US Online Betting Could Be Stopped by Controversial New Ruling

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 30-second summary 

  •           The US Department of Justice (DOJ) has revised its interpretation of the 1961 Wire Act
  •           While unlikely, this could mean that the 116th Congress may decide to update the current law
  • The new decision may limit the online gaming industry or even eliminate it entirely
  • However, policy and legal experts hope the law is revised to make it clearer

What is the Wire Act?

The US was plagued by organized crime 57 years ago, mainly because of the Mafia, so the 1961 Wire Act was passed. Simply put, the law prohibits the interstate transmission of information concerning bets or gambling on sporting events. 

In 2011, the DOJ issued an opinion that the Wire Act does not apply to online betting that is not sports-related. However, that interpretation was revised earlier this month in a new DOJ opinion that any form of online betting, not just sports betting, would be a violation of the federal Wire Act. That could shut down online poker, casino and lottery offerings.

Implications for online sports betting

It remains to be seen how strictly the DOJ enforces its new ruling. Jennifer Roberts, the associate director of the International Center for Gaming Regulation at the University of Nevada-Las Vegas, believes that an overly strict interpretation could shut down fantasy sports altogether, even in a state where betting is legal.

“Even if the betting takes place in a jurisdiction where it’s legal, if the communication is routed into another state, that could trigger the Wire Act,” she said.

In the latest opinion, the Justice Department did not indicate how far it would go with enforcement. But in a January 15 memo, Deputy Attorney General Rod Rosenstein said prosecutions could begin after 90 days. “A 90-day window will give businesses that relied on the 2011 Act opinion time to bring their operations into compliance with federal law,” Rosenstein said. “This is an internal exercise of prosecutorial discretion; it is not a safe harbor for violations of the Wire Act.”

Clarification could smooth things over

There is light at the end of the tunnel, however. Many policy and legal experts say the law could be revised to clarify what it specifically covers. With the many advances in technology and changes to the US legal betting scene since the Wire Act was first passed in 1961, it would make sense for the DOJ to clarify its position.

Michelle Minton, a senior fellow at the Competitive Enterprise Institute, said that the new legal opinion is likely to create further confusion and may dissuade states from authorizing new Internet gambling operations. She believes that if gambling was again made illegal, it would just drive gamblers underground.

Prohibition has never worked,” she said. “It just turns law-abiding citizens into lawbreakers and reduces the level of trust in government.”

Welcomed by anti-gambling groups

The DOJ policy has been welcomed by lobbying groups such as the Coalition to Stop Internet Gambling, a group backed by Las Vegas casino owner Sheldon Adelson, a prominent supporter of President Donald Trump. The group applauded the new policy guidance, repeating its concerns that online gambling could hook youngsters onto mobile gambling, citing the UK as a resource.

“Countries around the world offer a perilous preview of where our nation was headed absent today’s action from the federal government,” the coalition said in a statement. “In the UK, which is the epicenter of the epidemic . . . over half of 16-year-olds have gambling apps on their smartphones. Further, the iGaming industry obtains more than half of its profit from problem gamblers.”

The current chairman of the Senate Judiciary Committee, Lindsey Graham (R-South Carolina) is also a fan of a complete ban. He has publicly praised the DOJ’s new opinion on the Wire Act, saying it “takes great strides to protect children and society’s most vulnerable. It will also be a blow to criminal elements that tried to take advantage of the failed Obama policy.”

Graham has previously co-sponsored the Restoration of America’s Wire Act (RAWA), which would effectively ban all forms of online gambling at a federal level, apart from horse racing betting and fantasy sports.