The Department of Justice (DoJ) is considering a complete reversal from its former stance, exempting all forms of online gambling, bar sports betting, from the Wire Act of 1961.
The Department of Justice Sudden Change of Heart
Back in December, 2011, the U.S. Department of Justice (DoJ) delivered a decision that the Wire Act, voted several decades before, would not apply to the majority of gambling activities conducted online.
The decision issued by the Office of Legal Counsel at DoJ was a huge relief for the states of Illinois and New York, which had petitioned the department back in 2009 in the hopes of grow their lotteries.The Department of Justice (DoJ) is reportedly considering a volte-face on the Wire Act, banning online poker, TopTenPokerSites.com reported. Click To Tweet
With the regulatory hurdle out of the way and legal ambiguity dispelled, state lotteries grew at a rapid clip. STG Technologies, an established house name and tech developer of lottery solutions, has struck up a spate of multi-year partnerships to maintain various state lotteries, notably in Pennsylvania.
A volte-face by the DoJ at this point would affect lotteries first and foremost as most inter-state networks are dependent on one another – disruption in one place will affect everyone down the chain.
Is the Report Substantiated?
So far, the most substantial evidence is a claim by Dustin Gouker, a highly-respected reported who covers gambling legislation. In his words, the Office of Legal Counsel has prepared an opinion, which could be introduced today, after the holidays or not at all.
Would like to stress even though this is a big/interesting story, as I sit here, I am not sure it functionally changes anything in the US, even if it is a full reversal and ends up being issued in the short-term. https://t.co/vfKlv2a8b3
— Dustin Gouker (@DustinGouker) December 19, 2018
While Mr. Gouker is unsure about the specific timeline, he assures that such a document exists. This is not surprising. With the GOP assuming a tighter control on DoJ, it’s not entirely surprising that the Wire Act’s interpretation can be debated again.
It’s really simple to grasp, as back in 2011, the DoJ consisted mostly of Democratic, Obama-elect officials who turned a favorable eye on the industry. The decision of the then-ruling caste to push with an exemption disgruntled the vested and open interest of specific parties.
My moral standard compels me to speak out on this issue because I am the largest company by far in the industry and I am willing to speak out. – Sheldon Adelson speaking against online gambling
Sheldon Adelson, a billionaire who has amassed his wealth thanks to the land-based casino business, has been one of the most belligerent moguls to say that he won’t rest until the online gambling industry is completely defeated.
His crony, Senator Lindsey Graham, has also been vociferously re-iterating the words of his shadow patron, opposing himself in full against the spreading of the online industry, even though he himself had never actually used basic Internet services, such as e-mail.
Has There Been Too Much Regulation?
Before the rumor broke, there was another reason for concern. The burgeoning sports betting leeway was also under threat of federal regulation prepared by representatives of both parties.
Adding to the pile of regulation could only slow down the expansion of the industry, though, with some of the most active sports having passed their own legislation. Even if any of the two proposed legislations see the light of day, they would not be able to reverse the legalization in places where online activities have been voted with a law.
Presently, people who are interested in playing online poker in particular, can do so in several states, including:
- New Jersey
- Michigan – As of December 21, 2018
The latest state to fully legalize the activity is Michigan with the passing of a bill that will still have some way to go before it is fully passed into law. However, if Mr.Gouker’s report proves right and DoJ does indeed push ahead with a new restrictive measure on online poker, Michigan’s own efforts may fall through.
Meanwhile, Kentucky has also been mulling the idea of passing a bill that would legalize online poker for sake of patching up the state’s ailing pension system.
None of this might come true if a new interpretation of the Wire Act arrives. For a state to earn the right to introduce its own online poker, should a new opinion be issued by the OLC, the federal ban will have to be challenged.
New Jersey reportedly amassed $8 million in legal bill when it sought to defeat PASPA, the federal hurdle that made sports betting impossible prior to May, 2018.
The Offshore Industry – The Real Winner
It makes all the sense in the world to want to regulate the industry. This is a sure-fire way of stopping the offshore industry from taking hold of everyone. Forums such as Reddit have been buzzing with the complaints of offshore websites, such as Bovada and ACR, hoping for a freer and more transparent card room.
Pennsylvania, for example, has cleared PokerStars to launch in the states. But until such a time the company actually arrives on the market, it would most certainly be unpalatable to have legal challenges.
PokerStars has many reasons to be wary of the advancement of new legislation, too, as when Black Friday hit in 2011, the operator was one of the most severely affected, with the DoJ happily seizing the company’s US-focused domains and leaving them in a state of limbo.
So, What Might Happen in the Future
Mr. Goukers’ own take on the matters is nevertheless reassuring. He estimates that even if legislation is passed, effectively immediately, it’s short-term implications would be very modest, as it would take time for the DoJ to actually enact anything.
We believe, though, that in the long-term, and with enough time on their hands, the DoJ could go after businesses in separate states. With the DoJ’s threat hovering over nascent bills such as Michigan’s and non-existent ones (as in Kentucky), anything that signals the government’s aversion to the legalization of poker and online gambling is to be taken seriously.