Report: Department of Justice Looking to Reverse Wire Act Interpretation
The holiday season is a time of year to reflect on where we have been, look forward to where we are going, and to consider all of those people – friends, family, coworkers, acquaintances – who have had a positive impact on our lives. It is also a time to remember, as the U.S. government hurtles toward a shutdown, that the current administration and its supporters don’t give a flying fuck about any of us. It may be extremely minor in the grand scheme of things, but one data point in this regard comes from a report by Online Poker Report, which says that the Department of Justice is preparing a new opinion on the Federal Wire Act of 1961, one which would reverse the previous 2011 opinion that opened the doors to legalized online poker in the United States.
The reason I put this, something that could affect online poker, in the “they don’t give a shit about us” category is because for years, the opposition to online poker in the federal government has felt that way not because of some moral reason, but because of political reasons. Anyone with any sort of logic in their brain can understand that regulation is the best way to protect poker players, not prohibition. But poker opponents – who tend to be the most low-information politicians – are mainly trying to score points with billionaire Republican donor Sheldon Adelson, though there are certainly exceptions.
Wire Act: So Simple, Intentionally Misinterpreted
Back to the topic at hand, the Wire Act was originally created to try to stem the tide of organized crime and specifically forbids sports betting over telecommunications lines. Here is the meat of the Wire Act, so see for yourself:
Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the 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, shall be fined under this title or imprisoned not more than two years, or both.
See? It doesn’t talk about any sort of gambling except for sports betting. But since the advent of online gambling, including poker, the DoJ has for some reason interpreted the Wire Act as applying to all forms of gambling, despite the clear text above. Though online poker sites operated without much problem in the U.S. until the passage of the UIGEA in 2006 and even then, some sites still continued until Black Friday in 2011, the interpretation of the Wire Act hung over the industry like the sword of Damocles.
DoJ Comes to Its Senses
In 2009, the lottery commissions of New York and Illinois asked the DoJ about the legality of online lottery sales. The DoJ’s interpretation of the Wire Act would hold that such sales were illegal, as they used out-of-state payment processors, but the UIGEA actually permitted payments to electronically cross state lines as long as the payments began and ended in a state where intrastate online gambling was legal.
In late 2011, the DoJ’s Office of Legal Counsel (OLC) issued an opinion that the Wire Act applied only to sports betting. Here is the summary from the opinion:
Having considered the Criminal Division’s views, as well as letters from New York and Illinois to the Criminal Division that were attached to your opinion request, we conclude that interstate transmissions of wire communications that do not relate to a “sporting event or contest,” 18 U.S.C. § 1084(a), fall outside of the reach of the Wire Act. Because the proposed New York and Illinois lottery proposals do not involve wagering on sporting events or contests, the Wire Act does not, in our view, prohibit them. Given this conclusion, we have not found it necessary to address the Wire Act’s interaction with UIGEA, or to analyze UIGEA in any other respect.
This enraged opponents of online poker. Though the opinion does nothing to change the law, opponents – the vast majority of which were and are Republicans – were pissed that the “Obama Justice Department” would put out such a unilateral decision without consulting Congress. Never mind that it was just guidance and that it correctly interpreted the plain language of the Wire Act as originally written.
Since then, Sheldon Adelson has used Congressional proxies such as Senator Lindsey Graham and former Representative Jason Chaffetz to try to get the Restoration of America’s Wire Act (RAWA) passed, which would actually make the previous, incorrect interpretation of the Wire Act the US’s official law. That has failed, but now word is that the DoJ is working on a new opinion that would reverse the 2011 opinion, saying that the Wire Act makes all online gambling illegal.
This feels bad and should make nobody happy. The question is, of course, whether or not it will actually have an effect on anything. As the opinion is just that, an opinion, it does not change the law at all. States that already have legalized online gambling won’t stop. It could though, give states who are thinking about it some pause. Would they want to risk the ire of the Department of Justice? Would they want to risk the DoJ intervening?
If the opinion does get written and the DoJ actually tries to go after states that have legalized online gambling, those states will fight. Lawyers will make lots of money.