Lesniak: DOJ ruling could damage NJ's online gambling, sports betting market.

Byline: Jessica Perry

Lawmakers in New Jersey are warily eyeing the Department of Justice's recent strict interpretation of the Wire Act, which critics say could heavily weaken the state's online gambling and sports betting markets.

In November 2018, the DOJ's Office of Legal Counsel announced it would broaden the scope of the Wire Act, a federal law prohibiting certain kinds of gambling and wagering activing, so that any form of online gambling will be in violation of the act if it crosses state lines.

Then on Jan. 15, the DOJ announced businesses and state governments have 90 days to fully comply with law. It is not immediately clear how New Jersey's gambling industry, handled by the Division of Gaming Enforcement, will respond to the new ruling.

A DGE spokesperson did not return requests for comment.

Former state Sen. Ray Lesniak, who played a heavy hand in a U.S. Supreme Court case knocking down the near-nationwide ban on sports betting, said that alone could prove troubling for New Jersey's gambling industry, even if the patrons are physically located in New Jersey when gambling.

"If I go online to gamble on my phone [and] my internet connection goes through a transmitter out of the state, that can be considered a violation of the Wire Act," Lesniak told NJBIZ. "Same thing with payment processes."

Online sportsbooks such as DraftKings, SugarHouse, Caesars Entertainment and FanDuel, as well as fantasy leagues, depend on payment methods which at some point in the transaction could end up beyond state lines, such as PayPal, credit and debit cards.

The impact on the state's gambling economy, especially in Atlantic City, would be "disastrous," Lesniak said.

In 2011, the Obama-era DOJ ruled that in the gambling world, the Wire Act online applied to sports betting-related activities.

Since then, Delaware, Nevada, New Jersey and Pennsylvania have begun...