West Virginia Lottery commissioners on Wednesday approved state licenses for several companies that provide sports betting mobile app technologies, but Lottery Director John Myers said state casinos probably won’t move forward until the courts resolve a new federal Department of Justice interpretation of the federal Wire Act.
“They’re all approved to have them,” Myers said of casinos offering mobile sports betting apps. “It’s basically a decision for their corporate structures.”
He said the casinos are hesitant to launch sports betting apps while awaiting the outcome of a challenge in U.S. District Court to a DOJ opinion, released in November, that strictly interprets the Wire Act, a 1961 law intended to crack down on organized crime by prohibiting the use of “wire communication” — at the time, telephone or telegraph — for the interstate transmission of bets or wagers.
In the opinion, the DOJ expanded its interpretation of the Wire Act to apply to interstate transmission of data for all types of gambling.
While the West Virginia sports betting law permits wagers to be placed only within the state, there is concern that, under the new interpretation, casinos could violate the Wire Act if sports betting data is routed through internet servers in other states.
There also has been concern that a strict interpretation of the DOJ opinion could prohibit multi-state lottery games, such as Powerball and Mega Millions, prompting the New Hampshire Lottery to file suit to block its enforcement.
U.S. District Judge Paul Barbadoro heard arguments in the case earlier this month but has yet to issue a ruling.
To date, only two of West Virginia’s five casinos have launched sports betting apps — Mardi Gras and Wheeling Island — and parent company Delaware North abruptly shut down the sports betting apps and onsite sportbooks at both locations on March 6 over a contractual dispute involving the provider of the sports betting technology, Miomni Gaming.
Last week, Delaware North filed suit against the company, alleging fraud and breach of contract, and Myers said Wednesday that could further delay efforts by Delaware North to contract with a new sports betting provider.
“One of the concerns is whether they have to completely separate from Miomni before they can begin a new relationship,” he said.
From the Lottery’s standpoint, Myers said, the shutdown of the mobile app during the NCAA basketball tournament was disappointing, since it would have been nice to be able to track the impact of mobile wagering.
“That’s been taken out of the equation now,” he said.
Likewise, he said, casino revenue has improved this year over the same point in 2018, but he said it is too early to credit foot traffic generated by the onsite sportsbooks for that improvement.
Meanwhile, even with sportsbooks at Mardi Gras and Wheeling Island out of commission for most of the month, March Madness drove a 185 percent increase in sports wagering for the month, producing $1.96 million in revenue for the casinos — led by $1.48 million at Hollywood Casino, in Charles Town — with the state receiving $196,392 from its 10 percent privilege tax.
Overall, March was a good month for the Lottery, with gross revenue of $110.03 million, up nearly 4 percent from March 2018.
Year-to-date, the Lottery has grossed $853.11 million, up $40.56 million from the same point in 2018.
The state’s share of Lottery profits year-to-date of $389.1 million is up $16.63 million over the same point in 2018.
Year-to-date, state Lottery profits are running $31 million ahead of projections. Myers said he attributes the uptick to an improved economy, meaning that more people have more disposable income.
“The economy always helps,” he said.