In November 2018, the DOJ changed its 2011 interpretation of the Wire Act of 1961. The new interpretation says that all online lottery games are illegal. However, originally the Wire Act passed in an effort to combat mob tampering by banning wagering across state lines.
So, Federal Judge Paul Barbadoro gave the DOJ until the end of April to decide officially whether or not online state lottery games violated the act. However, on Thursday, April 25, DOJ officials were still weighing their options.
Subsequently, MI Lottery and six other states that sell lottery tickets online could be facing a major loss of revenue. The Associated Press estimates that the states would lose at least a combined $220 million in annual revenue.
Judge Paul Barbadoro also said he expects the case to go all the way to the U.S. Supreme Court.
Since Michigan uses part of the money generated by its lottery to bolster public education. Per the Michigan Lottery website, $941 million was given to schools in 2018; 26 cents of every lottery dollar went to Michigan’s School Aid Fund.
The Michigan Lottery currently has dozens of online games, with prizes reaching up to $500,000. Tickets for Power Ball and the Mega Millions drawing can also be purchased online.
Timing
In short, DOJ’s ruling comes at a time when online lottery games are becoming a point of emphasis for MI Lottery. In its 2018 Financial Report, the bureau said it wanted to increase online wagers by 9 percent and add 27 new games in 2019.
According to the report, “iLottery Games” resulted in $93.7 million in revenue for the Michigan Lottery. Although that does not specify whether or not “iLottery” refers to online-only. A 9 percent increase would push that figure over $100 million.
“Like nearly every state lottery in this country, Michigan Lottery generates hundreds of millions of dollars to fund education.” Michigan Attorney General Dana Nessel said in a March statement after filing a brief which supported New Hampshire’s lawsuit.
“Billions of dollars are generated annually across this country for critical governmental services including schools, senior citizens programs, first responders and infrastructure programs. This new interpretation of the law could have a dire effect on these programs by threatening their funding source.”
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