Will Mississippi lottery be derailed before it starts by fed ruling?
Mississippi's lottery could be hamstrung before it even starts later this year as states with lotteries worry over the U.S. Department of Justice's reinterpretation of a federal gambling law.
Mississippi Attorney General Jim Hood and attorney generals from 43 other states have expressed concern about a DOJ statement that it is reconsidering whether the federal Wire Act applies to non-sports gambling. If applied, it could prohibit inter-state, high jackpot games such as Powerball and Mega Millions that entice millions of people to buy lottery tickets.
A new interpretation could reverse DOJ’s 2011 legal opinion that prohibited only interstate transmission of information regarding sporting events or contests. Some state officials worry a reversal also could impact slot machines and other casino gambling.
“This change could potentially have devastating consequences for the lottery Mississippi has finally established,” Hood said in a statement “Many national and international companies operate in our state, and this reversal creates confusion for state regulators to determine if the companies comply with the Wire Act. Our lottery will fund much needed infrastructure and education, and this opinion could place the future of online gaming and lottery in Mississippi in the hands of the federal government.”
Mississippi lottery board Vice Chairman Gerard Gibert said the five member board has discussed the issue at length. Gibert said he had been in a meeting last week with attorneys for the lottery board, the state and a potential vendor about the law.
"The deal right now, based on the most recent memo from the DOJ is that they are really not sure at this point on where they stand on state lotteries and that they are not going to give us anything more definitive until June 14," Gibert said.
In a letter dated April 8 to U.S. attorneys, assistant attorney generals and the director of the FBI, Deputy U.S. Attorney General Rod Rosenstein's office said the department is reviewing the question whether the Wire Act applies to state lotteries and their vendors. He said Department of Justice attorneys should refrain from applying the law to state lotteries and their vendors until the review is completed and a decision made.
"Our plan at this point is business as usual,"Gibert said, "we are certainly not going to stop with our progress ... We are proceeding as planned until we get something more definitive."
Gibert said the issue is more of a technical matter. He said the Wire Act law is very old and the intent of it was to protect against placing bets from out of state into states where it's not illegal, in particular sports betting.
If DOJ strictly interprets the Wire Act, it would not only affect every state lottery, but Gibert said he would argue it could potentially place every casino at risk. He said sometime casino software and digital circuits are located out of state.
"It's a virtual world we live in," Gibert said.
Gibert said the Wire Act law was written around old analog systems whereas most everything today is digital.
In a March 21 letter to U.S. Attorney General William Barr, state attorneys general including Hood asked for a meeting to discuss the potentially "sweeping" implications on state lotteries.
After decades of debate, Mississippi lawmakers last year in a special session approved a state lottery. It is expected to be up and running by the end of this year, with scratch off tickets possibly available by late summer. Mississippi's lottery is expected to net the state about $40 million the first year, then $80 million to $100 million a year thereafter.
For the next decade, up to $80 million a year from lottery proceeds will go toward working on state roads and bridges or to match federal infrastructure money. Any revenue above $80 million would go to public education, the Education Enhancement Fund.