International Game Technology PLC et al v. Garland et al

Filing 21

MEORANDUM AND ORDER: Defendants' Motion to Dismiss, ECF No. 14 , is DENIED and Plaintiffs' Cross-Motion for Summary Judgment, ECF No. 16 , is GRANTED. So Ordered by District Judge William E. Smith on 9/15/2022. (Urizandi, Nissheneyra)

Case 1:21-cv-00463-WES-PAS Document 21 Filed 09/15/22 Page 1 of 24 PageID #: 156

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
INTERNATIONAL GAME TECHNOLOGY
)
PLC, and IGT GLOBAL SOLUTIONS
)
CORP.,
)
)
Plaintiffs,
)
)
v.
)
C.A. No. 21-463 WES
)
MERRICK B GARLAND and
)
THE UNITED STATES DEPARTMENT
)
OF JUSTICE,
)
)
Defendants.
)
___________________________________)
MEMORANDUM AND ORDER
WILLIAM E. SMITH, District Judge.
The substantive question of statutory interpretation at the
center of this case – whether the Wire Act of 1961 1 reaches nonsports

betting

Circuit.

–

has

been

definitively

decided

in

the

First

See N.H. Lottery Comm’n v. Rosen, 986 F.3d 38, 45 (1st

Cir. 2021) (“NHLC II”).

Plaintiffs, International Game Technology

PLC (“IGT PLC”) and IGT Global Solutions Corporation (“IGT GS
Corp.”) (together, “IGT”), seek for themselves what the plaintiffs
in NHLC II obtained: a declaratory judgment that the Department of
Justice may not prosecute them for non-sports betting under the
Wire Act. See id.; Compl. ¶ 60, ECF No. 1. In response, Defendants
Attorney General Merrick Garland and the U.S. Department of Justice

1

See 18 U.S.C. § 1084(a).

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(“DOJ”) moved to dismiss under Rule 12(b)(1), arguing that the
expiration of a DOJ forbearance period without like prosecutions
and the existence of the NHLC II decision itself render the threat
of future prosecutions too speculative an injury to confer Article
III standing.
Before the Court are Defendants’ Motion to Dismiss for Lack
of Jurisdiction, ECF No. 14, and Plaintiffs’ Cross-Motion for
Summary Judgment, ECF No. 16.

For the reasons that follow,

Defendants’ Motion to Dismiss is DENIED, and Plaintiffs’ Motion
for Summary Judgment is GRANTED.
I.

BACKGROUND
A.

Plaintiffs’ Operations

Based in London, England, Plaintiff IGT PLC is the world’s
largest end-to-end gaming company.

Compl. ¶¶ 5, 25. 2

Plaintiff

IGT GS Corp. is its wholly owned U.S. subsidiary and the largest
provider of gaming and lottery services in the United States.
¶ 6.

Id.

IGT GS Corp. is organized under the laws of Delaware and has

its principal place of business in Providence, Rhode Island.

Id.

It provides technical support, equipment, and management services
to thirty-seven out of forty-six state lotteries, including three

To color the background of the case, the Court draws on the
well-pleaded facts of the Complaint and the undisputed facts
submitted for summary judgment, and takes notice of some relevant
procedural history discussed in N.H. Lottery Comm’n v. Rosen, 986
F.3d 38 (1st Cir. 2021).
2

2

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states which sell tickets through the internet (“iLottery”).

Id.

IGT’s data center in Rhode Island is the primary or secondary data
center for seven state lotteries.

Id. ¶ 28.

IGT is also a leading

manufacturer and operator of casino-style gaming machines, like
slot machines.

Id. ¶ 33.

Some of these gaming machines allow for

the pooling of jackpots across multiple casinos using a data
network.

Id.

¶ 34(c).

Finally,

IGT

offers

internet-based

gambling, so-called “iGaming”, in the six states in which it is
legal to do so for money.

Id. ¶¶ 36-37.

iGaming, like these other

services, requires the use of wires to transmit data across state
lines, and thus perhaps falls within the reach of the Wire Act.
Id. ¶ 38.
B.

Shifting Interpretations of the Wire Act

IGT’s standing hinges, in large part, on the likelihood of
its criminal prosecution under the Wire Act.

It is necessary,

therefore, to recount in some detail the history of the DOJ’s
shifting interpretations as to the scope of Wire Act and the NHLC
litigation which precedes this case.
The relevant section of the Wire Act includes four related
clauses.

Each prohibits different aspects of making bets and

wagers using wire communications that cross state lines. 3
3

The statute provides:

Whoever being engaged in the business of betting or
wagering knowingly uses a wire communication facility
for the transmission in interstate or foreign commerce
3

The

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second prohibitional phrase is explicitly limited to “bets or
wagers on any sporting event or contest.” See 18 U.S.C. § 1084(a).
The pivotal question at issue in various DOJ opinions and in NHLC
II was whether the whole statute is limited to sports betting, or
whether

the

limiting

language

applies

only

to

the

second

prohibition, such that the rest of the statute criminalizes nonsports betting.

NHLC II, 986 F.3d at 45 (“The question the parties

present to us is whether the phrase ‘on any sporting event or
contest’

(the

‘sports-gambling

qualifier’)

qualifies

the

term

‘bets or wagers’ as used throughout section 1084(a).”).
Until 2011, the DOJ took the position “that the Wire Act is
not limited to sports wagering and can be applied to other forms
of interstate gambling.”
Sports

Gambling,

35

See Whether the Wire Act Applies to Non-

Op.

O.L.C.

134,

Opinion”); NHLC II, 986 F.3d at 45-46.
academic question.

136

(2011)

(“2011

OLC

This was not merely an

Between 2005 and 2011, the DOJ prosecuted at

least seventeen cases of non-sports betting under the Wire Act.
NHLC II, 986 F.3d at 50.

In 2009, the DOJ responded to inquiries

of [1] bets or wagers or [2] information assisting in
the placing of bets or wagers on any sporting event or
contest, or [3] for the transmission of a wire
communication which entitles the recipient to receive
money or credit as a result of bets or wagers, or [4]
for information assisting in the placing of bets or
wagers, shall be fined under this title or imprisoned
not more than two years, or both.

18 U.S.C. § 1084(a).

4

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from New York and Illinois about their plans to use IGT’s internetbased lottery systems.

Id. at 45; see also Compl. ¶ 48.

It made

clear that under its view of the Wire Act, these systems were
criminal.

NHLC II, 986 F.3d at 45-46.

At the same time, the DOJ Criminal Division recognized a
tension between its position on state lotteries and specific
statutory carve outs for state lotteries created by Congress in a
2006 statute. 4

As a result, it sought further guidance from the

DOJ’s Office of Legal Counsel (“OLC”) as to whether the Wire Act
reached internet-connected state lotteries. Id. The OLC responded
by reversing its prior position about the scope of the Wire Act.
It

concluded

that

“the

Wire

Act

does

not

reach

interstate

transmissions of wire communications that do not relate to a
‘sporting event or contest.’”

2011 OLC Opinion 151.

In other

words, it determined the Wire Act only prohibits sports betting;
the

state

lotteries,

along

with

other

forms

of

non-sports,

interstate gambling, were safe from prosecution.
IGT, and the gaming and lottery industry more broadly, relied
on this guidance as their business developed.

Compl. ¶¶ 48-51.

As noted, many aspects of IGT’s business now involve non-sports
betting,

including

its

land-based

gaming

machines,

iGaming,

iLottery systems, and even its more traditional state lotteries,
The Unlawful Internet Gambling Enforcement Act (“UIGEA”),
31 U.S.C. §§ 5361-5367.
4

5

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which verify and authorize ticket purchases through interstate
wire transmissions.

Id. ¶¶ 40-47.

In 2017, the DOJ Criminal Division asked the OLC to reconsider
its position.

See NHLC II, 986 F.3d at 46.

OLC did so, and

ultimately reverted to its pre-2011 position, concluding that the
Wire Act reached non-sports betting, like lotteries and internetconnected slot machines.
Cross-Mot.

Summ.

J.

¶ 1

See Pls.’ Statement Undisp. Facts Supp.
(“Pls.’

SUF”),

ECF

No.

16-2

(citing

Reconsidering Whether the Wire Act Applies to Non-Sports Gambling,
42 Op. O.L.C. __, 2018 WL 7080165 (Nov. 2, 2018) (“2018 OLC
Opinion”)).

In

this

latest

opinion,

the

OLC

“justified

its

reversal on the grounds that the 2011 Opinion did not devote
adequate attention to either the text of the statute or the canons
of statutory construction, was ‘of relatively recent vintage,’ and
departed from DOJ’s former position.”
(citing 2018 OLC Opinion 14).

NHLC II, 986 F.3d at 46

The Deputy Attorney General adopted

this opinion as the DOJ’s position on January 15, 2019.

Pls’ SUF

¶ 2.
C.

NHLC Litigation

In response to the 2018 OLC Opinion, the New Hampshire Lottery
Commission and its vender, NeoPollard (an IGT competitor), sought
both a declaratory judgment that the Wire Act applied only to
sports betting and an order under the Administrative Procedure Act

6

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(“APA”) setting aside the 2018 OLC Opinion. 5

See N.H. Lottery

Comm’n v. Barr, 386 F. Supp. 3d 132, 136 (D.N.H. 2019) (“NHLC
I”), aff'd in part, vacated in part sub nom. N.H. Lottery Comm’n
v. Rosen, 986 F.3d 38 (1st Cir. 2021).

In a thorough order, the

district court held that the threat of prosecution was significant
enough to confer standing, id. at 140-45, and that, as a matter of
statutory interpretation, the Wire Act only criminalizes sport
betting, id. 147-57.

As a remedy, the court entered a declaratory

judgment that “binds the United States vis-à-vis NeoPollard and
the [NHLC] everywhere the plaintiffs operate or would be otherwise
subject to prosecution,” and ordered that the 2018 OLC Opinion be
set aside under the APA.

Id. at 158-159.

On review, the First Circuit upheld the district court’s order
as to standing and its interpretation of the Wire Act.

NHLC II,

986 F.3d at 54-62; id. at 61-62 (“Like the Fifth Circuit, and the
district

court

in

this

case,

we

therefore

hold

that

the

prohibitions of section 1084(a) apply only to the interstate
transmission of wire communications related to any ‘sporting event
or contest.’”).

However, it vacated the relief granted under the

APA, concluding that declaratory relief was an adequate remedy
under the circumstances.

Id.

Within the First Circuit therefore,

The relevant portion of the APA states that a “reviewing
court shall . . . hold unlawful and set aside agency action,
findings, and conclusions found to be . . . not in accordance with
law.” 5 U.S.C. § 706(2)(A).
5

7

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the ping-ponging question of the Wire Act’s proper scope has been
definitively answered.

That decision is of course binding on this

Court, and independently compelling.

See NHLC II, 986 F.3d at 54-

62 (closely analyzing text, competing statutory cannons, evident
purpose, and legislative history to construe the Wire Act).
After the 2018 OLC Opinion was first challenged in the NHLC
litigation, the DOJ announced two separate forbearance periods.
The first pertained to the potential prosecution of state lotteries
and their vendors.

It was set to expire ninety days after the DOJ

issued additional guidance on whether it believes the Wire Act
applies to state lotteries.

Pls.’ SUF ¶ 4.

Even today, that

promised guidance has not arrived, so state lotteries and their
vendors (including IGT) operate within this indefinite forbearance
period.
The

Id.
second

forbearance

period

concerned

the

DOJ’s

announcement that it would not bring Wire Act prosecutions for
non-lottery gambling under the 2018 OLC Opinion until sixty days
after the entry of final judgment in the NHLC litigation.
¶ 5.

Id.

IGT argues this period expired on August 20, 2021, sixty

days after the expiration of the DOJ’s deadline to seek an en banc
rehearing of the First Circuit’s decision or to seek certiorari.
See Pls.’ Mem. Supp. Cross-Mot. Summ. J. (“Pls.’ SJ Mem.”) 15-16,
ECF No. 16-1.

(It sought neither.)

The DOJ notes that entry of

final judgment in the district court case would have put the
8

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expiration date much sooner, and points to subsequent forbearance
period extensions issued by the Deputy Attorney General.

See

Defs.’ Reply Mem. Supp. Mot. Dismiss and Opp’n Pl’s Cross-Mot.
Summ. J. (“Defs.’ Reply”) 5, ECF No. 19.

The last of these

memoranda was issued on June 11, 2020, and extended the moratorium
to December 1, 2020, with no sixty-day qualification.

Id.

While

the Court concludes that the DOJ has the better reading of its own
memoranda, and therefore the non-lottery forbearance period ran on
December 1, 2020, this dispute ultimately matters little.
II.

LEGAL STANDARD
When considering a motion to dismiss for lack of subject

matter jurisdiction under Rule 12(b)(1) of the Federal Rules of
Civil Procedure, the Court “must construe the complaint liberally,
treating

all

well-pleaded

facts

as

true

and

indulging

all

reasonable inferences in favor of the plaintiff.” Aversa v. United
States, 99 F.3d 1200, 1210 (1st Cir. 1996).
consider

whatever

evidence

has

been

The Court also “may

submitted

in

the

case.”

Acosta-Ramirez v. Banco Popular de Puerto Rico, 712 F.3d 14, 18
(1st Cir. 2013).

The burden of demonstrating subject matter

jurisdiction falls on the plaintiffs.

Justiniano v. Soc. Sec.

Admin., 876 F.3d 14, 21 (1st Cir. 2017).
Summary judgment is appropriate when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”

Fed. R. Civ. P. 56(a).
9

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III. DISCUSSION
A.

Standing

The government contends that IGT does not face a credible
threat of prosecution and therefore lacks standing, both because
the DOJ has not brought like prosecutions after the non-lottery
forbearance period ran out, and because NHLC II makes a successful
prosecution of IGT impossible in the First Circuit.

Neither

argument is persuasive.
The doctrine of standing gives shape to Article III’s caseor-controversy requirement by helping “identify those disputes
which are appropriately resolved through the judicial process.”
Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992).

To prove

standing, the party invoking a court’s jurisdiction must show,
with evidence appropriate to the stage of the proceeding, that it
“(1) suffered an injury in fact, (2) that is fairly traceable to
the challenged conduct of the defendant, and (3) that is likely to
be redressed by a favorable judicial decision.”
Robins, 578 U.S. 330, 338 (2016).

Spokeo, Inc. v.

As in NHLC II, there is “no

question that injury, if any, can be traced directly to the
government’s threatened enforcement of the Wire Act and can be
redressed in this action.”

986 F.3d at 50.

So, the pivotal inquiry becomes whether Plaintiffs can show
an injury in fact.

In general, an injury in fact “must be concrete

and particularized and actual or imminent, not conjectural or
10

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hypothetical.”
(internal

Reddy v. Foster, 845 F.3d 493, 500 (1st Cir. 2017)

quotation

marks

and

citations

omitted).

This

requirement ensures “a plaintiff has alleged such a personal stake
in the outcome of the controversy as to warrant his invocation of
federal-court jurisdiction and to justify exercise of the court’s
remedial powers on his behalf.”

Warth v. Seldin, 422 U.S. 490,

498–99 (1975).
1.

Threatened Prosecution as an Imminent Injury

In the right circumstances, the threatened enforcement of a
criminal law may be sufficiently “imminent” to constitute an
Article III injury in fact.
individual

is

subject

to

Reddy, 845 F.3d at 500.
such

a

threat,

an

actual

“When an
arrest,

prosecution, or other enforcement action is not a prerequisite to
challenging the law.”
149,

158

(2014)

Susan B. Anthony List v. Driehaus, 573 U.S.

(“SBA

List”);

see

also

MedImmune,

Inc.

v.

Genentech, Inc., 549 U.S. 118, 128–29 (2007) (“[W]here threatened
action by government is concerned, we do not require a plaintiff
to expose himself to liability before bringing suit to challenge
the basis for the threat.”).
But plaintiffs so threatened must show more than that they
intend to violate or are violating an existing law; they must also
show that the threat of prosecution is sufficiently real to provide
standing.

“[J]ust how clear the threat of prosecution needs to be

turns very much on the facts of the case and on a sliding-scale
11

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judgment that is very hard to calibrate.”

N.H. Hemp Council, Inc.

v. Marshall, 203 F.3d 1, 5 (1st Cir. 2000).

“Courts have variably

described the requisite likelihood of enforcement as ‘sufficiently
imminent,’ ‘credible,’ ‘substantial,’ and ‘realistic.’”

NHLC I,

386 F. Supp. 3d at 141 (collecting cases).
Context matters in this sliding-scale inquiry.

As evidence

that a threatened prosecution is realistic and credible, courts
have considered whether the plaintiff was previously threatened
with arrest and prosecution by the law’s enforcer, see, e.g.,
Steffel v. Thompson, 415 U.S. 452, 459 (1974) (specific threat of
arrest and prosecution gave pre-enforcement standing), a history
of like prosecutions, see Holder v. Humanitarian L. Project, 561
U.S. 1, 16 (2010); SBA List, 573 U.S. at 164, (“Past enforcement
against the same conduct is good evidence that the threat of
enforcement is not ‘chimerical.’”), and a background “assumption
that the state will enforce its own non-moribund criminal laws,
absent evidence to the contrary,” NHLC II, 986 F.3d at 51 (quoting
Blum v. Holder, 744 F.3d 790, 798 n.11 (1st Cir. 2014)).
Threat of prosecution may be too illusory to support standing
when there is an unequivocal statement disavowing the government’s
right to prosecute, Blum, 744 F.3d at 798 (“Particular weight must
be given to the Government disavowal of any intention to prosecute
. . . because it does not think [plaintiff’s conduct] is prohibited
by the statute.”), a significant history of declining to prosecute
12

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easily discovered conduct, id. (emphasizing “the lack of a history
of enforcement of the challenged statute to like facts, [and] that
no enforcement has been threatened as to plaintiffs’ proposed
activities”), or when a third-party’s actions are a precondition
of

prosecution,

and

it

is

speculative

as

to

whether

that

precondition will occur, Reddy, 845 F.3d at 502-03 (threat of
prosecution too speculative when contingent on abortion clinics
exercising statutory right to post “free speech buffer zones,”
something they had never done and represented that they did not
intend to do because of intervening Supreme Court precedent).
2.

IGT’s Threat of Prosecution

In the NHLC litigation, the DOJ contested standing before
both the district court and the First Circuit.
parallels

between

that

case

and

this

one,

Given the close

any

discussion

of

standing here should begin with the First Circuit’s standing
analysis in NHLC II.

Much of that analysis applies directly, and

thus the Court has little difficulty concluding IGT has standing,
despite the DOJ’s attempts to distinguish the case. 6
While the justiciability of this conflict is pitched by the
parties in terms of standing, the Court must also assure itself
that the matter is ripe. “In the pre-enforcement context. . . the
doctrines of standing and ripeness tend to overlap, so the Court’s
standing analysis largely applies here too.” NHLC II, 986 F.3d at
52 (internal quotation marks omitted).
In any event, ripeness
requires a court to consider fitness and hardship.
“Fitness
involves issues of ‘finality, definiteness, and the extent to which
resolution of the challenge depends upon facts that may not yet be
sufficiently developed,’ while hardship ‘typically turns upon
6

13

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In NHLC II, the court began by noting that the plaintiffs
were openly engaging in conduct branded as criminal by the DOJ’s
adoption of the 2018 OLC Opinion.

NHLC II, 986 F.3d at 50.

In

those circumstances, any threat of prosecution does not have the
added uncertainty of whether a plaintiff will follow through on a
stated intention to violate the law; it is doing so already.

Here,

broad swaths of IGT’s business run afoul of the DOJ’s latest
interpretation of the Wire Act.

See id. (noting 2018 OLC Opinion

“expressly mentioned [state] lotteries, suggesting that Congress
need amend the statute if it wishes to protect reliance interests”
and referring to memo that required DOJ attorneys to “adhere” to
this view); Compl. ¶¶ 40-47 (detailing IGT operations that use
wire communication to place non-sports bets across state lines).
Like the NHLC plaintiffs, IGT “already ha[s] it all on the line,
so to speak.”

NHLC II, 986 F.3d at 51.

And while the parties

dispute how long ago the DOJ’s forbearance period for non-lottery
enforcement expired, they agree that it has.

Thus, unlike the

NHLC plaintiffs, IGT could be indicted tomorrow for its non-lottery
business.

For its lottery business, IGT stands in the same

whether the challenged action creates a direct and immediate
dilemma for the parties.’”
Id. at 53 (quoting R.I. Ass’n of
Realtors, Inc. v. Whitehouse, 199 F.3d 26, 33 (1st Cir. 1999)).
The Court finds this matter to be ripe. The necessary facts are
sufficiently developed and definite to render a proper judgment,
and the threatened prosecution of much of its business operations
poses an immediate dilemma for IGT.
14

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position as the plaintiffs in NHLC; it could be prosecuted for its
state lottery operations within ninety days of the DOJ announcing
its new policy.
The DOJ argues that IGT’s continued, open violation of the
law (as the DOJ now describes it) implies that even IGT does not
think a prosecution is imminent.

That is not necessarily true.

IGT’s continued operation without the protection of a formal
forbearance directive makes a prosecution more possible, not less.
And the fact that IGT has not proactively dismantled most of its
business in response to the legal uncertainty created by the DOJ’s
waffling should not be held against it.

That IGT chose one prong

of a harsh dilemma (the costs of drastically reconfiguring its
business versus risking prosecution) does not mean that the threat
of prosecution is a fiction.

See NHLC II, 986 F.3d at 51 (“The

rule that a plaintiff must destroy a large building, bet the farm,
or . . . risk treble damages and the loss of 80 percent of its
business before seeking a declaration of its actively contested
legal rights finds no support in Article III.” (quoting MedImmune,
549 U.S. at 134)).
In concluding that the NHLC plaintiffs had standing, the First
Circuit also relied on record evidence that the “DOJ affirmatively
warned a state that it believed selling lottery tickets over the
internet violated the Wire Act and, in the lead-up to the 2011
Opinion, provided similar advice to inquiring authorities from two
15

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states.”

Id. at 51.

The court directly compared these warnings

to those issued by the Drug Enforcement Agency (“DEA”) in Hemp
Council, pointing out that it “found pre-enforcement standing
because the DEA had expressed its view that the conduct [the
plaintiff] sought to engage in violated federal law.” Id. (citing
Hemp Council, 203 F.3d at 5).
The DOJ’s warnings to New York and Illinois have even more
heft here, because those states partnered with IGT for the systems
the DOJ was reviewing.

See Compl. ¶ 48.

In other words, the last

time the DOJ held the position it now espouses, it specifically
told two of IGT’s state partners that IGT’s state lottery business
was criminal conduct.

And while the DOJ represents that it is

actively pondering this question, there is little mystery as to
why IGT finds the DOJ’s protracted private musings to be cold
comfort. These direct statements about IGT’s business, which align
precisely with the formally adopted 2018 OLC Opinion, strongly
support the conclusion that IGT faces a realistic and substantial
threat of prosecution for its lottery business.
Finally, the NHLC II court supported its conclusion that
threat

of

prosecution

was

credible

by

noting

that

“when

DOJ

attorneys last held the view expressed in the 2018 Opinion (between
2005 and 2011), DOJ had prosecuted seventeen cases involving nonsports betting under the Wire Act.”
Court

to

disregard

these

Id. at 50.

prosecutions,
16

The DOJ asks the

arguing

that

“[t]he

Case 1:21-cv-00463-WES-PAS Document 21 Filed 09/15/22 Page 17 of 24 PageID #: 172

landscape of past enforcement actions is . . . entirely different”
because there is no evidence that it brought prosecutions in the
“nearly one year during which DOJ attorneys were not barred by any
forbearance directives from prosecuting non-sports betting.”

Mem.

Supp. Defs.’ Mot. Dismiss for Lack Jurisdiction (“Mot. Dismiss”)
10-11, ECF No 14-1.

To be sure, this brief period during which

the DOJ could have prosecuted non-sports, non-lottery betting but
did not, lessens the weight of its pre-2011 prosecutions, but only
to a point.
landscape.

It does not constitute an “entirely different”

Even several years of declined prosecutions is hardly

a “realistic basis for a suggestion that the statutory provision
. . . has fallen into desuetude.”

NHLC II, 986 F.3d at 51 (quoting

R.I. Ass’n of Realtors, 199 F.3d at 32).

The Court has no trouble

concluding that the DOJ’s pre-2011 prosecutions reinforce that IGT
has standing here, even if the brief deferral period noted by the
DOJ undercuts the strength of that support.
While all this points to a rather straightforward application
of the standing analysis in NHLC II to the facts here, the DOJ
makes one other argument that the Court must address.
contends

that

the

very

existence

of

NHLC

II

as

a

The DOJ
precedent

distinguishes IGT’s situation from that of the NHLC plaintiffs.
This is so, the DOJ argues, because the holding in NHLC II prevents
any threat of IGT’s successful prosecution anywhere in the First
Circuit, including in Rhode Island. See Mot. Dismiss 9-10 (quoting
17

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NHLC II, 986 F.3d at 62) (“IGT faces no threat of successful
prosecution in this District (or, for that matter, in any other
District within the First Circuit) absent an overruling of [NHLC
II], because the First Circuit already has held that ‘the Wire Act
applies only to interstate wire communications related to sporting
events or contests.’”).
This argument misses the mark.

The relevant test is whether

IGT faces a realistic threat of prosecution, not whether it faces
the threat of successful prosecution here.

And while the DOJ’s

concerns about “extending the benefit of . . . First Circuit
precedent,” Mot. Dismiss 1, might present a prudential reason for
the

Court

to

decline

to

exercise

its

discretion

to

issue

a

declaratory judgment (discussed infra), there is no requirement
for standing purposes that an injury occur in the district where
relief is sought, or indeed, even in the United States at all.
See Cardenas v. Smith, 733 F.2d 909, 913 (D.C. Cir. 1984) (“[T]he
location of the injury does not affect [plaintiff’s] satisfaction
of the Article III standing requirement. . . . An injury endured
abroad is not less of an injury for Article III standing purposes
because it happened on foreign soil.”); see also Siegel v. United
States Dep’t of Treasury, 304 F. Supp. 3d 45, 52 (D.D.C. 2018)
(“The deprivation of property, even when that property is held
abroad,
fact.”).

constitutes

a

concrete

and

particularized

injury

in

Indeed, in Lujan, one of the Supreme Court’s seminal
18

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standing

cases,

nothing

suggested

that

a

district

court

in

Minnesota could not consider harm to the plaintiff’s ability to
observe elephants and leopards in Sri Lanka or crocodiles in Egypt
because of the locations of those injuries.
at 563–64 (1992).

See Lujan, 504 U.S.

Rather, the Court found a lack of standing

because it was too speculative that the plaintiffs would return to
those far-flung locations.
Furthermore,

the

DOJ

Id.
has

provided

no

authority

for

its

contention that this general proposition – that the location of an
Article III injury is irrelevant for assessing standing - changes
when that injury is a threatened prosecution by a federal agency
against a company operating across many states.
found

no

authority

for

that

proposition,

nor

This Court has
is

there

any

contention that venue is improper in Rhode Island. See Pls.’ Reply
Supp. Cross-Mot. Summ. J. 3, ECF No. 20.

Threatened prosecution

anywhere, if likely enough, is a direct harm to these Plaintiffs,
who are properly before this Court.

And indeed, far from being a

“concerned bystander[],” there is no question IGT has a sizable
“direct stake in the outcome.”

Diamond v. Charles, 476 U.S. 54,

62 (1986).
For all these reasons, the Court holds that the threat of
prosecution faced by IGT, both for its lottery and non-lottery
businesses, is credible enough to meet the requirements of proving

19

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an injury-in-fact.

The DOJ’s Motion to Dismiss, ECF No. 14, is

therefore DENIED.
B.

Discretion under the Declaratory Judgment Act

“Since its inception, the Declaratory Judgment Act has been
understood to confer on federal courts unique and substantial
discretion in deciding whether to declare the rights of litigants.”
Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995).
otherwise

“‘virtually

unflagging

obligation’

to

Despite an

exercise

the

jurisdiction conferred on them by Congress,” id. at 284 (quoting
Colo. River Water Conservation Dist. v. United States, 424 U.S.
800, 817 (1976)), the Supreme Court has held that “[i]n the
declaratory judgment context, the normal principle that federal
courts should adjudicate claims within their jurisdiction yields
to

considerations

of

practicality

and

wise

judicial

administration,” id. at 288.
Courts have considered a broad array of factors in guiding
the exercise of this discretion, 7 but often distill the inquiry
See, e.g., Sherwin-Williams Co. v. Holmes Cnty., 343 F.3d
383, 388 (5th Cir. 2003) (analyzing seven, non-exhaustive factors:
“(1) whether there is a pending state action in which all of the
matters in controversy may be fully litigated; (2) whether the
plaintiff filed suit in anticipation of a lawsuit filed by the
defendant; (3) whether the plaintiff engaged in forum shopping in
bringing the suit; (4) whether possible inequities in allowing the
declaratory plaintiff to gain precedence in time or to change
forums exist; (5) whether the federal court is a convenient forum
for the parties and witnesses; (6) whether retaining the lawsuit
would serve the purposes of judicial economy; and (7) whether the
federal court is being called on to construe a state judicial
7

20

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down to two “principal criteria”: “(1) [whether] the judgment will
serve

a

useful

purpose

in

clarifying

and

settling

the

legal

relations in issue, and (2) [whether] it will terminate and afford
relief from the uncertainty, insecurity, and controversy giving
rise to the proceeding.” 10B Charles Alan Wright, Arthur R. Miller
& Mary Kay Kane, Federal Practice and Procedure § 2759 (4th ed.)
(collecting cases).
The DOJ argues that “IGT asks this Court to determine the
rights of the parties solely as they exist outside the First
Circuit,” Defs.’ Reply 8, and that “any entity that could satisfy
the jurisdictional requirements to seek a declaratory judgment in
the

First

Circuit

could

obtain

the

benefit

of

First

Circuit

precedent outside of the First Circuit, as well, thereby insulating
itself from successful prosecution for any non-sports gambling
conduct in other jurisdictions.”

Mot. Dismiss 1 n.1.

While

irrelevant to standing, 8 the Court concludes this argument is
better considered as going to the prudence of the Court entering
a declaratory judgment.

But even in this more favorable context,

the Court ultimately finds the argument unpersuasive.
decree involving the same parties and entered by the court before
whom the parallel state suit between the same parties is
pending.”).
While the government has only made this argument as to
standing, the Court must still independently determine, as a
prudential matter, whether a declaratory judgment is appropriate
here.
8

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First, there is nothing uncommon about a declaratory judgment
binding

the

parties

beyond

the

district in which it enters.

geographical

confines

of

the

This is often true, especially when

a court sits in diversity, and therefore courts necessarily issues
judgments that affect entities in other states.

That both parties

here operate nationwide does not turn a declaratory judgment
between the parties into a nationwide injunction against the DOJ
generally, prevent the DOJ from prosecuting any non-party, or
necessarily arrest the development of the law in other circuits.
Furthermore,

the

DOJ’s

shift

in

positions

has

created

substantial uncertainty for broad swaths of IGT’s business, which
developed under the 2011 OLC Opinion.
uncertainty ripples outward.

Pls.’ SUF ¶¶ 11-13.

That

Should the DOJ issue guidance ending

its deferral period for state lotteries, IGT would have ninety
days to substantially revamp or end state lotteries in thirtyseven states.

Id. ¶¶ 13-14.

The First Circuit noted of the

lottery in New Hampshire:
A state-wide operation integrating over a thousand
retailers and multi-state relationships to produce
almost 100 million dollars in net revenue does not strike
us as an operation that can be easily wound-up in ninety
days. Nor can a state legislature plan sensibly if such
a relied-upon revenue stream finds itself suddenly
subject to a three-month closure notice.
NHLC II, 986 F.3d at 52.

The same concerns echo here, multiplied

across thirty-seven states and involving some significant portion

22

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of the 25.3 billion dollars that state lotteries generate for state
budgets annually.

See Compl. ¶ 51.

Given these concerns, there is no question that a judgment
“will serve a useful purpose in clarifying and settling the legal
relations

in

uncertainty,
proceeding.”

issue”

and

insecurity

afford
and

significant

controversy

relief

giving

Wright and Miller, supra, § 2759.

“from

rise

to

the
the

Like the NHLC

plaintiffs, IGT “should not have to operate under a dangling sword
of indictment while DOJ purports to deliberate without end the
purely legal question it had apparently already answered and
concerning which it offers no reason to expect an answer favorable
to the plaintiffs.”

NHLC II, 986 F.3d at 53.

Indeed, the dilemma

IGT faces – “between abandoning [its] rights or risking prosecution
– is a dilemma that it was the very purpose of the Declaratory
Judgment Act to ameliorate.”

MedImmune, 549 U.S. at 129 (internal

quotation marks and citation omitted); see also NHLC I, 386 F.
Supp.

3d

at

157

(“[W]here

an

agency

has

made

a

definitive

interpretation of a criminal law, the Declaratory Judgment Act
provides ‘a way to resolve the legal correctness of [the] position
without subjecting an honest businessman to criminal penalties.’”
(quoting Hemp Council, 203 F.3d at 5)).
For these reasons, the Court decides that granting relief
here is appropriate.

As for the scope of that relief, both parties

have been clear that the relief sought by IGT is the same as that
23

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afforded in the NHLC litigation, and thus a declaratory judgment
will bind the United States “everywhere [P]laintiffs operate or
would be otherwise subject to prosecution.”

NHLC I, 386 F. Supp.

3d at 158. 9 Because the Court finds there is no dispute of material
fact, judgment shall enter as a matter of law, and Plaintiffs’
Cross-Motion for Summary Judgment is GRANTED.
IV.

CONCLUSION
For all these reasons, Defendants’ Motion to Dismiss, ECF No.

14, is DENIED and Plaintiffs’ Cross-Motion for Summary Judgment,
ECF No. 16, is GRANTED.

The Court declares that, as to the parties

now before it, the Wire Act applies only to “bets or wagers on any
sporting event or contest.”

IT IS SO ORDERED.

William E. Smith
District Judge
Date: September 15, 2022

On appeal, the First Circuit upheld the scope of the relief
in NHLC II, noting that it was “responsive to the pleadings and
issues presented.” NHLC II, 986 F.3d at 62. Here, both parties
have understood the nationwide effect of the relief sought,
throughout their pleadings and presentation of the issues.
9

24