The Federal Wire Act

The Federal Wire Act, also known as the Interstate Wire Act of 1961 or simply the Wire Act for short, has been involved in legal discussions on online gambling in the United States since online gambling first surfaced in the mid 1990’s.

Often, people look to the authorities to interpret law, and the authorities of course often will take a too broad interpretation of laws, given that their goal and role is to prosecute. People often mistakenly look to these enforcement agencies, such as the FBI or the Department of Justice, for legal opinion.

So we may see the Department of Justice for instance making legal claims such as the Wire Act makes all online gambling illegal in the United States, as they did for many years, or we may also see them recant on this, as they did recently, but this is not the source of the law, it is simply their opinion, and often is full of bias.

Administrations will tend to have certain goals, for instance to look to prohibit gambling, especially unregulated gambling that occurs at sites in other countries, and this is seen as an economic threat as well as being a situation outside their regulatory power.

Only in police states do the police make the laws, and fortunately for the United States, authorities only have the power to enforce laws, not create or interpret them. They do serve to interpret them to some degree in choosing which cases to seek to prosecute, but whether these prosecutions end up being successful or not depends on the interpretation by the courts.

Courts are the final arbiter of legal matters, and this is the reason they exist actually, to resolve legal disputes. In the case of criminal law, they resolve disputes between the state and those they charge under the law.

So if the authorities have a certain opinion about the law, for instance on the Wire Act, this opinion only has merit when the courts agree with it, and the courts decide everything here.

What Actions Does The Wire Act Prohibit?

Opinions of enforcement agencies should sometimes be prefaced with “it is our legal opinion,” and this should always be tempered with a duty to seek out fact based opinions, to the best of their ability. Unlike individuals, public officials are under the duty to be fair and impartial, or at least that’s the way things are supposed to work, although it doesn’t always work out that way.

Let’s look at what the Wire Act says. It was designed to go after organized crime running interstate sports betting operations, and derives its power from the federal government’s power to regulate interstate commerce.

There are several elements here. The first is that it applies to those “engaging in the business of betting or wagering.”  So this obviously does not apply to participants of gambling, players in other words, and in fact they have no power to make illegal the actual wagering itself by players.

The wagering in question either occurs in the location that the player is in, whereby it would be under state jurisdiction, or in the location where the bet was placed, where it would be under the jurisdiction of that location. The most the federal government can do is regulate the commerce here, for instance the business of transmitting these bets.

That brings us to the second part, the transmission of betting information. That’s the part the law makes illegal, for those engaged in the business of gambling to transmit certain gambling information.

In the case of online gambling, internet providers are involved in transmitting this betting information, but they are not in the business of gambling, so this law cannot apply to them. So who does this law apply to anyway?

The Department of Justice believes that it applies to gambling operators, and have gone after several under this law, and have obtained convictions as well. The courts haven’t seemed to care whether or not the alleged transmission occurred outside the jurisdiction of the United States, and haven’t been bothered by the ridiculousness of seeking to apply U.S. law outside the country.

That’s another topic for later though, but for now, we can just say that the Wire Act does not apply to individuals, and may apply to operators if they are under the jurisdiction of the United States.

What Types of Gambling Does The Wire Act Prohibit?

The subject matter of the Wire Act is clearly sports betting. The wording of it clearly specifies that it deals with bets “on any sporting event or contest.”  Regardless of how strong the opinion was by the Department of Justice that this law applied to all forms of gambling, it has never been based upon fact at all, and clearly demonstrates how much bias is involved on the part of enforcement agencies.

A brief look at the law by anyone with any sort of legal background, or even people without one that at least had a good command of the English language, would reveal this, that this law deals with sports betting exclusively. There are cases where laws can be narrowly or broadly interpreted, but this is not one of them, there’s simply no way you can go from betting on sports to betting on anything.

The courts are the ones that decide this, which they did, back in 2002. The U.S. Federal Court of Appeals ruled that the Wire Act did indeed only apply to sports wagering.

While you would think that this would settle the matter, it took almost 10 years for the Department of Justice to finally admit this, when several state lotteries became worried that they may be subject to the prohibitions of the Wire Act. This has slowed down but hasn’t stopped the rhetoric from U.S. law enforcement, who still maintain at times that all online gambling is against federal law, although they no longer specify which federal law is alleged to be violated by it, because there aren’t any.