TRENTON, N.J. (CN) – One year after the U.S. Supreme Court legalized sports betting, the Trump administration is digging in for a new showdown with states that want online poker and other forms of internet gambling to also get a green light.
The Office of Legal Counsel at the Justice Department, normally considered a referee within the executive branch, fired the first shots with an opinion dated Nov. 2 that was made public earlier this year.
“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 opinion states.
This conclusion ran counter, however, to one the Justice Department reached in 2011 under former President Barack Obama. Though the policy reversal lacks the force of law, its suggestion of a pending government crackdown has left online gaming companies confounded. Politicians have eyed ulterior motives meanwhile in the Trump administration’s sudden reliance on a 1961 law used by Attorney General Robert Kennedy to fight the mafia.
“I think there is no doubt that this issue will go all the way to the U.S. Supreme Court,” Ray Lesniak, a former New Jersey senator, said in an interview. “Attorney General Barr is driven by politics and not by the law, and the politics of this is that the Justice Department of going to do the bidding of Sheldon Adelson.”
The OLC issued its policy reversal on the heels of intensive lobbying by Adelson, a noted Trump supporter who owns the Sands Hotel and Casino in Las Vegas, and New Jersey Attorney General Gurbir Grewal hammered the apparent conflict of interest here when the state filed suit under the Freedom of Information Act.
“It’s especially important that we figure out whether this federal crackdown is the result of a lobbying campaign by a single individual seeking to protect his personal business interests,” Grewal warned.
New Jersey has said revenue from online gaming brings in more than $350 million a year, a welcome boon to the state’s beleaguered casino industry. The state’s Department of Gaming and Entertainment reported in April that online gaming revenue is up nearly 60 percent from the same time last year, and that roughly 60 companies having applied for online gaming licenses.
Because of the OLC opinion, however, Lesniak said New Jersey’s expansion in the industry is being delayed.
“They want to drag it out as long as possible,” Lesniak said, referring to the Trump administration.
Another problem for the industry is conflicting guidance on how phones or mobile devices are used to place wagers. Intermediate routing, as such transactions are known, technically cross state lines, and Jennifer Roberts, associate director of the International Center for Gaming Regulation in Las Vegas, noted in an interview this complicates the full sweep of the OLC’s opinion.
“There’s so many questions that have been raised,” Roberts said. “Will they shut down every mobile wagering operation?”
In New Hampshire, the concern has even spread to intrastate activity such as online state-run lotteries.
“That just adds to the confusion,” Roberts said, noting the previous policy from 2011 DOJ had been written in response to concerns about lottery wagering.
The American Gaming Association called the new OLC opinion “unfortunate” earlier this year but said it believed it did not affect intrastate online gaming, known in the industry as i-gaming.