TRENTON – Attorney General Gurbir S. Grewal today wrote the U.S. Department of Justice (DOJ) expressing New Jersey’s objection to a recently-issued legal opinion that federal criminal law could apply to the state-sanctioned online gambling that has taken place for years in New Jersey and across the U.S.
Joining Attorney General Grewal in registering “strong opposition” to the new opinion was Pennsylvania Attorney General Josh Shapiro.
Almost a decade ago, DOJ found that most forms of online gaming were legal because federal criminal law only applied to sports wagering. Following that opinion, online lotteries and other forms of online gaming sprouted up in states across the country. On January 24, 2019, however, the Justice Department issued an opinion explicitly reversing course and announcing that online gaming could violate federal law.
In a letter today to Acting U.S. Attorney General Matthew Whitaker, Attorney General Grewal characterizes DOJ’s new opinion as an unfounded “about face” with potentially devastating economic consequences for families and businesses in New Jersey.
Online gaming in New Jersey, the letter notes, “generates $352.7 million in annual revenue and $60 million in direct gaming taxes—key both to New Jersey and to Atlantic City’s vitality.”
”Our growing online gaming industry is a key component in revitalizing Atlantic City and strengthening New Jersey’s economy,” said New Jersey Governor Phil Murphy. “This unexpected opinion from the U.S. Department of Justice not only jeopardizes the future of our casinos and gaming industry, but also threatens the jobs of thousands of New Jerseyans. I am pleased to see that Attorney General Grewal is committed to challenging the Justice Department’s unreasonable interpretation of the Wire Act.”
“The Justice Department’s latest action is wrong on the law and wrong for New Jersey,” said Attorney General Grewal. “For five years, our gaming industry and our regulators have relied on the Justice Department’s promises to develop a strong online gaming industry that generates hundreds of millions of dollars, and is key to Atlantic City’s vitality. With the stroke of a pen, the Justice Department is trying to take that all away. I’m committed to standing up for New Jersey and challenging this misguided opinion.”
“New Jersey has regulated online gaming for five years and has developed the most successful regulatory model in the world,” said David L. Rebuck, Director of the New Jersey Division of Gaming Enforcement. “The State is fully committed to maintaining and ensuring the highest regulatory standards for New Jersey's evolving online gaming industry, including the most recent addition of sports wagering.”
In a related move, Attorney General Grewal has filed a Freedom of Information Request (FOIA) on behalf of New Jersey seeking records pertaining to the new DOJ opinion.
Press reports indicate that pressure to reconsider the legality of online gaming followed lobbying efforts by Sheldon Adelson and affiliated lobbyists. After Adelson’s Coalition to Stop Internet Gambling was unable to persuade Congress to address the issue, then-U.S.-Attorney General Jeff Sessions agreed to look into it.
The New Jersey FOIA request seeks information on any communications involving Adelson, his lobbyists, the White House, and DOJ regarding the relevant federal law and online gaming.
“Nothing changed in the years since the Justice Department allowed online gaming to move forward, and there was no good reason for the Justice Department to rethink its prior decision,” said Attorney General Grewal. “Instead, media reports make clear that pressure to reconsider the opinion came from out-of-state casinos and their lobbyists. That is not a good enough reason to reverse course and undermine the online gaming industry. We want to know who Justice Department officials spoke with, and why they decided to change their minds.”
The relevant federal law is the Wire Act, which places criminal prohibitions on the interstate transmission of certain kinds of online gambling information. In 2011, the Obama-era DOJ recognized that the Wire Act’s criminal prohibitions only applied to interstate transmission of information relating to sports wagering, and did not apply to other forms of online gaming. Its opinion expressly allowed states to conduct multiple proposed forms of online gambling, including the online sale of lottery tickets. The new DOJ opinion, however, says that interstate transmission of information relating to any kind of online wagering can violate federal criminal law.
In his letter of objection, Attorney General Grewal notes that the “potential breadth of this opinion is deeply troubling. The opinion casts doubt not only on traditional online gaming, but also on multi-state lottery drawings (such as Power Ball and Mega Millions) and online sales of in-state lottery tickets.”
The letter notes that New Jersey “has worked hard to keep its online betting in state, where it is lawful, and to prevent it from occurring in other states, where it is not.”
The letter asserts that DOJ’s reinterpretation of the Wire Act “puts jobs and livelihoods at risk for the thousands of people who work in the online and casino gaming industry, and jeopardizes critical state funding for the public good that is generated by lottery sales and other Internet activity that is legal within our states.”
The letter concludes by asking that the Administration either withdraw the new opinion or “guarantee that DOJ will not bring enforcement actions against companies in our states that are acting lawfully under state statutes.”