The US Depart of Justice has issued a new Opinion on an interpretation of the 1961 Interstate Wire Act that could have far-reaching implications for real-money igaming operators stateside.
The Opinion, which runs to 23 pages, is dated November 2, 2018, and reverses a 2011 ruling that the Wire Act prohibited only interstate sports betting compacts. That 2011 Opinion itself arose due to apparent conflicts in the enforcement of the Wire Act, as interpreted, and the Unlawful Internet Gambling Enforcement Act of 2006, the terms of which were the grounds for a number of DOJ prosecutions.
The November 2 Opinion, entitled Reconsidering Whether the Wire Act Applies to Non-Sports Gambling, opens:
“This office concluded in 2011 that the prohibitions of [the Wire Act] are limited to sports gambling. Having been asked to reconsider, we now conclude that the statutory prohibitions are not uniformly limited to gambling on sporting events or contests.”
This represents a reversal of a reversal and typifies the difficulties the DOJ, regulators, law enforcement agencies and the industry have had in interpreting exactly what is permitted.
Indeed, the fresh interpretation of the “plain language” of the Wire Act, evidently overlooked by the 2011 Opinion, appears to hinge on the lack of single comma within a key passage of text.
The Opinion states that the DOJ’s Office of Legal Counsel does not “lightly depart from our precedent. But having reconsidered our conclusion, we now reach a different result.”
The Opinion also notes that:
“Reaching a contrary conclusion from our prior opinion will also make it more likely that the Executive Branch’s view of the law will be tested in the courts. Something the DOJ considers to be a key test of the decision to reverse the 2011 interpretation.
“Under our 2011 Opinion, the [DOJ] may not pursue non-sports-gambling related prosecutions under the Wire Act. But under the conclusion we adopt today, such prosecutions may proceed where appropriate, and courts may entertain challenges to the government’s view of the statute’s scope in such proceedings.”
The latest note also stresses that a reversal of the 2011 Opinion does not permit the continuance of activities that were deemed legal then but that are now interpreted as against the letter of the Wire Act:
“We acknowledge that some may have relied on the views expressed in our 2011 Opinion about what federal law permits. Some States, for example, began selling lottery tickets via the internet after the issuance of our 2011 Opinion.
“But in light of our conclusion about the plain language of the statute, we do not believe that such reliance interests are sufficient to justify continued adherence to the 2011 opinion.”
So what does all this mean for the nascent online gambling sector in the US? It is unclear, in short.
There are at present a handful of interstate online poker compacts in place, between Delaware, Nevada and New Jersey but, in truth, these are not significant in terms of the overall revenues generated by igaming, in New Jersey in particular.
As new, more populous states regulate real-money online gambling – Pennsylvania has already done so but is yet to launch – the potential growth could be limited by the interstate restriction in the latest Opinion.
As the DOJ’s Office of Legal Counsel itself suggests, the detail will be tested in the courts. At this stage, quite where the line will be ultimately be drawn is far from clear.