New Legal Opinion Puts US iGambling Industry at Risk

30-second summary

  • New interpretation of the Wire Act bans interstate wagering on all gambling activities that cross state lines
  • Sports betting no longer the sole focus
  • Department of Justice states previous opinion of the Wire Act misinterpreted the statute
  • American Gaming Association is reviewing the change
  • Sports betting industry should not be affected

The United States Department of Justice (DoJ) has announced a new legal opinion of the federal 1961 Wire Act. The decision could pose a threat to the existing online gambling industry in the states.

In 2011, the DoJ issued an opinion on the 1961 Wire Act, which was created to tackle the Mob and gambling activities. That interpretation decided that the Act only applied to sports betting regarding online gambling.

The opinion of the Office of Legal Counsel allowed states to offer interstate online casino, poker and lottery gaming. Now, that ruling has been changed.

The current administration’s DoJ has decided to reverse this opinion and rule that the Wire Act now applies to all gambling. The new opinion by the DoJ dates from November. It was written by the Assistant Attorney of the Office of Legal Counsel, Steven Engel.

Change of opinion

The change in 2011 allowed states to legalize online casino, poker and lottery gaming. This could be done if interstate sports betting was not included.

New Jersey, Nevada and Delaware quickly legalized iGaming in 2013. These states currently allow poker players within their borders to compete across the three states.

Operations have been successful ever since. Now, their interstate activity may be threatened because of the DoJ’s new opinion of the Wire Act.

The new opinion states that the DoJ ruled in 2011 that the prohibitions of the Wire Act are limited to sports gambling. After being asked to reconsider, the office has now concluded that the prohibitions are not limited to gambling on sporting events or contests. Other prohibitions apply to wagering or non-sports-related betting.

Experts comment

Gambling industry experts are now weighing in on how the gambling industry will be affected.

The American Gaming Association (AGA) is a large lobbyist group for the casino industry in the US. It is reportedly reviewing the new opinion and how it will affect the industry.

Consideration is being given as to how consumers will be affected.  States that currently provide legalized and regulated sports betting are also being reviewed.

The AGA believes that the sports betting industry will not be affected. This is because the Wire Act already applied to the gambling category based on the previous interpretation. It seems the impact that the new decision will have could be based on how the change will be enforced.

Associate director of the International Center for Gaming Regulation with the University of Nevada, Jennifer Roberts said: “Some could go really far and say even if you send a text message to a casino customer in another state and you are saying ‘Come play blackjack this weekend here’s a deal,’ arguably you can say that is information that assists in the placement of a wager. I doubt it will go that far, but we will once again be subject to the interpretation.”

For example, both online lottery gaming and online poker could essentially be impacted first, based on the new interpretation. States that offer interstate online lottery ticket sales and/or online poker may be asked to cease services.

It is expected that the new ruling will be challenged in court, but by whom has yet to be determined.