Donald Trump and Federal Online Gambling Policy
The 2018 OLC Wire Act Reversal, Sheldon Adelson Influence, and Post-PASPA Federal Neutrality
Trump Background and Industry Ties
The election of Donald J. Trump in November 2016 brought an individual to the presidency with a unique personal history in commercial gaming. Unlike any prior American president, Trump had spent decades operating commercial casino resorts in Atlantic City, New Jersey, including the Trump Plaza, Trump Castle, and the multibillion-dollar Trump Taj Mahal, alongside a gaming property in Gary, Indiana. He possessed intimate firsthand knowledge of state gaming commissions, casino cash flows, and political lobbying.
However, by the time he entered the White House in January 2017, Trump had completely divested from commercial casino operations following multiple corporate bankruptcies of Trump Entertainment Resorts. His political ascension was heavily financed by major figures in the contemporary commercial gaming industry, most prominently Sheldon Adelson, the founder and chief executive of Las Vegas Sands Corporation. Adelson and his wife Miriam contributed over one hundred million dollars to Trump's 2016 campaign, inauguration, and allied political action committees.
Adelson held an intense, publicly documented antipathy toward online gambling. He argued that internet casinos and digital poker rooms could not prevent underage gambling, preyed upon vulnerable citizens, and cannibalized land-based resort casinos. Adelson founded and funded the Coalition to Stop Internet Gambling (CSIG), retaining prominent Washington lobbyists to advocate for federal legislation or administrative action that would restore a nationwide ban on all online wagering.
The 2018 Wire Act Reinterpretation
Under Attorney General Jeff Sessions and subsequently Acting Attorney General Matthew Whitaker, the Department of Justice initiated a formal reconsideration of the Obama administration's 2011 Wire Act memorandum. Career attorneys within the Criminal Division, backed by Adelson's lobbyists, argued that the 2011 Seitz memorandum had misinterpreted the legislative text and grammar of 18 U.S.C. Section 1084(a).
On November 2, 2018, Assistant Attorney General Steven A. Engel of the Office of Legal Counsel signed a new 23-page formal opinion, which the Justice Department publicly released in January 2019. The Engel memorandum reached the exact opposite conclusion of the 2011 opinion, declaring that the Wire Act is not limited to sports gambling, and that three of the four prohibitions contained in Section 1084(a) apply to all forms of commercial gambling over interstate wire communication networks.
The Engel opinion asserted that while one clause explicitly referenced sporting events, the surrounding clauses applied broadly to all bets or wagers. Furthermore, the memorandum addressed the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA), concluding that UIGEA did not alter or broaden the Wire Act's scope. In an accompanying implementation memo, Deputy Attorney General Rod Rosenstein gave state lotteries and commercial operators a ninety-day grace period to bring their operations into compliance before federal criminal enforcement commenced.
| Executive Action | DOJ Leadership | Substantive Statutory Finding | Federal Judicial Disposition |
|---|---|---|---|
| Seitz Memorandum (Nov 2011) | Eric Holder DOJ (Obama) | Wire Act limited strictly to sporting events | Upheld by First Circuit in NH Lottery (2021) |
| Engel Memorandum (Nov 2018) | Matthew Whitaker DOJ (Trump) | Wire Act applies to all interstate gambling transmissions | Vacated by District of New Hampshire (2019) |
| District Court Invalidation (2019) | Judge Paul Barbadoro | Found 2018 OLC reinterpretation textually unsupportable | Issued nationwide declaratory judgment for lotteries |
| First Circuit Affirmance (2021) | Judge William Kayatta | Affirmed Wire Act § 1084(a) confined solely to sports | DOJ allowed 90-day Supreme Court cert deadline to lapse |
Court Rebuke in NH Lottery v. Rosen
The release of the 2018 OLC opinion ignited panic across state governments. State lotteries in dozens of states utilized interstate digital networks for ticket sales, multi-state pools like Powerball and Mega Millions, and online lottery portals, generating billions of dollars for public education. If the 2018 OLC memo was enforced, state officials and their private technology vendors faced immediate federal felony liability.
In February 2019, the New Hampshire Lottery Commission, joined by its primary technology vendor NeoPollard Interactive, filed a major federal lawsuit against Attorney General William Barr in the U.S. District Court for the District of New Hampshire. The plaintiffs challenged the 2018 OLC opinion under the Administrative Procedure Act (APA), seeking a declaratory judgment that the Wire Act applied only to sports betting.
In June 2019, U.S. District Judge Paul Barbadoro issued a resounding ruling against the Department of Justice, vacating the 2018 OLC opinion nationwide. Judge Barbadoro concluded that the grammatical construction and statutory history of Section 1084 demonstrated that the sports limitation applied to the entire provision.
The Trump Justice Department appealed the decision to the U.S. Court of Appeals for the First Circuit. On January 20, 2021-the final morning of Donald Trump's presidential term-the First Circuit issued a unanimous decision affirming Judge Barbadoro's ruling in New Hampshire Lottery Commission v. Rosen (986 F.3d 110). The appellate court held definitively that the Wire Act applies exclusively to sporting events and contests, delivering a comprehensive defeat to the administration's reinterpretation effort.
Post-PASPA Boom and Federal Stance
Simultaneously, the Trump administration presided over the most consequential judicial development in modern gambling history: the Supreme Court's May 2018 ruling in Murphy v. NCAA striking down the federal sports betting prohibition under PASPA.
Judicial Precedent: New Hampshire Lottery Commission v. Rosen
The statutory prohibitions of 18 U.S.C. § 1084(a) are limited exclusively to interstate bets or wagers placed on sporting events or contests, invalidating the 2018 Department of Justice OLC reinterpretation.
Vacated the Trump administration DOJ opinion that attempted to apply Wire Act criminal penalties to non-sports internet gambling, multi-state lotteries, and interstate digital casino compacts.
During the litigation, the Trump Department of Justice filed an amicus brief arguing that PASPA was constitutional, defending federal supremacy. However, once the Supreme Court invalidated the statute, the Trump administration adopted a policy of strict federal non-interference. Despite calls from several prominent lawmakers, including Senator Chuck Schumer of New York and Senator Mitt Romney of Utah, to enact a comprehensive federal regulatory framework for sports betting, the Trump White House declined to support new federal legislation.
By choosing not to pursue a federal regulatory takeover, the administration allowed individual state legislatures to craft their own sports betting laws, licensing structures, tax rates, and mobile betting rules. Between 2018 and the end of Trump's term, more than twenty states legalized sports betting, creating a booming multi-billion-dollar commercial market governed entirely by state gaming commissions.
The 2018 OLC Engel Reversal Memo and Casino Industry Lobbying Pressure
During the presidency of Donald Trump, the Department of Justice executed an abrupt administrative reversal that threw the multi-billion-dollar state-regulated online gaming market into legal turmoil. In November 2018, the Office of Legal Counsel, under Assistant Attorney General Steven A. Engel, issued a new formal memorandum (42 Op. O.L.C. __) that repudiated the 2011 Seitz opinion and concluded that the Wire Act applies to all forms of interstate gambling, including state lotteries and online casino games.
Investigative reporting and congressional inquiries revealed that the 2018 OLC reinterpretation followed intense, sustained political lobbying by billionaire casino owner Sheldon Adelson, the CEO of Las Vegas Sands Corporation and a prominent political donor to Republican presidential campaigns. Adelson had established the Coalition to Stop Internet Gambling (CSIG), arguing that digital gaming cannibalized land-based resort casinos and created insurmountable risks of adolescent gambling addiction.
The Engel memorandum adopted a strict textualist interpretation, arguing that the plain syntactic structure of Section 1084(a) separated sports betting from general gambling transmissions. In January 2019, Deputy Attorney General Rod Rosenstein issued an enforcement directive instructing United States Attorneys to begin applying the new interpretation, granting commercial operators and state lottery divisions a temporary ninety-day grace period to dismantle multi-state data sharing networks or face federal criminal indictment.
New Hampshire Lottery Injunction and First Circuit Ruling
The Department of Justice's 2018 reversal triggered swift and furious legal retaliation from state governments. The New Hampshire Lottery Commission, joined by technology provider NeoPollard Interactive and backed by amicus briefs from seventeen state attorneys general, filed a lawsuit in the United States District Court for the District of New Hampshire under the Administrative Procedure Act (APA), challenging the OLC memorandum as arbitrary, capricious, and contrary to law.
In June 2019, U.S. District Judge Paul Barbadoro issued a sweeping declaratory judgment vacating the 2018 OLC memorandum. Judge Barbadoro concluded that the 1961 legislative record demonstrated unmistakable congressional intent to confine the Wire Act exclusively to sports betting, holding that the DOJ's contrary interpretation was textually unsupportable and violated basic principles of administrative law.
The Department of Justice appealed to the United States Court of Appeals for the First Circuit. In January 2021, in New Hampshire Lottery Commission v. Rosen (986 F.3d 110), the First Circuit unanimously affirmed Judge Barbadoro's ruling, vacating the Engel memorandum nationwide. The First Circuit holding permanently insulated state lotteries and state-licensed online casinos from federal Wire Act prosecution, marking the definitive judicial repudiation of the Trump administration's attempt to rewrite federal gambling policy through administrative fiat.
The Engel 2018 Memorandum & First Circuit Rebuke
The Engel 2018 Memorandum & First Circuit Rebuke
Assistant Attorney General Steven Engel argued that § 1084(a) syntax applied broadly to all bets, not just sports. The First Circuit in New Hampshire Lottery Commission v. Rosen (2021) struck down the memo, confirming the statute remains strictly limited to sports wagering.