campaign. Adelson is a billionaire who made his money on casinos, and has said he opposes internet gambling on moral grounds, although critics point out that casino owners stand to lose money as the number of people gambling online increases.
Trump, too, is a longtime casino owner, Forbes has reported.
Strangely, Adelson's opposition to online gambling puts him on the same side as people who oppose slots and other forms of gambling that take place in his Las Vegas casino.
Many faith groups are opposed to gambling because of its detrimental effects, which can include addiction and poverty. The Church of Jesus Christ of Latter-day Saints, for example, opposes gambling in all forms, even when sponsored by states for benevolent purposes, such as education.
"Gambling is motivated by a desire to get something for nothing. This desire is spiritually destructive," the LDS church says on its website.
And at its 2017 gathering in Phoenix, the Southern Baptist Convention passed a resolution saying that gambling of all kinds is a "deceptive sin" that violates the principles of work, contentment and "neighbor-love."
Despite opposition from faith groups and others who say that gambling preys on the poor, all but six states have lotteries, and the average American spends nearly $220 on lottery tickets every year, according to a recent survey of gambling behavior.
Casino operators prefer the word "gaming" and say that they promote "responsible gaming" for the entertainment of people ages 21 and older.
Adelson is a backer of the Coalition to Stop Internet Gambling, which warns of the effects of online gambling on children and argues that the spread of online gambling will hurt schools since many state-run lotteries provide money for education.
The group's list of coalition members includes family and faith groups across the nation, as well as Bonanza Casino in Reno, Nevada.
Meanwhile, casino owners in Pennsylvania are trying to to block the debut of online casino-style games, scheduled to launch there in mid-July.
According to PennLive.com, the website of the (Harrisburg) Patriot-News, the casinos say internet games too closely resemble games found in their casinos, which were to be protected by a 2017 law.
“Pennsylvania casinos are not opposed to iLottery — only simulated, casino-style games,” casino spokesman David La Torre told Charles Thompson of the Patriot-News.
The newspaper reported that Pennsylvania's iLottery is expected to generate about $30 million in profit during this fiscal year.
What happens now?
The New Hampshire ruling is the latest in a string of good news for supporters of online gaming. Earlier this month, a Michigan man won $3 million playing the lottery online, and Arizona recently joined nine other states in allowing winners of $100,000 or more to remain anonymous.
And the Pennsylvania Gaming Control Board has said that online casino games will go live in the commonwealth July 15.
But people in Utah and five other states that don't have lotteries will not be able to play — legally, at least.
In Pennsylvania, as in New Hampshire, people can only play on devices located within the state offering the game, the Philadelphia Inquirer reported, although by using a virtual private network, or VPN, people can hide location information.
(Using a VPN may put any winnings at risk, however. Last year, an online poker card room called PokerStars accused a champion poker player of violating the terms of service by pretending to play in Canada even though he was in the U.S., and the company refused to pay Gordon Vayo the more than $600,000 he had won.)
Meanwhile, websites devoted to gambling news cheered the New Hampshire decision and the Department of Justice's subsequent decision to back off on enforcement. For businesses that offer online gaming, that seemed like a license to proceed.
"DOJ says it won't enforce Wire Act Beyond Sports Betting until 2020," a headline on the Online Poker Report said.
Writing in Forbes, Marc Edelman, a law professor at the Zicklin School of Business in New York, called the decision "a big win" for online lotteries and poker, but said "the impact of the decision on the daily fantasy sports and sports gambling industries is far more nuanced."
"Under every conceivable interpretation of the Wire Act, including the one adopted (June 3) by the U.S. District Court, interstate sports gambling clearly falls under the ambit of the Wire Act," Edelman wrote. " Thus, while (the) decision seems to bless the legality of interstate poker compacts, it does nothing to support the legality of interstate sports gambling compacts.6 comments on this story
And it remains unclear if interstate betting in fantasy sports leagues is prohibited by the Wire Act, Edelman said.
Some observers believe the murky legal landscape of online betting will ultimately be decided by the nation's Supreme Court. Even the district judge who wrote the New Hampshire opinion said as much, ESPN reported.
"I have a strong feeling that however I resolve the case ... it is likely to be resolved by the United States Supreme Court either way," U.S. District Judge Paul Barbadoro said during April's court hearing.