A new interpretation of a federal law by the U.S. Department of Justice could mean some nationwide games offered by the Virginia Lottery would have to stop, cutting off about 15 percent of the agency’s annual sales.
The Virginia Lottery is following legal proceedings “very closely” related to the opinion, said spokesperson John Hagerty, but has not filed its own lawsuit against the federal government.
The DOJ issued an opinion in late 2018 about the Wire Act, which was passed in 1961 to curb gambling operations that funded organized crime. Federal officials now say the law is “not uniformly limited to gambling on sporting events or contests,” and prohibitions in it apply to lottery games played among states, like the Mega Millions game.
In 2010, New York and Illinois wanted clarification on whether its lottery agencies could use the internet and out-of-state processors to sell lottery tickets to people living in their states. The Department of Justice at the time said the Wire Act didn’t apply to lottery games.
The new opinion reverses that.
“While the Wire Act is not a model of artful drafting, we conclude that the words of the statute are sufficiently clear and that all but one of its prohibitions sweep beyond sports gambling,” the opinion states.
The New Hampshire Lottery Commission sued over the ruling. The state, like Virginia, is also part of several multi-jurisdictional groups that sell tickets for larger lottery games, like Powerball and Mega Millions.
The recent opinion could make it illegal to operate any lottery game, since much of the infrastructure for lottery games — companies that create the tickets or handle the randomization aspect — are national companies, New Hampshire officials wrote in the complaint.
Last month, the federal government asked a judge to dismiss New Hampshire’s lawsuit because the 2018 opinion was not meant to target lotteries or lottery vendor, a claim disputed by states and lottery agencies.
A judge later ruled the lawsuit could proceed while the DOJ reviews the most recent opinion.
The Virginia Lottery signed on to an amicus brief in the case with six other state lottery agencies, five states and the District of Columbia. Attorney General Mark Herring also signed on to a letter with 24 other attorneys general asking U.S. Attorney General William Barr for a meeting to discuss what a change in the Wire Act’s interpretation would mean.
“State-run and multi-state lotteries are a consistent source of state revenue, representing many billions of dollars in annual funding used to fund vital state services such as schools and other educational initiatives, services for senior citizens, and infrastructure projects,” the attorneys general wrote to Barr. “In light of these concerns, we ask for time to meet with you in the coming weeks to confirm that the department does not intend to enforce this law against state lotteries and their associated vendors.”
In the brief filed by lottery agencies around the country, Michigan officials estimated the 47 government-operated lotteries brought in a combined $80 billion in revenue in 2017. In New Hampshire’s complaints, attorneys said the 45 states that offer multi-jurisdictional games made a combined $7.8 billion in 2017.
“The lotteries are now faced with choosing between permanently losing millions of dollars in funding for vital public services or potentially facing criminal liability,” Michigan lottery officials wrote in the brief Virginia signed on to.
Virginia uses five out-of-state vendors for its games, according to Hagerty, the lottery spokesman. Last fiscal year, 12 percent of the agency’s $2.1 billion in sales were from three multi-state games Virginia offers.
Last year in Virginia, the Cash4Life game made $15.2 million; the Powerball game brought in $130.78 million and MegaMillions made $110.39 million.
It’s hard to know exactly how much those games’ sales ended up going toward public education. Lottery proceeds go toward K-12 education in Virginia, which is the money left after paying commissions to retailers who carry the games, the agency’s operating costs and prizes.
A decision in the New Hampshire case is expected by early June.