Less than two days before Christmas, 2011, the United States Department of Justice unwrapped its reinterpretation of the Wire Act of 1961, opening the door for legalized internet gaming in the United States. 

Finding that the Wire Act only directly prohibited gaming on sporting events or contests, the DOJ’s opinion opened the door for states to finally legalize wagering on the Internet.

The liberalized opinion from the DOJ initially allows states to make legal Internet gaming within their own boundaries.  However, it also paves the way to allow two or more states to reach an agreement to allow their citizens to make Internet wagers at each other’s facilities.

Although Nevada was the first state to grasp the opportunity, it has so far limited Internet wagering to online poker.  Delaware and New Jersey, which authorized Internet wagering soon thereafter, are allowing a far broader spectrum of legalized Internet wagering.

The New Jersey Internet Gaming Act was signed into law by Governor Chris Christie on February 26, 2013, following his veto of a prior version of the bill.  Under the New Jersey Act, all Internet wagering is conducted through the existing Atlantic City casinos and is considered to take place there, no matter where the bet is placed within the state.  Gamblers must be at least 21 years of age and physically present in the state of New Jersey when they make a wager, which they can place via computer terminal, smart phone, iPad, or other mobile device.  Gamblers are required to establish an account at an Atlantic City casino prior to first engaging in gambling and must verify their identity and their location in New Jersey before making a wager.

Commencement of operations in New Jersey will await the implementation of regulations from the Division of Gaming Enforcement; proposed regulations were released on June 3 of this year and will be open for public comment until August 2, to become effective sometime thereafter.  Not yet known is precisely what games will be authorized for Internet gaming and, although approved, whether New Jersey will indeed enter into reciprocal agreements with any other states.

There has been opposition to the implementation of Internet gaming, both from the traditional foes of gambling as well as from competitors such as the tribal casinos, which fear a loss of revenue.  Gambling foes argue that Internet wagering is “too easy, too convenient” and will attract persons who would otherwise not visit a brick-and-mortar establishment.  Naturally, supporters of legalized gaming point to this potential expansion of the customer base and the greatly expanded revenues as positive factors for an industry which has suffered many setbacks lately.

In New Jersey, for example, where casino revenues have been on a steady decline for the last several years, analysts look to Internet gaming as a desperately needed stimulant to the industry, providing a huge boost to state tax revenues of anywhere from $40 million to $180 million dollars annually.

Somewhat surprisingly, there has not yet been a flood of other states approving Internet wagering.  Although bills have been offered in a variety of jurisdictions, a number of states have either rejected Internet gaming or shown no urgency in deciding to adopt it.

It is also surprising that the federal government has failed to act with a comprehensive bill governing Internet gaming.  Although long-time gaming industry supporter Senator Harry Reid, Democratic majority leader, managed to forge an unlikely coalition with staunch Internet gaming foe, Republican Minority Whip Jon Kyl, their co-sponsored bill stalled in Congress.  At the time of writing this article, it appears that once again federal legislation will not be forthcoming, meaning that the states have the future of Internet gaming squarely in their own hands.