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Pennsylvania, N.J. officials ask feds to withdraw ‘deeply troubling’ online gaming rule

NJ's attorney general also asks the feds to disclose if GOP megadonor Sheldon Adelson influenced the Justice Department's decision on internet gaming.

Mobile and online gambling is demonstrated at a Las Vegas conference.
Mobile and online gambling is demonstrated at a Las Vegas conference.Read more

The attorneys general of New Jersey and Pennsylvania on Tuesday asked the U.S. Justice Department to withdraw a “deeply troubling” legal opinion that state-sanctioned online gambling may violate federal law, which has thrown the internet gaming business into disarray.

“We ask that DOJ withdraw its opinion altogether or assure us that DOJ will not bring any enforcement actions against companies and individuals engaged in online gaming in our states — where it is appropriate under state law," New Jersey Attorney General Gurbir S. Grewal and Pennsylvania Attorney General Josh Shapiro wrote in a letter to Matthew G. Whitaker, acting U.S. attorney general.

Grewal also submitted a federal Freedom of Information Act request to the Justice Department seeking information about the influence that GOP donor Sheldon Adelson may have had on the department’s about-face, which reversed a 2011 opinion that the federal Wire Act only pertained to sports betting. The billionaire chairman of Las Vegas Sands Corp., Adelson has funded lobbying efforts to curtail the growth of online gaming.

“The potential breadth of this opinion is deeply troubling," Grewal and Shapiro, who are Democrats, said in their letter. “The opinion casts doubt not only on traditional online gaming, but also multi-state lottery drawings (such as PowerBall and Mega Millions) and online sales of in-state lottery tickets.”

Internet gaming generated $1 billion for New Jersey casinos in five years, and $45 million last year in state taxes. In Pennsylvania, the state-run iLottery is expected to earn $30 million in profits this year.

The state officials said the decision “puts jobs and livelihoods at risk for the thousands of people who work in the online 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 Justice Department’s opinion, released Jan. 14, reinterprets the federal Wire Act to apply to any form of gambling that crosses state lines, not just sports betting. The Justice Department directed prosecutors to delay implementing the new opinion for 90 days, until April 14, to allow gaming operators to modify their practices.

The new interpretation has upended the gaming industry, casting uncertainty over existing online betting and lottery operations, and putting the brakes on states considering legalizing internet wagering.

Ten Pennsylvania casinos last year had rushed in to pay $94 million for license fees to offer interactive casino games, slots and poker, though the startup of internet betting is now in limbo while the casinos report back to Pennsylvania how they plan to comply with the new federal directive.