DoJ Reversal of Wire Act Deals a Blow to US Online Gambling

Online poker and gambling within the US have become even more controversial following the release of a DoJ opinion that reverses a previous ruling in 2011.

The Office of Legal Counsel within the US Department of Justice found that the 1961 Wire Act, which prohibits interstate wagers transmitted electronically, applies to all forms of online gambling. The opinion is a reversal of a 2011 finding that concluded that only sports betting fell under the Wire Act’s domain.

The 2011 opinion resulted in states having the right to regulate online poker and gambling, which Nevada, Delaware, New Jersey and Pennsylvania have done. All but the latter have launched i-gaming regimes available to the citizens in their respective states and have also formed an online poker partnership that combines player pools across state lines.

It’s that partnership that seemingly is now taboo under the new DoJ opinion. Also, perhaps in jeopardy are Daily Fantasy Sports (DFS) offerings and multi-state lotteries that conduct business online.

Strict Enforcement Unlikely

A rumor has been floating around that the current industries that rely on interstate wagering will have a 90-day window in which no legal action will   be taken. We can likely expect to see the issue also contested in a federal court of law, a forum that has been favorable to online gambling proponents as two separate Circuit Courts of Appeal have previously found that the Wire Act does indeed apply only to sports betting.

If the entire issue sounds to you like a lot of legal mumbo jumbo that will keep lawyers in business for years, you are certainly not alone. Of most concern to online poker players and gamblers within the US is how the ruling will affect the current climate of regulation.

The answer seems to be that regulation will be hampered considerably, especially among states that had been making progress toward passing i-gaming legislation. Those states may now be more hesitant about going forward with any new bills or proposals until the full impact of the new opinion is known.

Business as Usual for Some

On the positive side of the equation, it appears that the current crop of online poker sites catering to the US market such as Bovada, Ignition Poker, Americas Cardroom and BetOnline will continue under a business as usual format. However, the trend toward deposits and withdrawals being facilitated via crypto-currencies such as bitcoin will likely increase as the new ruling may prompt credit card companies to become even more hesitant about approving credit card transactions involving online poker and gambling sites.

The new DoJ opinion does mention the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA), which was put in place to make transactions with fiat currency against the law. The opinion states that the DoJ “further conclude that the 2006 enactment of UIGEA did not alter the scope of the Wire Act.”

A Win for the CSIG

The DoJ reversal was applauded by Sheldon Adelson, the billionaire casino mogul whose stance against online gambling regulation has been well-chronicled. It’s believed by many that Adelson’s efforts and his insistence that he will “spend whatever it takes” to stop the spread of i-gaming legislation was the catalyst behind the new opinion.

Adelson fronts the Coalition to Stop Internet Gambling, which came into existence following the 2011 DoJ opinion that was favorable toward online poker and gambling. It took him eight years, but it appears that Adelson’s efforts have paid off, at least for the time being.

It will take plenty of time for the new opinion to be fully interpreted as to the effect it will have on the online gambling industry as a whole. Expect plenty of challenges from pro-gambling insiders and advocates along the way.