Wire Act Reversal “Corrupt, Unethical, & Legally Bankrupt”

An Op-Ed published in USA Today has called the DOJ´s decision to reverse the 2011 opinion on the Wire Act “corrupt, unethical, and legally bankrupt”.

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An Op-Ed published in USA Today has called the DOJ´s decision to reverse the 2011 opinion on the Wire Act “corrupt, unethical, and legally bankrupt”.

In 2011, the Department of Justice´s Office of Legal Counsel (OLC) was asked by the states of Illinois and New York whether the use of the Internet and out-of-state payment processors to sell lottery tickets violated the Wire Act. The OLC´s reply was that interstate transmissions of wire communications that do not relate to a sporting event or contest fall outside the reach of the Wire Act.

The “opinion” (PDF) as it came to be known, not only paved the way for interstate online lotteries, but also for regulated interstate online poker and networked online casino games. Although the progress of regulated online poker in the United States has been slow, online casinos have generated billions of dollars for states that acted on the OLC´s opinion and passed legislation.

Then, the OLC reversed the opinion and stated the Wire Act applies to all forms of gambling. If the revised opinion is enforced, it will have implications for interstate lotteries, online poker, casino, and sports betting, and Daily Fantasy Sports contests – which although given a carve-out by UIGEA, would still be affected by out-of-state payment processing being in violation of the law.

Was it a Case of “Now or Never”?

At the time the revised opinion was issued, most industry observers believed it was influenced by anti-online gambling magnate Sheldon Adelson, who directly and indirectly has contributed significant amounts to the Republic Party and President Trump´s presidential campaign. A timeline of events leading up to the revised opinion published by the Washington Post would seem to confirm their beliefs.

However, at a hearing of the House Judiciary Committee last week, acting US Attorney General Matthew Whitaker denied having any relationships with anti-online-gambling groups and casino interests – even though he was former Attorney General Jeff Sessions´ Chief of Staff at the time the original interpretation of the Wire Act was being reconsidered in November 2018.

Writing for the online journal Intercept, Rachel M. Cohen believes differently. Her timeline of events claims Whitaker met with officials from the Department of Justice and the White House during the recent government shutdown, and she believes that the decision was made to release the opinion as incoming Attorney General is an advocate for states´ rights and it was a case of “now or never”.

“Correct, Unethical, and Legally Bankrupt”

Whereas most observers have been careful to choose their words carefully when discussing possible Adelson influence, Peter J. Ferrara showed no such restraint when writing an opinion piece for USA Today. Pointing the finger directly at Sheldon Adelson, he called the decision to reverse the 2011 Wire Act opinion “corrupt, unethical, and legally bankrupt” and wrote “I cannot stress how unprecedentedly appalling this decision is”.

If Ferrara had been an industry hack looking for click bait, most people may have given the Op-Ed a miss. However, Ferrara served in the White House Office of Policy Development under President Reagan and as Associate Deputy Attorney General under President Bush, so he knows a thing or two about the way the Department of Justice operates Consequently, when he claims never to have seen law enforcement officials bend so easily to please one influencer, you know something is wrong.

Ferrara concludes his Op-Ed by suggesting President Trump should get involved and publicly criticize the reversed Wire Act opinion in order to “fend off the media´s allegations of crony capitalism”. Inasmuch as that is unlikely to happen, a quiet word or two behind closed doors may stop any enforcement action, or may facilitate a carve out for states that already allow regulated online gambling in their jurisdictions. We shall have to wait and see.