Will the Fate of US Online Gambling Rest on a Comma?

Author: Skyla Burrell

Buried amidst the seemingly never-ending parade of strange headlines coming out of the USA, you may have missed that the US Department of Justice has reversed their interpretation of the initial 2011 interpretation of the 1961 Wire Act. Confused yet? Yes, we all are. So, climb aboard, and let’s try to navigate this murky water.

The original 1961 Wire Act banned businesses from operating sports betting operations of any kind using wire communications. The 1961 Interstate Wire Act, sometimes referred to as the Federal Wire Act, was really brought to fruition in an effort to deal with organized crime and prohibited specific types of businesses from using any kind of wire communications to take or place sports bets or wagers, and applied to both interstate and international transmissions. This stood in place for the first 40 years, basically intact, with a few small modifications to account for modern technology as the years passed.

The portion of the Wire Act in question reads, “Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.”

In 2001, under President Bush, the Wire Act was amended. The new interpretation included all forms of gambling, not just sports. In 2011, under President Obama, the Justice Department changed its interpretation, ruling the Interstate Wire Act in-fact only applied to interstate sports betting. This was the prevailing position of the legal community until late 2018.

Under the Trump presidency, a new interpretation of the Wire Act was signed on 7th November 2018. Reverting back to the 2001 interpretation that the Interstate Wire Act did in-fact apply to all betting, including casino games.

Seemingly, and perhaps unbelievably, it may all come down to just a single comma in the original draft in 1961. For now, the future seems uncertain for USA gamblers; the new ruling is bound to affect the following markets:

Daily fantasy sports Intrastate online casinos Intrastate online poker rooms Interstate online poker between Nevada, NJ, and Delaware Marketing that occurs across state lines for any type of gaming Online lottery sales How will this all play out? You can bet on legal challenges to the new interpretation, as the Fifth Circuit Court and the First Circuit Court of Appeals have already ruled the Wire Act only applies to sports betting. Perhaps if the United States Government can manage to stay open, we'll get some final answers. In the meantime, there is a chill in the online gambling air of the United States.