Summary: The DOJ has extended the period of compliance involving online gambling based on Wire Act changes to include 60 more days.
Late last year we learned that the Department of Justice had decided to reinterpret the Wire Act of 1961. The Wire Act was first changed back in 2011 by the Obama Administration and allowed for online gambling to be legalized in individual states. In the initial change, all interstate online gambling was considered legal except for sports betting. Now, the DOJ has ruled that all interstate gambling applies, and operators had a 90 day window in which to comply. That window has been extended 60 days.
More Time to Comply
In the beginning, operators were given just 90 days to be in compliance of the new ruling, from the time in which the memo regarding the change was released. This would mean changes had to be made by April 15th. Now, that timeline has been increased by 60 days, ending on June 14th. The extension has been reported by Online Poker Report and expected to be announced by the DOJ by next week.
Currently, operators are scrambling to make the appropriate changes to be in compliance. The actual steps that operators need to take have not really been laid out by the DOJ. Operators are basing the decision on interstate gaming. This means that servers for online gaming must be located in the state of operation. Operators are also worried that payment processing problems may begin again as financial institutions are scared to be involved with online gambling when there are legal challenges afoot.
Challenging the Ruling
The extension of the time line by the Department of Justice comes at the same time as legal challenges are being issued against the ruling. The new Wire Act opinion instantly came under fire, with lawsuits already having been filed within the First Circuit. The New Hampshire Lottery Commission was one of the first to file suit, seeking to undermine certain aspects of the ruling.
The group has been joined by the Neopollard Interactive and Pollard Banknote group, with the iDEA Growth group also hoping to become involved. Certain lottery products in the United States operates across state lines, including the Powerball. The lottery along with online poker gaming in Nevada, Delaware and New Jersey are at risk based on this new ruling.
So now we have a clash of titans so to speak. You have the DOJ, that is now allowing states more time to comply, while lawsuits are being filed to stop the ruling from taking effect. There are going to be a great many legal challenges no doubt, as several states are involved or are preparing to become involved in the online gambling industry.
Hopefully, the outcome will be that the Wire Act will go back to its original change, and include only interstate sports betting. Many feel that the recent change was brought on by such lobbyists as Sheldon Adelson, the CEO of the Las Vegas Sands. Adelson along with others have been strong opponents of online gambling in the US and are suspected by some sources of being the key effort behind the re-interpretation of the act.
When the new opinion was announced, Attorney’s General in Pennsylvania and New Jersey were the first to show their displeasure. The New Jersey AG has even requested paperwork to show how the ruling came about, feeling that the lobbyists might have had a hand in the decision.
For now, we will watch as operators either choose to be in compliance or fight back.