New Jersey Sues U.S. for Adelson Link to Online Gambling Crackdown

(Bloomberg) -- New Jersey sued the U.S. Justice Department, claiming it failed to respond to the state's demand for documents linking a recent crackdown on legal online gambling to lobbying efforts by casino magnate and Republican mega-donor Sheldon Adelson.

The Justice Department is violating the Freedom of Information Act by not responding to a February request for information about the new enforcement policy's reported link to Adelson, whose brick-and-mortar casino businesses are threatened by online gambling, New Jersey Attorney General Gurbir Grewal said in a federal complaint filed Tuesday in Trenton.

“The residents of New Jersey deserve to know why the Justice Department is threatening to come after an industry we legalized years ago,” Grewal said in a statement. “It's especially important that we figure out whether this federal crackdown is the result of a lobbying campaign by a single individual seeking to protect his personal business interests.”

Online gaming in New Jersey generates $353 million in annual revenue and $60 million in direct gaming taxes, the attorney general said.

Adelson is a friend of President Donald Trump, who awarded a Presidential Medal of Freedom to the casino magnate's wife last year. Adelson has been a staunch opponent of online wagers, claiming it will lead to more betting addiction. He has lobbied against it in statehouses and nationally, although a person familiar with the billionaire's efforts said he has never personally asked Trump to change the policy.

A spokesman for Adelson's Las Vegas Sands Corp. declined to comment on the lawsuit.

The Justice Department in January expanded a federal prohibition on Internet gambling, saying the U.S. Wire Act bars all Internet gambling that involves interstate transactions. The decision, which takes effect June 14, reversed the agency's position from 2011 that only sports betting was prohibited under the law passed 50 years earlier.

The reversal was prompted by the department's criminal division, which prosecutes illegal gambling. The opinion issued about seven years ago that the 1961 Wire Act only banned sports gambling was a misinterpretation of the statute, according to a 23-page opinion by the department's Office of Legal Counsel dated Nov. 2.

Las Vegas Sands spent $280,000 lobbying the federal government in the first quarter of the year, disclosures filed with the Senate show. It paid $30,000 to Lincoln Policy Group, founded by Blanche Lincoln, a two-term Democratic Senator from Arkansas. The firm disclosed that Lincoln and three of her colleagues lobbied Congress on issues related to online gambling, but did not disclose any contacts with the Justice Department.

Among the records New Jersey requested were those of interactions between Justice Department officials and Lincoln and her firm. The attorney general also requested information on Darryl Nirenberg of Steptoe & Johnson LLP, who lobbied Congress, but not Justice, on online gaming, disclosures show. Las Vegas Sands paid the firm $80,000.

Adelson and his wife Miriam have been prolific donors to Republican causes and candidates. The Adelsons were the biggest donors in the 2018 midterms, according the Center for Responsive Politics, giving $122.3 million. In 2016, they poured $20 million in the final weeks of the election into Future45, a super political action committee that backed Trump with critical advertising in swing states.

The case is State of New Jersey v. U.S. Department of Justice, 3:19-cv-12218, U.S. District Court for the District of New Jersey (Trenton).

To contact the reporters on this story: Erik Larson in New York at elarson4@bloomberg.net;Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net;Bill Allison in Washington at ballison14@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Steve Stroth, Joe Schneider

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