The U.S. Department of Justice has issued a memo on the Wire Act earlier this week, written by Assistant Attorney General Steven Engel. The opinion reinterprets the Wire Act to apply to all forms of interstate gaming, not just sports betting, making it illegal if conducted across state lines. The law originally was enacted in the 1961 to combat organized crime.
This is a reversal of a 2011 Obama administration opinion that narrowly applied the Wire Act only to sports betting.
“We believe that the 2011 Opinion devoted insufficient attention to the statutory text and applicable canons of construction, which we believe compel the conclusion that the prohibitions of the Wire Act are not uniformly limited to sports gambling,” the memo states.
Enforcement takes effect in 90 days.
When the 2011 opinion was issued, six states moved to allow its lotteries to bring online gambling to residents.
This new interpretation has the potential to affect all online gambling including online casino games, lottery and daily fantasy sports. It also will likely impact the interstate poker compact between Nevada, New Jersey and Delaware.
Experts say the burgeoning sports betting industry will remain unaffected because the law already applies to that form of gambling. Sports betting, made legal in May thanks to a U.S. Supreme Court decision, is expected to expand to many more states this year.
As Assistant AG Engel explains it: “The first clause bars anyone in the gambling business from knowingly using a wire communication facility to transmit ‘bets or wagers’ or ‘information assisting in the placing of bets or wagers on any sporting event or contest.’ The second clause bars any such person from transmitting wire communications that entitle the recipient to ‘receive money or credit’ either ‘as a result of bets or wagers’ or ‘for information assisting in the placing of bets or wagers.’”
Mark Hichar, an expert on the law and shareholder at Greenberg Traurig LLP, told Online Poker Report the opinion will affect iLottery and iGaming and possibly traditional lottery sales, due to the possible routing of payments out-of-state.
“Language in the opinion supports the position that such intermediately routed transmissions are sent in ‘interstate commerce.’ Thus, lottery purchases — whether via traditional retailers or via PCs or mobile devices — and iGaming wagers, that originate in a state and are processed in the same state but are routed intermediately out of the state (or, according to some court cases, are merely sent via the internet without regard to their travel route) could violate the Wire Act.”
The reinterpretation is expected to be challenged in the courts.
“I expect that there will be litigation within that 90-day period as states sue the federal government seeking a declaratory judgment that the Wire Act applies only to sports betting,” Hichar told Online Poker Report.
The Coalition to Stop Internet Gambling and advocate and former U.S. Sen. Blanche Lincoln released a statement lauding the DOJ reversal calling it “a win for parents, children and other vulnerable populations.”