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Ruling by Justice Dept. opens a door on online gambling

Online GamblingOnline Gambling: Ruling by Justice Dept. opens a door on online gambling
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2012 may the year of widespread Internet lottery ticket sales

WASHINGTON, D.C. — The Justice Department has reversed its long-held opposition to many forms of Internet gambling, removing a big legal obstacle for states that want to sanction online gambling to help fix their budget deficits.

The legal opinion, issued by the department's office of legal counsel in September but made public on Friday, came in response to requests by New York and Illinois to clarify whether the Wire Act of 1961, which prohibits wagering over telecommunications systems that cross state or national borders, prevented those states from using the Internet to sell lottery tickets to adults within their own borders.

(See Related Links at end of news story to see the full text of the Justice Dept. legal opinion.)

Although the opinion dealt specifically with lottery tickets, it opened the door for states to allow Internet poker and other forms of online betting that do not involve sports. Many states are interested in online gambling as a way to raise tax revenue.

New York has offered an online subscription service since 2005 that allows state residents to enter a string of Lotto or Mega Millions drawings.

The director of the New York Lottery, Gordon Medenica, said Saturday that the lottery had built a broader online gaming system for New York, but that the contractor that put the system together was wary about moving forward because it feared it could get into legal trouble.

"We've been waiting for a couple years," Mr. Medenica said in a telephone interview. "We're thrilled that this ruling has now come down and confirmed that our legal analysis was correct all along."

As a result of the new policy, New York Lottery officials said they planned to add two additional jackpot games, Powerball and Sweet Million, to its current online lottery subscription service, and would allow New York residents to buy single-draw tickets online for the first time.

Mr. Medenica said it would take several months for the lottery to finalize the new offerings, and he said officials would "take a very cautious initial approach" in rolling out additional online options.

Michael Jones, the superintendent of the Illinois Lottery, said the request for clarification was prompted by research the state commissioned several years ago that indicated online sales could drive up participation. "When you look at the Internet, which is what everybody uses these days to buy everything, it seemed like a very, very logical thing to use the Internet to increase the player base," Mr. Jones said. "States were in dire financial problems — the ability to use the lottery to raise revenue in a nontax way was a significant thing for states to do."

He also said that online sales would enable the lottery to regulate purchases. "Right now we can't guard against someone walking into a lottery retailer and buying too many tickets and behaving excessively," Mr. Jones said. "Now with credit card purchases, we can guard against excessive play."

Illinois could begin selling lottery tickets online in as soon as three months, he said.

The District of Columbia and Nevada have both approved limited forms of Internet gambling, and New Jersey has been considering legislation allowing sports betting and other forms of Internet gambling.

Steven Grossman, the Massachusetts state treasurer and the chairman of the state's Lottery Commission, called the opinion a "turbocharged opportunity to engage new markets."

"This will put additional pressure on Congress and others to allow online poker and other Internet gambling," Mr. Grossman said.

Estimates of the size of the online gambling industry vary widely, from as low as $6 billion to as high as $100 billion. But even at the lower end, Mr. Grossman said, "that's tens of billions of dollars that goes offshore."

In a separate request in July, Senators Harry Reid, Democrat of Nevada, and Jon Kyl, Republican of Arizona, asked the Justice Department to clarify its position on Internet gambling, seeking either to affirm that federal law prohibits gambling over the Internet or to make sure that Congress has a role in drafting any expansion of online betting.

In a reply letter that was also issued Friday, the Justice Department said that while the new policy "differs from the department's previous interpretation of the Wire Act, it reflects the department's position in Congressional testimony at the time the Wire Act was passed in 1961."

The new policy merely reverses the Justice Department's longstanding position that all forms of online gambling are illegal in the United States. It does not necessarily pave the way for national rules governing online gambling.

But experts in gambling law said Saturday that the new policy does imply that states can band together to allow gambling across state borders. The exception would be online sports betting, which is explicitly prohibited under federal law.

"The next step," said Mark Hichar, a partner and head of the gaming law group at the law firm Edwards Wildman in Boston, "could be for states to enter into compacts with each other to have interstate Internet wagering," as some do now for horse racing.

The decision was cheered by states that have been contemplating gambling for the first time. But some gambling interest groups, like the American Gaming Association, which represents casino operators and makers of gambling equipment, said the opinion makes clear the need for a federal law establishing consistent regulatory standards.

"This is quite a Christmas present," said I. Nelson Rose, a distinguished senior professor at Whittier Law School and a consultant to gambling companies and governments. "It says, 'Keep it in your state and it's legal.' Given the continuing budget crisis, and so many states looking for ways to raise money, it's really a major decision."

Virginia A. Seitz, an assistant attorney general in the Justice Department's office of legal counsel, wrote in the opinion that the prohibition in the Wire Act of using interstate communications for gambling applies only to betting on a "sporting event or contest."

As long as the gambling operator and the customer are within the same state, the opinion says, and the betting activity does not include sporting events, a state's own laws apply. Another federal law, the Unlawful Internet Gambling Enforcement Act of 2006, made it illegal for financial institutions to process payments for online wagers.

Taken together, the two laws allowed the Justice Department to invoke its authority over interstate communications as a means of blocking all Internet gambling.

Online gambling has been a focus in the Justice Department for years, but it burst into public view in April, when federal prosecutors charged the operators of three of the most popular online poker sites with fraud and money laundering.

The three sites, Full Tilt Poker, PokerStars and Absolute Poker, are based in Antigua and the Isle of Man, where online gambling is legal. That had made it difficult for American authorities to crack down on the operations, which had millions of United States customers.

But the Justice Department charged that the companies had used United States banks to process their transactions, violating the 2006 law that governed payment processing.

Those payment restrictions do not apply to transactions within a single state, however. With the ruling that the Wire Act applies only to sports betting, the way is clear for in-state online poker and other games.

Some gambling experts believed that the Justice Department's position that the Wire Act prevented any Internet gambling conflicted with a federal appeals court decision, and therefore the new opinion simply confirmed what was already law.

But states have been reluctant to rely on the appeals court decision, handed down in 2002 by the United States Court of Appeals for the Fifth Circuit in New Orleans, because, in addition to the Justice Department's continued crackdown, other federal and state court opinions offered conflicting directions.

The Justice Department previously tried to crack down on Internet gambling by going after companies that facilitated advertising for the gambling sites. In December 2007, Microsoft, Google and Yahoo paid a combined $31.5 million to settle federal charges that they promoted illegal gambling by serving ads for the gambling operations to other Web sites.

New York Times

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56 comments. Last comment 3 years ago by Stack47.
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Avatar
ohio
United States
Member #105836
February 7, 2011
34 Posts
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Posted: December 25, 2011, 3:04 pm - IP Logged

So if i am understanding this right this is basically only going to allow you to buy tickets online to your own state lottery unless all states agree together to allow cross boarder purchases?

    Littleoldlady's avatar - basket
    Clarksville
    United States
    Member #487
    July 15, 2002
    17638 Posts
    Offline
    Posted: December 25, 2011, 3:44 pm - IP Logged

    Yep..I think it is about time that US lotteries start having online play.  It makes sense.  Now if they will just clarify the banking part..I will be ready to go..

    If you know your number is going to hit, have patience and then KILL IT!

    You never know when you will get another hit.

      tmead's avatar - IBM Watson_Avatar1.jpg
      NEW YORK
      United States
      Member #90466
      April 28, 2010
      735 Posts
      Offline
      Posted: December 25, 2011, 3:50 pm - IP Logged

      The quicker, the better.

        Avatar
        westboro, ma
        United States
        Member #108384
        March 25, 2011
        328 Posts
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        Posted: December 25, 2011, 5:29 pm - IP Logged

        being able to buy just lottery tickets on line is hardly a significant breakthrough. what was it difficult to go out and buy them in the normal fashion. does anybody care if the pools are higher  because of this. i don't think so. you should have to make an effort to play the lottery with cash only. people will get into too much trouble if allowed to buy them with a credit card. the credit card issuers aren't going to like it at all when the defaults start to pile up. there will be snafus galore when someone claims they bought a winning ticket on line and didn't print it, or didn't buy it before drawing closed or some other type of mistake on their part or the sellers computer malfunction. it is working the way it is, why change it. if you're too lazy to go out and buy one you shouldn't be allowed to win it.

          Littleoldlady's avatar - basket
          Clarksville
          United States
          Member #487
          July 15, 2002
          17638 Posts
          Offline
          Posted: December 25, 2011, 6:21 pm - IP Logged

          being able to buy just lottery tickets on line is hardly a significant breakthrough. what was it difficult to go out and buy them in the normal fashion. does anybody care if the pools are higher  because of this. i don't think so. you should have to make an effort to play the lottery with cash only. people will get into too much trouble if allowed to buy them with a credit card. the credit card issuers aren't going to like it at all when the defaults start to pile up. there will be snafus galore when someone claims they bought a winning ticket on line and didn't print it, or didn't buy it before drawing closed or some other type of mistake on their part or the sellers computer malfunction. it is working the way it is, why change it. if you're too lazy to go out and buy one you shouldn't be allowed to win it.

          You act like folks are going to go crazy buying lottery tickets online.  That is just plain silly.  Lottery tickets are sold online in other countries and this one should let folks buy them online also.  If your weekly play is just 5-10.00 I am sure most intelligent folks can manage that.  Credit card companies have tightened their qualifications so a lot of folks won't be eligible to get one anyway.  Besides if I don't stop by the bank to get my cash and use one of those "other" atms..it still costs me 4-5.00 to make a withdrawal. (total).  why should I pay that when I could be playing online with no extra cost.

          If you know your number is going to hit, have patience and then KILL IT!

          You never know when you will get another hit.

            TOOT515's avatar - Lottery-050.jpg
            New Member
            Snellville,Ga
            United States
            Member #107559
            March 9, 2011
            1 Posts
            Offline
            Posted: December 25, 2011, 8:27 pm - IP Logged

            Everyone is different. Some people like to play small, some people like to play big, playing online is convenient for most people..  Time change, people change, technology change, get use to it!  Faber, if you're fine with going to the store spending $2 - $5 a week winning $40 to $80 then that's your business.  The majority rules, and I believe most people would prefer to play online.   LETS DO IT!!!

              myeyes2020's avatar - phant
              toledo, ohio
              United States
              Member #108833
              March 31, 2011
              63 Posts
              Offline
              Posted: December 25, 2011, 9:17 pm - IP Logged

              I'm ready -I'm ready ;  let's get ohio:  ohio-michigan, ohio-indiana, ohio-kentucky, ohio-ny, OHIO - TRI STATE, I'm Ready.

              keep campaigning you will get elected

                Avatar
                ohio
                United States
                Member #105836
                February 7, 2011
                34 Posts
                Offline
                Posted: December 25, 2011, 9:37 pm - IP Logged

                Faber- that is a pretty dumb post my friend, and it is people like you that try and keep this thing from getting off the ground. Just because some people may not have control it should not ruin it for everyone, there are bad drivers out there..should we ban driving? And also it is not about being lazy, if you would pay attention there is some money to be made on this site except most peoples numbers work with all states and not just your own.


                  United States
                  Member #68713
                  December 28, 2008
                  301 Posts
                  Offline
                  Posted: December 25, 2011, 10:57 pm - IP Logged

                  Faber- that is a pretty dumb post my friend, and it is people like you that try and keep this thing from getting off the ground. Just because some people may not have control it should not ruin it for everyone, there are bad drivers out there..should we ban driving? And also it is not about being lazy, if you would pay attention there is some money to be made on this site except most peoples numbers work with all states and not just your own.

                  I Agree!

                    HiFi's avatar - police

                    United States
                    Member #3792
                    February 21, 2004
                    197 Posts
                    Offline
                    Posted: December 25, 2011, 11:44 pm - IP Logged

                    i dont like this because when people buy tickets at the store they also will buy other things an it helps out the small business owner.  i dont own a business but i think its good for the economy and my community.  sure i can buy lottery tickets online an save money on gas but u have to think of the bigger picture.

                      BobP's avatar - bobp avatar.png
                      Dump Water Florida
                      United States
                      Member #380
                      June 5, 2002
                      2914 Posts
                      Offline
                      Posted: December 26, 2011, 5:47 am - IP Logged


                      Why won't our government admit we're living in a police state and get it over with already?   We're the most controled "free" country ever, can't even spend our hard earned cash freely. 

                      The states have a vested interest in keeping all gambling within their borders. 

                      We the lottery players have a vested interest in playing the best games where ever they may be, whether they are lowest odds,  two tickets for a dollar games or highest jackpot.

                      The positives with online play is saving gas and more days to play without a trip to the store.

                      OPEN UP ALL THE GAMES TO US ! ! !

                      BobP

                        ConstantlyB's avatar - masked
                        Wilson
                        United States
                        Member #54516
                        August 21, 2007
                        2796 Posts
                        Offline
                        Posted: December 26, 2011, 7:37 am - IP Logged


                        Why won't our government admit we're living in a police state and get it over with already?   We're the most controled "free" country ever, can't even spend our hard earned cash freely. 

                        The states have a vested interest in keeping all gambling within their borders. 

                        We the lottery players have a vested interest in playing the best games where ever they may be, whether they are lowest odds,  two tickets for a dollar games or highest jackpot.

                        The positives with online play is saving gas and more days to play without a trip to the store.

                        OPEN UP ALL THE GAMES TO US ! ! !

                        BobP

                        Good morning everyone....I hope ya'll had a great

                         holiday weekendYEAHHHHHHHHHHHHHHHH!!!

                        In total agreement with you on this note BobP.....I would like to purchase tickets in any state for any game if I so choose.

                        "MAKE THAT MONEY YA'LL"

                        wisdom from Tyler Perry's Madea:"It doesn't matter what people call you....it's what you answer to."

                          TnTicketlosers's avatar - Lottery-065.jpg

                          United States
                          Member #71120
                          February 19, 2009
                          993 Posts
                          Offline
                          Posted: December 26, 2011, 8:08 am - IP Logged

                          As it should be,I rather play any state than here,so would other Tennesseans..I want to play Kentucky Or Georgia,,,,why do I have to play here if I dont want to.????????????

                            TnTicketlosers's avatar - Lottery-065.jpg

                            United States
                            Member #71120
                            February 19, 2009
                            993 Posts
                            Offline
                            Posted: December 26, 2011, 8:11 am - IP Logged

                            Well I guess I will keep driving to those states,but that is allowed.