CONCORD — A Trump administration opinion on the legality of online lottery sales puts at risk at least $5 million a year in New Hampshire Lottery profits, according to its executive director.
State officials say they will file a lawsuit if that becomes necessary to protect those millions, which help fund New Hampshire schools.
Lottery executives across the country have universally condemned a U.S. Department of Justice guidance that dramatically expands what the federal government views as betting across the internet in violation of the federal Wire Act.
At the very least, Lottery Executive Director Charles McIntyre said the ruling deems illegal the purchasing of New Hampshire lottery tickets on the web.
“Certainly at the very narrowest interpretation we are looking at $4 million to $6 million this year and $6 million to $8 million next year, as this represents what we are selling now through the internet online channel,” McIntyre said.
Last September New Hampshire became the sixth state to roll out online lottery products. McIntyre said it’s been very well-received.
“This revenue is growing month by month and profitability now is more than $300,000 a month,” McIntyre said.
In the Nov. 2 opinion, Assistant U.S. Attorney General Steven Engel fully concedes this decision overturns a 2011 guidance from the same office, which concluded that only interstate sports betting was in violation.
The North American Association of State and Provincial Lotteries issued a strong statement this week saying the reversal on the Wire Act guidance is bad for the industry. This group includes most U.S. and Canadian lotteries, along with some providers of lottery products.
“The recent United States Department of Justice, (DOJ) reinterpretation of the Wire Act of 1961 creates a substantially detrimental impact on the lottery industry, including traditional retail-based draw and instant lottery games, as well as traditional lottery games offered over the Internet, and the billions of dollars for good causes lotteries provide,” the statement said.
The chief prosecutors of New Jersey and Pennsylvania, two of the first states to legalize online lottery betting, said the opinion suggests criminal charges can be brought, “even where the interstate transmission of information is merely incidental to betting that is otherwise entirely lawful under state law.”
In a letter this week, New Jersey AG Gurbir S. Grewal and Pennsylvania AG Josh Shapiro urged acting Attorney General Matthew Whitaker to overrule the opinion.
“The potential breadth of this opinion is deeply troubling. The opinion casts doubt not only on traditional online gaming but also multi-state lottery drawings (such as Power Ball and Mega Millions) and online sales of in-state lottery tickets.”
As an alternative to overruling this guidance, the two state prosecutors said the federal government should choose not to enforce this provision and respect existing state laws that make these wagers legal.
That’s how the federal government in recent years has treated the possession and use of recreational marijuana where states have made it legal, even though it remains against federal law to use it.
McIntyre said New Hampshire and the other states went ahead with legislation to make online ticket purchases legal because the Obama administration in 2011 had said it was permitted.
”We went forward with the best of intentions believing that all of this would be allowed and that’s what is so troubling about this development,” McIntyre said.
An official with one of the leading think tanks on the gambling industry said federal prosecutors may not have thought through the consequences of this opinion.
”This could have huge implications for things I don’t think the DOJ intended to affect,” said Jennifer Roberts, associate director of the University of Nevada Las Vegas’ International Center for Gaming Regulation.
”Anything that crosses state lines through intermediate routing of data could possibly be impacted.”
Among those activities that could be considered illegal with this ruling, Roberts said, would include daily fantasy sports and marketing lottery sales across state lines.
McIntyre said he’s spoken with both Gov. Chris Sununu and Attorney General Gordon J. MacDonald about the matter.
“This is a serious enough threat to a major revenue source that I wanted them to be aware of it and to discuss what our options are,” McIntyre said.
Lottery industry experts say New Hampshire is the best place for a lawsuit to proceed if state officials want to pursue it.
That’s because the U.S. Circuit Court of Appeals in Boston, Mass. ruled in 2014 that only interstate sports betting was illegal under the Wire Act.
On Thursday, the House Ways and Means Committee hosted its public hearing on legislation to legalize sports betting in New Hampshire.
As written, the bill would allow the state lottery to operate its own sports book as well as allowing retail businesses to open their own after getting licenses from the state to do so.
State Rep. Timothy Lang, R-Sanborton, is the prime sponsor of the measure (HB 480).
McIntyre said sports betting online is permitted, but only if the transaction is made in the home state.
“New Jersey now has sports betting online and the key is that wager has to be placed within the state’s borders,” McIntyre said.
The casino industry has been mixed about this latest opinion, McIntyre said.
The Coalition to Stop Internet Gambling is financed by casino executive Sheldon Adelson, a close friend and campaign backer of President Trump who has long advocated for Congress to outlaw online gambling.
“CSIG is pleased to see today’s decision by the Department of Justice to reverse an Office of Legal Counsel opinion that was as problematic legally as it was morally,” the coalition said after the ruling was announced.
“Today’s landmark action to rightfully restore the Wire Act is a win for parents, children and other vulnerable populations.”