Why a New Hampshire legal case is vital to U.S. sports betting growth

New Hampshire -- not New Jersey -- is the new epicenter for legal drama that could shape the expansion of sports betting and fantasy one year after the Supreme Court paved the way for state-by-state legalization.

Earlier this year, the New Hampshire Lottery sued the U.S. Department of Justice after a governmental shift in policy involving a federal law known as the Wire Act of 1961.

In 2011, Justice Department lawyers in the Obama administration concluded that the Wire Act applied only to sports betting. Late last year, government lawyers switched gears and wrote that the Wire Act also applied to wagering unrelated to sports.

After an April 11 hearing, the case is pending before U.S. District Judge Paul Barbadoro.

Certain aspects of sports betting could be impacted depending on how Judge Barbadoro rules.

"What the New Hampshire challenge may help clarify is whether intermediate routing of [sports betting] information is prohibited," wrote Jennifer Roberts, the associate director of the International Center for Gaming Regulation at the University of Nevada, Las Vegas, in an email to ESPN.

Roberts specifically flagged mobile sports betting "since it may be impossible to control and confine the transmission of bets/wagers or information through Internet providers."

Fantasy sports could be impacted as well, especially in cross-state transactions where legality is murky, such as those involving Texas and Illinois.

"It remains uncertain whether DFS [daily fantasy sports] will be affected," Roberts wrote. "The DOJ could take the position that DFS involves the placement of bets or wagers on sporting events or contests, which could seriously impact the allowance of DFS products across multiple states."

The yet-to-be-resolved case has not stopped states from moving forward with sports betting legislation, however.

"While the case has been pending, dozens of states have introduced new sports gambling legislation, and a handful have passed such legislation," said Jeff Ifrah, founding member of Ifrah Law PLLC in Washington and counsel to iDEA, a non-profit association that filed an amicus brief in the New Hampshire case. "So the [Justice Department's new stance] and the case itself do not appear to be delaying the roll-out of expanded sports betting across the country."

Disputes about the scope of the Wire Act as it applies to sports also arose in the long court battle started by the five sports leagues that first sued then-New Jersey governor Chris Christie in 2012.

"New Jersey is incorrect in asserting that [the Wire Act's] prohibition on the interstate transmission of wagers 'does not apply where a state has legalized the activity,'" wrote Paul Clement, the lead attorney for the NCAA, NFL, NHL, NBA and Major League Baseball during the Supreme Court case. "The interstate transmission of 'bets or wagers' remains prohibited."

The NCAA, PGA Tour and Major League Baseball did not respond to a question about their view of the ongoing New Hampshire case.

The current dispute in New Hampshire involving the Wire Act has even more connective tissue to the Supreme Court's decision in the New Jersey sports betting case one year ago.

Indeed, the Supreme Court specifically flagged the Wire Act last year.

"[The Wire Act] outlaws the interstate transmission of information that assists in the placing of a bet on a sporting event, [but] only if the underlying gambling is illegal under state law," Justice Samuel Alito wrote on May 14, 2018.

Ted Olson and Matthew McGill -- the duo from the Gibson Dunn law firm in Washington who guided New Jersey to its Supreme Court win -- are also involved in the New Hampshire case, representing one of the state lottery's service providers.

"In the New Hampshire litigation, the one thing everyone agrees on is that the Wire Act applies to sports betting," McGill wrote in an email to ESPN. "At that same time, though, no one is suggesting legal sports betting in New Jersey and other states violates the Wire Act.

"This makes perfect sense because the Wire Act was intended to target illegal gambling outfits run by mobsters -- not wagering schemes licensed and regulated by states."

The judge set to rule in the New Hampshire case even predicted that the current lawsuit would probably make its way to the nation's capital.

"I have a strong feeling that however I resolve the case ... it is likely to be resolved by the United States Supreme Court either way," Judge Barbadoro said during last month's court hearing.