New Hampshire Lottery Comm'n v. Rosen

• Citation: 986 F.3d 38
• Decision Date: 20 January 2021
• Docket Number: No. 19-1835,19-1835
• Parties: NEW HAMPSHIRE LOTTERY COMMISSION ; NeoPollard Interactive LLC; Pollard Banknote Limited, Plaintiffs, Appellees, v. Jeffrey ROSEN, Acting U.S. Attorney General; United States Department of Justice; United States, Defendants, Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

986 F.3d 38

NEW HAMPSHIRE LOTTERY COMMISSION ; NeoPollard Interactive LLC; Pollard Banknote Limited, Plaintiffs, Appellees,

v.Jeffrey ROSEN, Acting U.S. Attorney General;^* United States Department of Justice; United States, Defendants, Appellants.

No. 19-1835

United States Court of Appeals, First Circuit.

January 20, 2021

Jeffrey E. Sandberg, Attorney, Appellate Staff, Civil Division, U.S. Department of Justice, with whom Ethan P. Davis, Principal Deputy Assistant Attorney General, Hashim M. Mooppan, Deputy Assistant Attorney General, and Scott R. McIntosh, Attorney, Appellate Staff, Civil Division, were on brief, for appellants.

Anthony J. Galdieri, Senior Assistant Attorney General, Civil Bureau, with whom Gordon J. MacDonald, Attorney General, was on brief, for appellee New Hampshire Lottery Commission.

Matthew D. McGill, with whom Theodore B. Olson, Lochlan F. Shelfer, Washington, DC, Joshua M. Wesneski, Debra Wong Yang, Los Angeles, CA, and Gibson, Dunn & Crutcher LLP were on brief, for appellees NeoPollard Interactive LLC and Pollard Banknote Limited.

Charles J. Cooper, David H. Thompson, Brian W. Barnes, J. Joel Alicea, Washington, DC, Nicole Frazer Reaves, and Cooper & Kirk, PLLC on brief for Coalition to Stop Internet Gambling and National Association of Convenience Stores, amici curiae.

Jonathan F. Cohn, Peter D. Keisler, Joshua J. Fougere, Daniel J. Hay, Derek A. Webb, Washington, DC, and Sidley Austin LLP on brief for International Game Technology PLC, amicus curiae.

A. Jeff Ifrah, Andrew J. Silver, Washington, DC, and Ifrah PLLC on brief for iDevelopment and Economic Association, amicus curiae.

Kevin F. King, Rafael Reyneri, Washington, DC, and Covington & Burling LLP, on brief for Association of Gaming Equipment Manufacturers, amicus curiae.

A. Michael Pratt, Philadelphia, PA, Elliot H. Scherker, Miami, FL, Nicole Leonard Cordoba, Austin, TX, Greenberg Traurig, LLP and Greenberg Traurig, P.A. on brief for The Commonwealth of Pennsylvania, amicus curiae.

Glenn J. Moramarco, Assistant Attorney General, John T. Passante, Deputy Attorney General, and Gurbir S. Grewal, Attorney General of New Jersey, on brief for the State of New Jersey, amicus curiae.

Dana Nessel, Michigan Attorney General, Fadwa A. Hammoud, Solicitor General, Melinda A. Leonard, Mark G. Sands, Donald S. McGehee, Assistant Attorneys General, Jason Ravnsborg, Attorney General, State of South Dakota, Dave Yost, Attorney General, State of Ohio, Kathleen Jennings, Attorney General, State of Delaware, Joshua H. Stein, Attorney General, State of North Carolina, Mark R. Herring, Attorney General of Virginia, T.J. Donovan, Attorney General, State of Vermont, Kevin G. Clarkson, Attorney General, State of Alaska, Josh Kaul, Attorney General, State of Wisconsin, Mary R. Harville, Senior Vice President, General Counsel & Corporate Secretary, Kentucky Lottery Corporation, Phil Weiser, Attorney General, State of Colorado, Keith Ellison, Attorney General, State of Minnesota, Lawrence G. Wasden, Attorney General of Idaho, Valerie Morozov, Legal Counsel, Rhode Island Dept. of Revenue, Division of Lottery, William Tong, Attorney General of Connecticut, Karl A. Racine, Attorney General for the District of Columbia, Brian E. Frosh, Attorney General of Maryland, Alonda W. McCutcheon, General Counsel, Tennessee Education Lottery Corporation, on brief for the State of Michigan, Michigan Bureau of State Lottery, and South Dakota, Ohio, Delaware, North Carolina, Virginia, Vermont, Alaska, Wisconsin, Colorado, Minnesota, Idaho, Connecticut, District of Columbia, Maryland, the Rhode Island Department of Revenue, Division of Lottery, the Kentucky Lottery Corporation, and the Tennessee Education Lottery Corporation, amici curiae.

Before Lynch and Kayatta, Circuit Judges.^**

KAYATTA, Circuit Judge.

In 2018, the Office of Legal Counsel ("OLC") of the U.S. Department of Justice ("DOJ") issued a legal opinion, adopted by DOJ, that all prohibitions in the Wire Act of 1961, save one, apply to all forms of bets or wagers (the "2018 Opinion"). The 2018 Opinion superseded an OLC opinion from 2011 concluding that the Wire Act's prohibitions were uniformly limited to sports gambling (the "2011 Opinion"). Suffice it to say, the more expansive construction of the Wire Act adopted in 2018 caused great consternation among the many states and their vendors who, as the 2018 Opinion acknowledged, had "beg[u]n selling lottery tickets via the Internet after the issuance of [the] 2011 Opinion." Not eager to scrap or shrink its lottery, the New Hampshire Lottery Commission and one of its vendors, NeoPollard,¹ commenced this action in February 2019, seeking relief under the Declaratory Judgment Act and the Administrative Procedure Act. The district court granted both requests, ruling that the Wire Act is limited to sports gambling, as OLC initially opined.

The Attorney General, DOJ, and the United States (collectively "the government") appealed the district court's judgment.

For the following reasons, we hold that the controversy before us is justiciable and that the Wire Act's prohibitions are limited to bets or wagers on sporting events or contests. We depart from the district court only by deciding that relief under the Declaratory Judgment Act alone is sufficient.

I.

A.

In 1961, Congress passed the Wire Act. See 18 U.S.C. § 1084 (codifying Pub. L. No. 87-216, § 2, 75 Stat. 491, 491 (1961)). The subsection relevant for our purposes, section 1084(a), reads:

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 question the parties present to us is whether the phrase "on any sporting event or contest" (the "sports-gambling qualifier") qualifies the term "bets or wagers" as used throughout section 1084(a).

Although Congress enacted the Wire Act in 1961, this question seems not to have raised its head until after a substantial amount of commerce had moved to the internet four decades later. In 2002, the Fifth Circuit opined in a private civil suit that "[a] plain reading of the statutory language [of the Wire Act] clearly requires that the object of the gambling be a sporting event or contest." In re MasterCard Int'l Inc., 313 F.3d 257, 262 n.20 (5th Cir. 2002) (second alteration in original) (quoting In re MasterCard Int'l Inc., Internet Gambling Litig., 132 F. Supp. 2d 468, 480 (E.D. La. 2001) ). In May 2005, the Deputy Assistant Attorney General of DOJ's Criminal Division begged to differ, issuing a letter to inform the Illinois Lottery Superintendent that DOJ believed that prospective legislation pending in the Illinois Senate to create a website where people could purchase lottery tickets over the internet would violate section 1084. DOJ explained its view that, although the purchase of lottery tickets might be lawful in Illinois, "the acceptance of wagers through the use of a wire communication facility by a gambling business, including [one] operated by ... a state, from individuals located ... within the borders of the state (but where transmission is routed outside of the state) would violate federal law." The letter equated the sale of lottery tickets with the acceptance of wagers and deemed the interstate transmission of such wagers violative of the Wire Act regardless of whether they were placed on sporting events or contests.

Four years later, in December 2009, authorities from New York and Illinois requested the views of DOJ's Criminal Division on the legality of the states' plans to use the internet and out-of-state transaction processing systems to sell lottery tickets to adults within their states. The states pointed out that their proposals had been designed to comport with the Unlawful Internet Gambling Enforcement Act ("UIGEA"), 31 U.S.C. §§ 5361 - 5367, and argued that the Wire Act did not bar their proposed systems because section 1084(a) was limited to sports-related gambling. In response, and in keeping with its 2005 letter to Illinois, the Criminal Division opined that section 1084(a) was not so limited and that the Act would prohibit the use of the internet to transmit bets or wagers of any kind, even if the transactions originated and ended within a single state. The Criminal Division nevertheless noted the tension that this reading of the statute created with the UIGEA, which explicitly excludes from its prohibition of "unlawful Internet gambling" the "placing, receiving, or otherwise transmitting a bet or wager where ... the bet or wager is initiated and received or otherwise made exclusively within a single State," 31 U.S.C. § 5362(10)(B), despite "[t]he intermediate routing of electronic data" through other states, id. § 5362(10)(E). The Criminal Division noted the "potential oddity" whereby the Wire Act's reference to "the use of interstate commerce" would criminalize otherwise lawful state-run, in-state lottery transactions. For these reasons, the Criminal Division sought guidance from OLC on whether the use of the internet for in-state lottery sales with out-of-state processing violated the Wire Act.

In its 2011 Opinion, OLC agreed with the Fifth Circuit, concluding that "the Wire Act does not reach interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ " and ultimately concluded that the states' lottery-related proposals did not violate the Wire Act. See Whether the Wire Act Applies to Non-Sports Gambling, 35 Op. O.L.C. 134, 151 (2011) ("2011 Opinion").

So matters stood until 2017, when the Criminal Division asked OLC to reconsider...