Pennsylvania Won’t Join Interstate Online Poker Compact

Legislation, US
US Poker

The recent DoJ opinion that the 1961 Wire Act applies to all forms of online gambling means that Pennsylvania won’t be joining the interstate poker partnership.

A letter sent Friday from the Pennsylvania Gaming Control Board to all of the general managers and attorneys of the state’s casinos stated as much. PGCB Executive Director Kevin O’Toole informed the casinos to “comply with the federal law in all respects in establishing your gaming operations which now must be entirely ‘intrastate.'”

Pennsylvania is in the process of launching regulated online poker and gambling offerings to its citizens after passing legislation way back in 2017. It was expected that the roll out would occur sometime early this year. However, the Department of Justice opinion will likely delay the launch even more as Pennsylvania makes sure to comply with the new finding.

The DoJ opinion, titled “Reconsidering Whether the Wire Act Applies to Non-Sports Gambling,” has created havoc for states hoping to regulate online poker and gambling, as well as those that already have. It reversed a previous DoJ opinion in 2011 that found the Wire Act applied only to sports betting.

States such as Michigan, Illinois, West Virginia and New York were among those that were progressing toward passing i-gaming legislation this year or perhaps next. The new opinion from the Office of Legal Counsel of the DoJ throws a wrench into those possibilities.

Liquidity Stunted

The 2011 opinion was the impetus that prompted individual states to begin legislating i-gaming. Nevada, Delaware and New Jersey had already done so and are fully engaged in a multi-state online poker partnership that is now apparently in jeopardy due to the new DoJ finding.

It’s highly likely that the regulated states will challenge the DoJ opinion in a court of law. Two federal appeals courts previously ruled in favor of the 2011 elucidation.

However, there is a 90-day window in which no enforcement proceedings will take place against any violators of the Wire Act as it’s now interpreted. That’s a direct mandate from the Deputy Attorney General of the DoJ, Rod Rosenstein, who wanted to give businesses that relied on the 2011 opinion in setting up shop plenty of time to comply with the reversal.

Intrastate Only

The PGCB letter also mentioned some other issues that the DoJ opinion calls into question. Wagers can never cross state lines, according to the new interpretation, which requires servers or any “associated equipment” related to interactive gaming to be within the boundaries of Pennsylvania.

The Pennsylvania statute permits such equipment to be located in a remote location. Since the DoJ finding does not, some shifting must be done in order to fall in line with the language as is spelled out in the new opinion.

The same apparently holds true for payment processing with regard to Pennsylvania gambling sites, player accounts, and financial institutions. All banking and transactions must be done intrastate, likely creating additional headaches for all involved.

The PGCB director instructed the casino general managers to get back to him within 30 days, each expected to state “your plans for complying with the Wire Act, as now interpreted.”

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