DoJ Issues New Wire Act Opinion, Says All Interstate Online Gambling is Illegal
In December, it was reported – originally by poker media outlet Online Poker Report – that the U.S. Department of Justice’s Office of Legal Counsel (OLC) was preparing a new opinion on the Federal Wire Act of 1961 to say, contrary to what is actually written in said Act, that it prohibits all interstate online gambling and not just sports betting. And so it has been done. The new opinion, dated November 2nd, more than a month and a half before the rumor mill started churning, was published on Monday, January 14th.
If the timing of everything seems very political to you, it is because it is. The date on the opinion is just a few days before former U.S. Attorney General Jeff Sessions resigned. Sessions is as conservative as they come and had said during his confirmation hearing that he was “shocked” when the OLC said the Wire Act applied only to sports betting in 2011. He recused himself from any online gambling legislation discussion in 2017 because his attorney in the Trump administration Russia collusion investigation is Charles Cooper, who also worked with Sheldon Adelson’s Coalition to Stop Internet Gambling (CSIG).
The OLC opinion is not legislation, so it doesn’t seem like Sessions needed to stay away from it. This is pure speculation, but perhaps he wanted it written before he exited.
As for this week, it is pretty easy to hide this news from the general public, as the government is in a shutdown, there isn’t much happening on Capitol Hill legislatively, and all of the focus of the political media is on the shutdown and the Trump-Russia collusion investigation. Publish an opinion that most people wouldn’t care about? Easy game.
Oh, and the hearings for the potential new Attorney General begin today. Convenient.
Brief (Kind Of) History of the Wire Act
Back to the Wire Act itself. It was drawn up nearly 60 years ago as a way to combat organized crime. The meaty part is as follows:
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.
For whatever reason (politics!), the DoJ interpreted this to mean all online gambling is banned when online gambling became a thing. In late 2011, though, the OLC issued an opinion saying that it only applied to sports betting, which makes sense, reading the text above. The opinion was spurred on by questions asked by the New York and Illinois lotteries, which wanted to start selling tickets online. The worry for them was that online payment processing could route payments out of state, though the UIGEA said that was fine as long as the payments originated and ended within the same state.
The OLC, in its opinion, said the UIGEA didn’t matter in this case because lottery sales had nothing to do with sports betting. Thus, the green light was given to states who wanted to legalize intrastate online gambling. So far, New Jersey, Delaware, Nevada, and Pennsylvania have done so (though no sites are up and running yet in Pennsylvania). The states have also formed an interstate compact, allowing games to cross state lines.
Enter billionaire Republican king maker Sheldon Adelson, at whose feet conservative politicians beg. Adelson is the CEO of Las Vegas Sands Corp. and has long been afraid that online gambling could hurt his business. Thus, he got his legal team to quite literally write legislation, the Restoration of America’s Wire Act (RAWA), that would make the original, incorrect interpretation of the Wire Act official federal law. He got it introduced in both the House and Senate and even got a couple committee hearings in the House, but by and large, most lawmakers have seen it for the crony capitalism that it is and it didn’t get very far. He and his puppets in Congress have kept trying and failing at various end-arounds for years.
This OLC Opinion is… Something
But with the infinitely corrupt Trump administration now in power, it appears that Adelson has pulled some more strings with this new OLC opinion. The key part of the opinion is the following:
Only the second prohibition of the first clause of section 1084(a), which criminalizes transmitting “information assisting in the placing of bets or wagers on any sporting event or contest,” is so limited. The other prohibitions apply to non-sports-related betting or wagering that satisfy the other elements of section 1084(a).
The 2006 enactment of the Unlawful Internet Gambling Enforcement Act did not alter the scope of section 1084(a).
There is a lot to unpack in the entire 23-page opinion and while I have read some of it, it would take quite some time for even a lawyer to wrap his or her brain around it. What it looks like the Trump OLC is saying is that because the part of the Wire Act that reads, “… 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,” does not specifically mention sports betting, that it encompasses all online gambling.
Basically, the OLC is parsing the text of the Wire Act so severely that it is telling us that the “on any sporting event or contest” portion does not carry forward to the rest of the sentence because it is not restated later. From what I can tell, if the second half of the paragraph read something like “as a result of such bets or wagers” and “placing of such bets or wagers,” the OLC would say that sports betting is implied there. But without the addition of one word or explicitly repeating the “sporting event or context” modifier, the OLC is trying to get us to believe that the authors of the Wire Act meant two entirely separate things in a single, long sentence. Okay, then.*
In the meantime, anyone with half a brain can read the Wire Act and understand that “sporting event or contest” extends to the entire sentence. But as we have seen repeatedly, day after day after miserable day, the Trump administration doesn’t even have half a brain.
Will the Opinion Hurt Online Poker?
As far as this new Wire Act opinion’s impact on online gambling and poker, specifically, it remains to be seen what will happen. This is not a new law, just an interpretation. The DoJ would have to actually start going after gaming sites and hell, maybe even states themselves, for current online gaming to be wiped out. If it did, you know the states would fight tooth and nail and a major states rights battle would ensue.
There are two immediate impacts I could see being possible, though not necessarily probable. The first is that banks and other payment processors could get scared that their online gaming transactions are now at least legally questionable as they cross state lines, even if they start and end within the same state. Perhaps they start pulling back on their servicing of the industry. The second impact could be with states that have online poker legislation in the works or are interested in discussing online gaming, but now with a big question mark hanging over the industry, they might slow down or stop all together.
*Again, I am not a legal expert at all, just trying to understand the opinion from a layman’s point of view. If I’m way off base, let me know.