When legal battles linger for more than a year, the arguments made can come to seem outdated before a case is even settled.
Take the New Hampshire Lottery’s ongoing lawsuit against the U.S. Department of Justice over a Dececember 2018 opinion that put into question the fate of all lotteries in the country, because of technology that arguably makes even in-state, grocery store purchases illegal.
Yet in a filing formalized last week, Michigan Attorney General Dana Nessel noted, “The Michigan Bureau of State Lottery and the nation’s 46 other government-operated lotteries raised over $80 billion in gross revenues in 2017 to support public education, college scholarship, environmental protection, senior citizens, first responders, and infrastructure projects.”
Lotteries cut jackpots
Amid the worldwide COVID-19 pandemic, state lottery sales at retailers have plummeted as most of the U.S. has landed in virtual lockdown. Powerball announced last week that it will cut in half its minimum annuity jackpot size from $40 million to $20 million. The minimum increase between drawings will now be $2 million, down from $10 million.
With state tax revenues plummeting due to the economic crisis, online lottery tickets might be in position to provide a boost. Yet only New Hampshire, Michigan, Kentucky, Illinois, georgia, and Pennsylvania offer online lottery sales.
If the DOJ prevails in this case – however unlikely that result might be, given a firm ruling by a U.S. District Court Judge last summer – then state services will be even further damaged.
Pennsylvania with its own billion reasons for filing brief backing NH Lottery's fight against DOJ's amended interpretation of The Wire Act: https://t.co/WQraAZpcDq feds may have stepped on a hornet's nest here re lotteries
— John Brennan (@BergenBrennan) March 9, 2020
As New Hampshire attorneys wrote, it is far more than Powerball and Mega Millions that could be impacted by an edict that the Federal Wire Act of 1961 covers far more than just interstate sports betting.
“Pursuant to industry regulation and best practice, lotteries are required to have duplicate [computer gaming system] locations so that they can continue to operate if one system fails,” the attorneys told the court.
“Frequently, these duplicate systems are sited in different states to create sufficient geographical diversity to continue operations in the event of a natural disaster. … To the extent that the [Lottery] cannot utilize internet communications for its operations, sales would likely be reduced to approximately 25% of their current level.”
And that insight was made even before the COVID-19 crisis took root.
(What makes this even odder is that the horse racing industry has offered online wagering for more than a decade, but that would not be impacted at all by however the New Hampshire Lottery case plays out.)
Even the judge who has ruled in favor of the New Hampshire Lottery sees this playing out all the way to the U.S. Supreme Court unless the DOJ stops digging in its heels.
The NJ sports betting parallel
The whole saga is reminiscent of the New Jersey sports betting saga, which played out from 2012-18 before the U.S. Supreme Court sided with the state and against the NFL and its fellow plaintiffs in finding a 1992 federal law prohibiting most sports betting unconstitutional.
The case continued even as NBA Commissioner Adam Silver came out in favor of legal sports betting in 2014 – albeit preferring federal oversight. The NFL ramped up its game totals in London, playing in a stadium where fans visiting the stadium can make a sports wager, buy fish and chips, and a beer while walking the concession area.
The NHL, another plaintiff in that case, welcomed the debut of the Vegas Golden Knights franchise in 2017. MLB formed a partnership in 2013 with DraftKings, a daily fantasy sports giant that offers fans a chance to put up an “entry fee” and compete in contests that award prizes as large as $1 million to contestants whose chosen players produce the most impressive statistical results.
The NCAA does not hold “March Madness” tournament games in Las Vegas, but a half-dozen western U.S. college conferences have held their tournaments – with the winner guaranteed a spot in the March Madness field – in that city just days before the “main event” begins.
Once the Supreme Court did rule that any state could offer sports betting, DraftKings and chief rival FanDuel seamlessly got into that field and now offer sports betting alongside their DFS products in numerous states.
Show me the money
New Jersey sports betting plaintiffs NHL, NBA, and MLB are among those who wasted little time adjusting to the “new normal” of sports betting in spite of those six years of insistence that such wagering would cause “irreparable harm” to their sports.
Once it turned out there was new revenue to be had, lots of minds changed very quickly.
Meanwhile, the U.S. federal government continues to press on against lotteries (not to mention interstate online poker compacts) in spite of the national economic crisis.
The leagues’ fight against sports betting (which was sporadically backed by DOJ over the years) eventually seemed like an anachronism.
Given the current economic realities, there seems to be a significant chance that the fight against lottery sales will wind up in the same boat.