The US Department of Justice issued a new opinion on the Wire Act, reversing its prior 2011 opinion that paved the way for states to regulate online gambling.
The reversal further complicates the grey area surrounding the online poker and gambling industry in the US. What is a likely certainty is that the opinion, if enforced, will be challenged in the courts, creating plenty more misunderstanding among US residents who want nothing more than to play a few hands of real money poker or blackjack over the internet.
The opinion came from the DoJ’s Office of Legal Counsel (OLC). It reversed its finding of eight years ago that concluded that the 1961 Wire Act is applicable to only sports betting. That 57-year-old statute makes it a crime to electronically transmit wagers from one state to another.
Online Gambling Takes a Hit
The 2011 DoJ opinion was the impetus that permitted the likes of Nevada, Delaware and New Jersey to regulate online poker and gambling, eventually joining forces on the poker side to increase liquidity. That partnership may now be in jeopardy due to the new opinion.
Also seemingly in jeopardy is the Daily Fantasy Sports (DFS) industry, as well as online lotteries that sell tickets across state lines. Both could be in violation of the law under the new opinion. However, they also may not be, depending on how far the DoJ chooses to go with regard to enforcement.
The full impact of the OLC’s opinion remains unclear at the moment. But it certainly is bad news for states that have recently been considering or contemplating the regulation of online poker and gambling. New York, Illinois, Michigan and West Virginia are a few states that come to mind. Lawmakers within those states may now think twice about introducing any new online gambling proposals.
For those wondering what would prompt the DoJ to shift 180 degrees on a previous opinion, many gaming industry veterans attribute the reversal to the efforts of Sheldon Adelson and his Coalition to Stop Internet Gambling. The billionaire casino owner has been steadfastly against i-gaming ever since the 2011 opinion was issued.
The fabulously wealthy octogenarian has spent much of the last eight years fighting the spread of online poker and gambling. And much to the dismay of internet gambling advocates, Adelson has now been dealt a winning hand.
Adelson has long claimed that the proliferation of online poker rooms and casinos would be bad for today’s youth, would increase crime, and would not be the revenue bonanza that some envision. Critics of the billionaire counter that he’s out of touch with the times and the latest in technological progress due to his advanced age.
Reversal of Fortunes
US online poker and gambling took its first blow in 2006 when the Unlawful Internet Gambling Enforcement Act was passed, prohibiting banks and financial institutions from facilitating transactions with operators of gambling sites. The next whack came five years later when the online poker industry’s three largest sites and networks saw their .com domains seized and were prohibited from operating stateside.
The tide began turning with the 2011 DoJ opinion that favored the rights of states to offer i-gaming. The repeal of PASPA last year that allows sports betting in any state that so chooses continued the positive momentum of the pro-gambling crowd.
And now in 2019 the progress made in recent years has seemingly been altered by the new OLC opinion that reverses the 2011 finding. Only time will tell how large of an effect the DoJ’s opinion actually has on the online poker and gambling industry.