On December 23, 2011 the Department of Justice Office of Legal Counsel (“OLC”), made public their opinion that the Wire Act applies only to interstate transmissions of wire communications of bets or wagers on any “sporting event or contest”.1 Such an opinion is a contradiction to the long-held interpretation by the USAO that the parameters of the Wire Act are more far-reaching, and in fact, they have been used for decades in prosecutions of gambling activities.
On January 26, the judge in the Black Friday criminal case ordered that the parties submit additional briefs to address any implications that the recent DOJ legal opinion regarding the Wire Act’s parameters might have in the case. These briefs would be to supplement the original motions to dismiss filed by Chad Elie and John Campos last fall.
Oral arguments on those motions were heard in New York on December 1. At the close of court proceedings on that day, Judge Kaplan commented that it was “extraordinarily unlikely” that all charges against Elie and Campos would be dropped, however, this was weeks before the OLC made public their Wire Act opinion. The judge has reserved rendering his decision on these motions, and these new supplemental briefs will presumably be a consideration in making that decision.
The newly filed brief, on behalf of Elie and Campos, asserts that the DOJ’s Criminal Division has, for many years, used their own interpretation of the Wire Act, while applying it to cover all forms of “bets and wagers” rather than only sports related bets and wagers only. The brief further states that such use of the statute is “inconsistent with the statute’s text, purpose and canons governing the construction of criminal status”.
The brief also cites the government’s propensity to continue using it’s interpretation that the Wire Act should apply to online poker cases by pointing to an affidavit for the seizure of at least one of the payment processor’s bank accounts in the current case, using language in several instances that the forfeiture should rely, at least in part, on the Wire Act as support of the seizure. The Wire Act however, is not charged in the criminal indictment of the defendants.
The defendant’s stance is that, because the OLC has formally rejected the “criminal division’s premise” of the application parameters of the Wire Act, the court should also reject the same division’s similar premise that the Illegal Gambling Businesses Act of 1970 (IGBA) should apply to all forms of “gambling”, including online poker. Defense arguments as to why the IGBA should, on it’s own, not apply to online poker, were also addressed in the aforementioned oral arguments in December, citing, among other reasons, that poker is not included in the list included in the law and also was not intended to apply to internet businesses that are located outside of the United States.
When reviewing the opinion, the brief states that the DOJ , by rejecting that the “bets and wagers” terminology should apply to anything other than “sporting events and contests” in the Wire Act, assert that the same rejection should apply to “bets and wagers” applying to anything other than “house backed games” in IGBA, and that internet poker does not fall into that category.
The defense reinforces it’s position, as stated in prior briefs and arguments, that internet poker is substantially different than the games recounted in IGBA and that poker varies substantially from the games of chance regulated by Unlawful Internet Gambling Enforcement Act (UIGEA), that the Rule of Lenity would still apply for the vagueness of both. For all of these reasons, and those previously argued, the defense has again asked the court to dismiss all charges against Elie and Campos.
The U.S.Attorney’s Office (USAO) disagrees that the opinion should have any bearing on the charges facing the defendants in this case. The OLC opinion was drafted following a request to clarify whether proposals by New York and Illinois to use the internet and out-of-state transaction processors to sell lottery tickets to in-state adults would be lawful when considering the Wire Act of 1970 and UIGEA, considering that the transmission of such transaction may have included incidental interstate internet transmission.
While the clarity for the case of state lottery transmissions may have been resolved by the opinion, the government contends that the opinion does not address any conclusions re UIGEA or IGBA or any other statute referenced in defense motions. In fact, the government points to the conclusion in the opinion which states that because there was a finding that interstate transmissions of wire communications that do not relate to a “sporting event or contest”,that the lotteries would then fall outside the reach of the Wire Act and therefore not be prohibited. Because of that finding, the OLC found no cause to reconcile any potential conflicts between the Wire Act and UIGEA. The OLC expressed no views as to the interpretation or scope of UIGEA in their opinion.
The government further looks to emphasize that the Opinion itself was meant to address the Wire Act only. In as much as defense pointed out that the Wire Act was referenced in a probable cause affidavit in this case, the USAO points out that that statute was not charged in this case. They further reinforce that the two gambling statutes charged against the defendants, UIGEA and IGBA, were not addressed in the OLC opinion.
The USAO points to the their claim that the Wire Act could be ambiguous based on the punctuation used in it’s wording. Specifically, in the following paragraph:
Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.
the USAO contends that it is not clear whether “sporting event or contest” refers to every instance of “bets or wagers” or only the one instance for which it follows. The 5th District Court of Appeals ruled in In re MasterCard found that “bets and wagers” would be modified by “sporting event or contest” throughout, and the Wire Act claims were dismissed. However, the USAO then cites US v Lombardo where the finding was that any “sporting event or contest” modifies only the first clause. This is the government’s explanation as to why the Wire Act is typically only charged in bookmaking cases and was not charged in this case.
The USAO accepts that the OLC relied on logic and legislative history to conclude that the phrase modified both clauses. However, they assert that that analysis has no application to either IGBA or UIGEA, which do not suffer from the same syntax and punctuation ambiguities.
Finally, the USAO states that whatever policy changes occur based on the opinion, would not affect the internet poker charges that stem from state gambling law violations, as was charged in the indictment. The government recognizes that some states, may be considering legislation to legalize certain times of internet gaming for within their borders. However, the allegations in this case, the “operation of unregulated and indeed in at least some cases dishonest internet gambling business throughout the United States, in violation of state gambling law still remains entirely unlawful”.
For those reasons, the government asks the court to deny any requests for dismissal of charges.
The trial is currently scheduled to commence on April 9, 2012.
- The Office of Legal Counsel provides authoritative legal advice to the President and all the Executive Branch agencies. ↩