Wire Act may brake iGaming
One step up, two steps back
When the Supreme Court repealed the Professional and Amateur Sports Protection Act (PASPA) last May, essentially clearing the way for states to enact sports betting, it appeared that the online wagering industry in the U.S. was finally going to be on par with Europe and other more liberal international gaming marketplaces, where online gaming has grown steadily in popularity and profits. Indeed, pro-gaming pundits believed the lucrative potential of online sports wagering would be the much-needed carrot that would finally lead more states to legalize online wagering.
While this eventually may come to pass, the road to domestic online gaming expansion undoubtedly became more uncertain last month thanks to an opinion by the Office of Legal Counsel (OLC) that essentially revived the Federal Wire Act, which could potentially make some aspects of internet wagering once again illegal in the U.S.
By way of background, the Wire Act, which became law in 1961, was an anti-organized crime measure that made interstate gambling illegal. In more recent times, the law—specifically its prohibition on the use of electronic communications to transmit bets across state lines—was used by anti-gaming forces to curb online gambling expansion in the U.S. This changed in 2011 when the Department of Justice (DoJ) issued a new ruling on the Wire Act saying it only prohibited sports betting from occurring across state borders, an opinion that cleared the way for the establishment of intrastate online casino, online lottery offerings and/or online sports betting in 15 states, according to a research report by Eilers & Krejcik Gaming. In addition, three states—Delaware, Nevada and New Jersey—offer interstate online poker systems.
But this past year saw the DoJ’s Criminal Division request the OLC review the 2011 Wire Act ruling and, in a new opinion, the OLC said the act does indeed apply to all forms of gambling, not just sports wagering. The OLC added that the Wire Act bars any gaming business from using wire communications to facilitate wagering or to receive money or credit as the result of gambling.
As you can well imagine, this abrupt reversal did not sit well with many in the gaming industry. “It is unfortunate that the Department of Justice departed from well-established practice in reversing its previous opinion without a compelling reason to do so,” said Sara Slane, senior vice president of public affairs for the American Gaming Association in a prepared statement. “However, the 2018 OLC opinion does not impact the ability for states and tribes to legalize and regulate gaming on a state-by-state and tribal basis...”
Well, maybe. At this point, no one is sure how aggressively the DoJ and the federal government will pursue enforcement of the revived Wire Act. It’s been noted that OLC opinions do not carry the force of law and the Washington Post reported that the U.S. Attorney General’s office has sent out a memo stating it would delay implementation of the new OLC opinion for 90 days. The Eilers & Krejcik report noted that the lawyers it surveyed about the opinion found it to be broad and vague and any application of it would likely end up in court.
Still, few would argue that a forceful application of the new Wire Act opinion would have a braking effect on the nascent online wagering industry, especially in states and jurisdictions currently considering legalization. It’s a shame that a new, exciting growth area for the gaming industry which showed so much promise just last summer could so quickly be derailed.