Ruling throws snake eyes for online lottery
When it comes to the Lottery’s bid to sell its products online, state Treasurer Deb Goldberg must feel that all the stars are aligned against her.
Not only has she yet to win over a skeptical state Legislature, Goldberg now faces a federal hurdle that could derail any chance of migrating Lottery offerings to the internet.
The treasurer traveled to Washington last week to confer with members of the state’s congressional delegation about the bombshell of a recently disclosed Justice Department ruling pertaining to the legality of online lotteries. In an opinion reached late last year but only released publicly in January, the DOJ reversed a 2011 ruling that gave states legal protection to sell lottery products online.
In 2011, the DOJ’s Criminal Division under President Barack Obama determined that “the prohibitions of the (federal Wire Act of 1961) are limited to (interstate) sports gambling and thus do not apply to state lotteries at all.” But last November, Assistant U.S. Attorney General Steven Engel stated that after reconsidering that 2011 explanation, the Criminal Division now says that the Wire Act’s prohibitions on the use of a wire for transmitting data related to wagers “are not uniformly limited to sports gambling.”
This reinterpretation of the Wire Act not only has created chaos in the 11 states with online lotteries, it flies in the face of the changing attitudes on gambling, exemplified by last year’s Supreme Court ruling that paved the way for state-sponsored wagering on professional sports.
Treasurer Goldberg isn’t the only commonwealth cabinet officer who should be concerned. Gov. Charlie Baker recently proposed legislation that would legalize betting on professional sports online and at the state’s three licensed casinos. Baker said he crafted his bill on New Jersey’s model, which has reciprocal arrangements with Delaware and Nevada over online poker player pools. Wouldn’t enforcement of the Wire Act preclude that arrangement?
The implications of this puzzling decision go far beyond Massachusetts. Online lotteries pump millions into state treasuries, to the benefit of its residents in the form of direct and indirect local aid.
No matter your interpretation, the Wire Act appears out of step with the digital age and the changing legal gambling landscape.
In 1961, the internet seemed as fanciful as landing humans on the moon. At a time when legalized gambling was the domain of Las Vegas casinos, the Wire Act and other similar legislation targeted the illegal activities of organized crime, specifically interstate gaming.
It wasn’t meant to make outlaws out of treasurers overseeing statesanctioned lotteries.
It seems states can approach this opinion by either hoping the federal government, as it’s done with marijuana, won’t interfere with state statutes, or they can join with organizations like the National Association of State Treasurers to press Congress or the Supreme Court for either updated legislation or legal clarity.
No matter the course, it’s bound to be a protracted ordeal, which leaves the status of online state lotteries in limbo — just the kind of uncertainty that allows an already recalcitrant state Legislature to table consideration of any online lottery legislation.
The bottom line: Goldberg has repeatedly warned lawmakers that without the expanded market online sales would create, Lottery profits will steadily decline. That means the days of returning $1 billion annually in local aid to cities and towns are over.