IGT launches DOJ Wire Act opinion legal challenge

International Game Technology (IGT) has filed a lawsuit in the Rhode Island federal courts seeking to set aside the 2018 Department of Justice (DOJ) legal opinion criminalizing all forms of interstate online gambling under the Wire Act.

Filing a declaratory claim for damages, IGT has asked the US District Court for Rhode Island to intervene against the 2018 DOJ Office of Legal Counsel opinion which extended the prohibition of interstate communications related to sports betting to all types of gambling.

In addition to the claim for damages, IGT has cited the prior accepted interpretation of the act, suggesting that the 2018 reinterpretation “fundamentally imperils” this stance, placing the business at risk as well as state lotteries and the commercial gaming industry alike.

“OLC’s new interpretation of the Wire Act puts IGT to the choice of either fundamentally restructuring (or closing) its business or risking a federal felony prosecution,” the lawsuit states.

“Based on this severe and present hardship, IGT requests a declaratory judgment that the 2018 OLC Opinion is contrary to law and that the Wire Act applies only to “bets or wagers on any sporting event or contest,” it adds.

IGT highlighted “prohibitive” compliance costs arising from the reinterpretation including lost data and communication networks and lost profits from not being able to offer multi-jurisdictional games.

“Most state lottery contracts further require wagers to be routed through a secondary data center in a different state, or at least a sufficient distance apart from one another in the same state,” IGT said.

“This structure is in line with industry best practices to ensure uninterrupted service in the event of outages or natural disasters that impact one of the data centers.

“Even when the data centers are all located in the same state, those transmissions are routed through data and telephone networks maintained by telecommunications companies, and thus IGT has little control over how the communications are transmitted to and from the data centers,” the firm added.

Secondary costs would also impact the firm’s state lottery partners, including Rhode Island, IGT explained.

“If lotteries were suddenly illegal or forced to shut down for a prolonged period during restructuring, states would have to scramble to replace millions or even billions of dollars of state revenue.

“The resulting tax hikes and service reductions would no doubt force state officials to feel the brunt of unpopular federal policy choices,” the supplier added.

Seen as one of the biggest threats to online state lottery and gambling operations, as well as the proposed intrastate online poker shared liquidity network, the 2018 DOJ reinterpretation was successfully challenged by the New Hampshire Lottery in February 2019.

The U.S. District Court for the District of New Hampshire ordered DOJ to set aside the opinion under the Administrative Procedure Act, a decision which was later vacated by the same court in January 2021.

IGT’s suit asks for the court to declare the Wire Act applies only to “bets or wagers on any sporting event or contest” and seeks compensatory relief for its costs.

The case continues.