The U.S. Department of Justice has issued a new opinion making the Federal Wire Act of 1961 applicable to any form of gambling that crosses state lines, reversing an opinion it issued in 2011 and a decision that could impact several states where online gambling is legal.
Two forms of gambling that cross state lines include online poker and other casino games and online lotteries, with several states enacting laws in the wake of the 2011 decision by the Justice Department. There is uncertainty, however, regarding the reversal and its impact on a burgeoning gambling market, which was further heightened when the Supreme Court decided last year to strike down the federal ban on sports betting.
“I think that's the concern is that it just makes it so broad now that now we’re just left up to guessing what the Department of Justice will do for enforcement,” said Jennifer Roberts, Associate Director of the International Center for Gaming Regulation.
The Wire Act went into law as means to prevent all forms of online gambling, particularly as a way to combat organized crime, and up until 2011 it had been used to restrict online gambling. Under the Obama Administration, the Justice Department ruled the Wire Act was only applicable to sports betting, exempting all other forms of online gaming.
A conservative interpretation of the Justice Department’s decision could mean a strict ban on online poker and other casino games and online lotteries, effectively shutting down such gambling mechanisms that are in place. And if strictly applied it could even extend into sports betting. Delaware, New Jersey, Nevada and Pennsylvania each legalized online gambling in the wake of the Justice Department’s 2011 opinion, and several states either passed legislation to make sports betting legal or announced steps to do so since the Supreme Court’s ruling last year.
But such opinions by the Justice Department are non-binding and doesn’t instantly make online illegal in states where the practice is allowed. There is also doubts whether the Justice Department would actually take the necessary steps to begin enforcement or prohibit such concords as the interstate poker compact between Delaware, New Jersey and Nevada entered into. Were that to occur, the aggrieved parties would inevitably file a multitude of lawsuits to prevent the Justice Department from dissolving said agreements.
Another possibility is Congress overriding the Department of Justice by passing legislation that clearly defines the Wire Act, specifically laying out how it pertains to online gambling. But with the federal government in amidst of the longest partial shutdown in history, it is unlikely Congress will intervene in the imminent future.
“There is plenty of illegal gambling activities occurring anyway that they just didn't have the resources to enforce against, so will that suddenly change? I don't see it,” Roberts said. “I think the federal government is going to be focused on higher priorities.”
And the language of the Wire Act itself is ambiguous, leaving plenty of room for interpretation on both sides. That lack of clarity, accompanied with the federal government focused primarily on ending the shutdown, means nothing is expected to be definitively decided anytime soon. Some states that permit online gambling will likely continue to do so, while states that are mulling various forms of legislation may table the bills until there is a clear resolution.
“So we're stuck with an ambiguous opinion that declares the law is clear and unambiguous,” Roberts said.