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DOJ reverses 2011 opinion of the Wire Act; legal online gaming in question

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Online GamblingOnline Gambling: DOJ reverses 2011 opinion of the Wire Act; legal online gaming in question
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The U.S. Department of Justice's legal counsel office reversed a 2011 opinion that the Federal Wire Act applies only to sports betting, potentially throwing the small U.S. Internet gaming market into question.

A 23-page opinion is dated Nov. 2, 2018 but became public Monday. Justice Department attorneys said they have, "Based on the plain language of the issue, we reach a different result" from the 2011 opinion of the 1961 Act.

"While the Wire Act is not a model of artful drafting, we conclude that the words of the statute are sufficiently clear and that all but one of its prohibitions sweep beyond sports gambling," Justice Department attorneys wrote. "We further conclude that that the 2006 enactment of (Unlawful Internet Gambling Enforcement Act) did not alter the scope of the Wire Act."

The new Justice Department opinion could apply the Wire Act to any form of gambling that crosses state lines, including online gaming.

Following the 2011 decision, New Jersey, Nevada and Delaware legalized online gaming. Nevada's online gaming activities is restricted to poker only. Pennsylvania lawmakers legalized Internet gaming last year as part of an overall gaming expansion, but websites have been slow to launch.

Eilers & Krejcik Gaming analyst Chris Grove said the opinion places "many conflicting aspects" into play.

"It's our belief that we'll see the heart of this issue head to the courts sooner rather than later," Grove said in an email. "The opinion seems to create more headaches for products that clearly share liquidity across state lines. We also expect it to further delay Pennsylvania's rollout of online casino gambling."

New Jersey has the most active Internet gaming business of any state. According to the New Jersey Division of Gaming Enforcement, gaming revenue from online wagering was $298.7 million, a 21.6 percent increase from 2017. Since its launch in 2013, Internet gaming in New Jersey has generated more than $1 billion in revenue.

Nevada, Delaware and New Jersey have an interstate online gaming agreements that allows Internet poker players to compete across the three states.

Caesars Entertainment, which operates Internet gaming in both Nevada and New Jersey, declined comment Monday.

"(We) will take some time to review opinion and get outside legal advice," said Seth Palansky, who is the head of communications for the Caesars' owned World Series of Poker.

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9 comments. Last comment 2 months ago by Stack47.
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Kentucky
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February 14, 2006
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Posted: January 14, 2019, 9:59 pm - IP Logged

The 1961 wire act was made to stop sports betting, but in 2001 that Justice Department ruled it covered all forms of Internet gambling. I guess the lottery question is will this new Justice Department ruling prevent states from selling MM, PB, or any other multi-state game tickets online.

    music*'s avatar - Trek HAND1.gif
    Fresno, California
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    Posted: January 15, 2019, 12:29 am - IP Logged

    This might mean more players will turn to MM & PB. Even if online betting is made illegal. More billion dollar jackpots are on the way. US Flag

      "May You Live Long and Prosper" Spock on Star Trek. A Vulcan.

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      NY
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      Posted: January 15, 2019, 2:49 am - IP Logged

      "The 1961 wire act was made to stop sports betting"

      That strikes me as the rational conclusion. The first sentence reads "... transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers ..."

      About two years ago a labor dispute in Maine turned on the absence of a comma in a list, making the meaning unclear. That first comma in the wire act potentially means that the limitation to sporting events in the first clause is totally irrelevant to the 2nd and 3rd clauses, in which case the law would apply to any type of bet or wager. OTOH, if that was the intent why is the first clause unnecessarily limited to "sporting events and contests"?

      The second sentence of the wire act reads "Nothing in this section shall be construed to prevent ... the transmission of information assisting in the placing of bets or wagers on a sporting event or contest from a State or foreign country where betting on that sporting event or contest is legal into a State or foreign country in which such betting is legal."

      That makes it clear that for sporting events the law is only intended to apply to betting where it's illegal. In that case why isn't it similarly clear and obvious that it applies to all other types of betting even where such betting is legal? Maybe it's just because it's a poorly written law, but there's a possibility that only legal sports betting was intended to be exempt.

      "will this new Justice Department ruling prevent states from selling MM, PB, or any other multi-state game tickets online."

      The act applies to interstate and foreign transmission, so even for multi-state games it shouldn't apply as long as sales are only offered within the state.

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        Simpsonville
        United States
        Member #163184
        January 22, 2015
        1751 Posts
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        Posted: January 15, 2019, 8:36 am - IP Logged

        The U.S. Department of Justice's legal counsel office reversed a 2011 opinion that the Federal Wire Act applies only to sports betting, potentially throwing the small U.S. Internet gaming market into question.

        A 23-page opinion is dated Nov. 2, 2018 but became public Monday. Justice Department attorneys said they have, "Based on the plain language of the issue, we reach a different result" from the 2011 opinion of the 1961 Act.

        "While the Wire Act is not a model of artful drafting, we conclude that the words of the statute are sufficiently clear and that all but one of its prohibitions sweep beyond sports gambling," Justice Department attorneys wrote. "We further conclude that that the 2006 enactment of (Unlawful Internet Gambling Enforcement Act) did not alter the scope of the Wire Act."

        The new Justice Department opinion could apply the Wire Act to any form of gambling that crosses state lines, including online gaming.

        Following the 2011 decision, New Jersey, Nevada and Delaware legalized online gaming. Nevada's online gaming activities is restricted to poker only. Pennsylvania lawmakers legalized Internet gaming last year as part of an overall gaming expansion, but websites have been slow to launch.

        Eilers & Krejcik Gaming analyst Chris Grove said the opinion places "many conflicting aspects" into play.

        "It's our belief that we'll see the heart of this issue head to the courts sooner rather than later," Grove said in an email. "The opinion seems to create more headaches for products that clearly share liquidity across state lines. We also expect it to further delay Pennsylvania's rollout of online casino gambling."

        New Jersey has the most active Internet gaming business of any state. According to the New Jersey Division of Gaming Enforcement, gaming revenue from online wagering was $298.7 million, a 21.6 percent increase from 2017. Since its launch in 2013, Internet gaming in New Jersey has generated more than $1 billion in revenue.

        Nevada, Delaware and New Jersey have an interstate online gaming agreements that allows Internet poker players to compete across the three states.

        Caesars Entertainment, which operates Internet gaming in both Nevada and New Jersey, declined comment Monday.

        "(We) will take some time to review opinion and get outside legal advice," said Seth Palansky, who is the head of communications for the Caesars' owned World Series of Poker.

        Todd, please add the couple of paragraphs that are missing from this article.  This was pushed very hard by Adelson (?) a multi-billionaire who owns Sands et al Casinos in Las Vegas.  He donated millions to the Repubs. 

         

        Personally I wish that 1961 Wire Act law which I've harped on several times on LP would be amended or just abolished.

          Avatar
          Kentucky
          United States
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          February 14, 2006
          8190 Posts
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          Posted: January 15, 2019, 2:59 pm - IP Logged

          "The 1961 wire act was made to stop sports betting"

          That strikes me as the rational conclusion. The first sentence reads "... transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers ..."

          About two years ago a labor dispute in Maine turned on the absence of a comma in a list, making the meaning unclear. That first comma in the wire act potentially means that the limitation to sporting events in the first clause is totally irrelevant to the 2nd and 3rd clauses, in which case the law would apply to any type of bet or wager. OTOH, if that was the intent why is the first clause unnecessarily limited to "sporting events and contests"?

          The second sentence of the wire act reads "Nothing in this section shall be construed to prevent ... the transmission of information assisting in the placing of bets or wagers on a sporting event or contest from a State or foreign country where betting on that sporting event or contest is legal into a State or foreign country in which such betting is legal."

          That makes it clear that for sporting events the law is only intended to apply to betting where it's illegal. In that case why isn't it similarly clear and obvious that it applies to all other types of betting even where such betting is legal? Maybe it's just because it's a poorly written law, but there's a possibility that only legal sports betting was intended to be exempt.

          "will this new Justice Department ruling prevent states from selling MM, PB, or any other multi-state game tickets online."

          The act applies to interstate and foreign transmission, so even for multi-state games it shouldn't apply as long as sales are only offered within the state.

          There was no "Online lottery betting" when the Justice Department made their 2011 ruling which basically said the intent of the 1961 Wire Act was for sports betting. The lottery lawyers probably already have the answers to the legality of selling multi-state tickets where the only effect (if there is one) is on jackpot prizes; states payout all the secondary prizes.

          I always thought the 2001 JD ruling was unfair because it didn't apply to interstate horse racing betting and the 2006 UIGEA went after Internet poker.

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            Kentucky
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            February 14, 2006
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            Posted: January 15, 2019, 3:02 pm - IP Logged

            Todd, please add the couple of paragraphs that are missing from this article.  This was pushed very hard by Adelson (?) a multi-billionaire who owns Sands et al Casinos in Las Vegas.  He donated millions to the Repubs. 

             

            Personally I wish that 1961 Wire Act law which I've harped on several times on LP would be amended or just abolished.

            I Agree!

            That Act was made before there was a public Internet and should be repealed.

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              Simpsonville
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              January 22, 2015
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              Posted: January 15, 2019, 3:34 pm - IP Logged

              This is one law that is so antiquated it needs to go.  Big government, once these scoundrels stop wasting Oxygen and are gone, should realize the tax benefit to opening the borders for all kinds of gambling.

              Stack47...did you know or remember a couple of years ago the IRS tried to change the tax law so that slot machine payout tax liability would drop from $1199 to $600?  The casino lobbyists fought hard on that one.  Funny I thought the IRS couldn't change the rules...

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                Simpsonville
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                Posted: January 17, 2019, 8:47 am - IP Logged

                What did I read yesterday...sixty days to comply from the DOJ?   Article also expect lawsuits.

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                  Kentucky
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                  Posted: January 17, 2019, 8:34 pm - IP Logged

                  What did I read yesterday...sixty days to comply from the DOJ?   Article also expect lawsuits.

                  Got an email from the Poker Alliance with their take on the new DOJ ruling. They contention is the 1961 Wire Act applied to sports betting on sporting contests. Here's a conversation between Senator Estes Kefauver and Assistant Attorney General Herbert Miller in 1961:

                  Senator Kefauver: I can see that telephones would be used in sporting contests, and it is used quite substantially in the numbers games, too. How about laying off bets by the use of telephones and laying off bets in big time gambling? Does that not happen sometimes?
                  Mr. Miller: We can see that this statute will cover it. Oh, you mean gambling on other than a sporting event of contest?
                  Senator Kefauver: Yes.
                  Mr. Miller: This bill, of course, would not cover that because it is limited to sporting events or contests.
                  Senator Kefauver: Do you consider a boxing match a contest?
                  Mr. Miller: That is a sporting event or contest, yes, sir, normally.
                  Senator Kefauver: How about a wrestling match?
                  Mr. Miller: Yes, sir.
                  Senator Kefauver: I would think that would be more of a performance than a contest.
                  Mr. Miller: I do not watch them on television, but I understand that is a fact, more actor than wrestler.

                  It should be obvious from the wresting comments, the Act was intended for betting on sporting events and contests.