November 28, 2022

Volume XII, Number 332


First Circuit Case Doesn’t Move the Line on the Future of State Authorized Sports Betting

The First Circuit’s recent decision in New Hampshire Lottery Commission v. Rosen1 holds that the Wire Act’s prohibitions on interstate activity apply only to sports betting, and not to all types of bets and wagers, such as online lotteries, poker, and other gaming for dollars. State lotteries and non-sports betting vendors cheered the decision, but for the sports betting industry, the decision is disappointing because their business still potentially runs afoul of federal law.

The case first made headlines in early 2019 when a group of plaintiffs, led by the New Hampshire Lottery, sued the Department of Justice (“DOJ”) over its recent reinterpretation of the Wire Act, a decades-old federal law that prohibits the use of interstate wires to place certain bets. On its face, the language of the Wire Act is ambiguous about the specific types of interstate betting activity it prohibits. A 2011 DOJ opinion narrowly interpreted the Wire Act as only prohibiting the use of interstate wire transmissions in connection with sports betting. However, a subsequent DOJ opinion released in 2018 reinterpreted the Wire Act as broadly prohibiting nearly all betting—sports and non-sports wagers alike—that uses interstate wires. The First Circuit’s opinion centered on the structure and legislative history of the Wire Act, finding that the 2018 DOJ opinion would create an “odd and unharmonious piece of criminal legislation,” and the Wire Act’s limit on using interstate wires applies only to sports betting.

As the non-sports online betting industry applauds the First Circuit’s opinion, online sports betting operators must now contend with the reality that the Wire Act prohibits online sports betting – at least until the Supreme Court rules otherwise or Congress changes the law. While the U.S. Supreme Court’s May 2018 decision in Murphy v. NCAA gave individual states the power to authorize sports betting, the Wire Act remains  an obstacle for state-legal betting operators seeking to offer online or app-based sports wagers. This is because, while a bettor and sportsbook may be located in the same state and thus permitted under Murphy, the structure of the internet virtually ensures that any online or app-based bet will involve the movement of data across state lines and thus violate the Wire Act.

In the near term, it remains to be seen how the Biden administration will interpret the Wire Act. As a presidential candidate, Biden stated that he “doesn’t support adding unnecessary restrictions to the gaming industry like the Trump administration has done.” Although Congress could pass a law that clarifies or wholly changes the scope of the Wire Act, the likelihood of new legislation is unknown.

States, meanwhile, are moving quickly to embrace sports betting, even if it contravenes the Wire Act. In the years since Murphy, 25 states and the District of Columbia have authorized some form of sports betting. Given that sports fans prefer betting online over in-person, betting operators in many of those states are grappling with the tension between state-legal sports betting and the federal Wire Act’s prohibitions of interstate sports wagers. Many businesses with state-legal cannabis operations—which remain illegal under federal law—have operated under the federal government’s unofficial protection since it instructed U.S. Attorney’s offices to think hard before bringing charges for marijuana-related offenses. State-legal sports books that operate in apparent violation of the federal Wire Act may find themselves on similar ground, absent the Supreme Court’s intervention, new guidance from the DOJ, or legislative action by Congress.

1   New Hampshire Lottery Commission et al. v. Jeffrey Rosen, Acting U.S. Attorney General, Case No. 19-1835 (1st Cir. Jan. 20, 2021).

© Copyright 2022 Cadwalader, Wickersham & Taft LLPNational Law Review, Volume XI, Number 32

About this Author

Todd Blanche White Collar Defense & Investigations Attorney Cadwalader New York, NY

Todd Blanche is a partner in Cadwalader’s White Collar Defense and Investigations Group. His practice focuses on representing corporations and individuals in criminal and regulatory matters involving all types of white collar investigations, prosecutions and enforcement actions. Todd has successfully represented both companies and individuals facing grand jury subpoenas, criminal charges, regulatory inquiries and actions, and internal investigations. A former Assistant U.S. Attorney for the Southern District of New York, Todd has extensive experience investigating all manner of white...

Jodi L. Avergun, Cadwalader, Criminal regulatory Matters Lawyer, Foreign Corrupt Practices Attorney

Jodi Avergun’s practice focuses on representing corporations and individuals in criminal and regulatory matters involving, among other things, the Foreign Corrupt Practices Act, securities enforcement, health care, and general white collar matters. Jodi has successfully represented both companies and senior executives in internal investigations, matters before regulatory bodies including the SEC and the U.S. Drug Enforcement Administration, and in civil and criminal matters in federal court. She has also designed and implemented compliance programs for a variety of her...

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Lex Urban, Cadwalader Law Firm, Anti-Money Laundering Attorney

Lex Urban represents corporations and individuals in a variety of criminal, civil, and regulatory matters. He assists clients in responding to and defending against investigations, enforcement actions, and prosecutions arising under the Foreign Corrupt Practices Act, securities and accounting fraud, and other white collar issues. He also conducts internal corporate investigations and compliance program reviews.

Lex participates in the firm’s pro bono program and received a 2012 Outstanding Achievement Award from the Washington Lawyers' Committee...

Christian Larson White Collar Defense and Investigations Attorney Cadwalader Washington, DC

Christian Larson is an associate in Cadwalader’s White Collar Defense and Investigations Group. His practice focuses on advising corporations and individuals in connection with financial regulations, internal investigations, and government inquiries. He has extensive experience with U.S. and international anti-money laundering rules and regulations, and related compliance programs. Christian has advised banks, broker-dealers, funds, advisors, securitization parties, cryptocurrency and other money services businesses, national governments, and individuals in relation to the Bank Secrecy Act...

Stephen Weiss, Cadwalader Law Firm, White Collar Defense Attorney

Stephen Weiss is an associate in the White Collar Defense and Investigations Group in Cadwalader’s Washington, D.C., office. His practice concentrates on advising clients in a variety of criminal and regulatory matters, focusing primarily on government enforcement actions and internal corporate investigations. 

A graduate of Dickinson College, Stephen received his J.D. from American University, Washington College of Law and served on The American University Business Law Review. He is admitted to practice in the District of Columbia.