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First Circuit Court of Appeals Decision Saves Millions in Annual Funding for Schools, First Responders

LANSING – Millions of dollars in annual funding for Michigan schools and first responders derived from lottery revenues have been preserved by a federal First Circuit Court of Appeals decision in the case New Hampshire Lottery Commission, et. al. v. United States Department of Justice, et. al., Michigan Attorney General Dana Nessel announced today. 

In agreeing with the lower court’s ruling, the First Circuit Court on Thursday ruled that the U.S. Department of Justice’s (DOJ) interpretation of the Wire Act was incorrect and that the law should be construed to only prohibit interstate wire communications of sports-related bets.   

Nessel and a 17-jurisdiction coalition filed a brief in March 2020 with the appellate court, supporting the New Hampshire Lottery Commission and two of its vendors – NeoPollard Interactive LLC and Pollard Banknote Limited – and asking the court to affirm the lower court decision vacating the DOJ opinion that would encompass all types of bets and wagers in the federal Wire Act’s prohibitions. 

The appellate court, in its decision, noted that the DOJ’s 2018 interpretation would lead to “odd and seemingly inexplicable results.” After a review of the legislative history demonstrated that Congress did not intend such an odd result, the First Circuit Court adopted the lower court’s more natural reading of the Wire Act as applying solely to interstate wire communications of sports-related bets. 

“This is a major victory for state lotteries across the nation that raise millions of dollars in revenue which directly supports our schools, emergency personnel and other fundamental services for residents,” Nessel said. “Preserving this critical revenue stream is incumbent on me as Attorney General of Michigan, and I am grateful for the bipartisan effort to achieve that. Ensuring our schools and first responders have funding to perform their duties should not be an issue divided by politics and party affiliation.”  

In Fiscal Year 2018-19, the state School Aid Fund received a disbursement of more than $1 billion from the Michigan Lottery program. The Michigan Bureau of State Lottery (MBSL) and the nation’s 46 other government-operated lotteries raised more than $80 billion in gross revenues in 2017. In Michigan, the net proceeds of those monies provide critical support for public education, but the money is also used elsewhere for college scholarships, environmental protection, senior citizens, first responders and infrastructure projects, among other things. 

Michigan filed the lead amicus brief supporting the New Hampshire Lottery Commission, and was joined by 17 jurisdictions: Alaska, Colorado, Connecticut, Delaware, the District of Columbia, Idaho, Kentucky, Maryland, Minnesota, North Carolina, Ohio, Rhode Island, South Dakota, Tennessee, Vermont, Virginia and Wisconsin.   

A copy of the First Circuit Court of Appeals’ decision is available online here