Nearly seven years ago, as American families busily prepared for Christmas, the U.S. Justice Department quietly released a legal opinion reversing 50 years of interpretation of the federal Wire Act. It discarded the position of its own Criminal Division by arguing the law no longer covers internet gambling—as long as the wagers are not on sporting events or contests.

DOJ’s goal: Make an end run around Congress and the courts to help cash-strapped states reap the rewards expected to come from converting Americans’ cellphones into mobile slot machines.