The Federal Wire Act was passed by Congress and signed into law back in 1961, at a time where online gambling was decades away. Its scope was clearly defined as applying to bets and wagers on sporting events, and that was the only wagers that were being made or even possible back then, over a wire that is, or specifically, over a wire being transmitted over state borders.
So there’s two main components of the Wire Act, the fact that it only applies to sports betting, and the fact that it only applies, or could even apply, to the interstate transmission of bets across state lines, interstate betting in other words.
Casino magnate Sheldon Adelson has spearheaded an effort to pass a new bill before Congress, the Restoration of America’s Wire Act, or RAWA, and has managed to bribe enough people to get the bill sponsored. Adelson is one of the world’s richest men with a net worth of over 30 billion and has stated he will spend what it takes to try to eliminate or reduce what he sees as competition for land based casino empire, and is particularly worried about the potential growth of state regulated online gambling.
It took a good many years for the government to agree to abide by the clear text of the current law, and it was as clear as day, specifically mentioning sports betting and not even leaving a hint of the possibility that this could ever be construed as to applying to any other form of bet or wager.
It does seem that they are still lacking in reading skills, because the way this proposed bill is being promoted, they are missing the term “interstate” in the text, and also showing a poor understanding of how the Constitution allocates power to regulate commerce between the federal government and the states.
The idea that the title of the bill would include the term “restoration” does give us a good sense of how much misunderstanding still goes on, and when this misunderstanding involves members of Congress, this really gives us pause. There are indeed Congressmen who believe that this restores the Wire Act to its prior force before the Department of Justice finally admitted they had incorrect beliefs about what the current law applied to, giving way to both the clear language of the law and the opinion of the courts.
So nothing is being restored here, although the bill does seek to rewrite the terms of the current law to include not just betting on sporting events but all betting.
So this would restore something at least, it would restore the opinion of the government that existed prior to its recanting on the current law, but it’s not as if that really mattered much anyway, although many believe that this revision under the new Restoration of America’s Wire Act, if passed, would have dramatic consequences.
What Does This New Bill Really Change Anyway?
It’s important to look at the existing Wire Act as a starting point to see what the proposed changes. When we do, the term interstate has not been stricken or modified, all they modified is the types of gambling that are subject to interstate regulation.
The only interstate gambling that we see originates from countries outside the United States, who are not in any way subject to the Wire Act or any other U.S. law, and the U.S. government tried in vain to seek remedies through looking to international law and trade agreements, but it was determined that these other countries have the right to make their own laws and if they want to legalize and regulate online gambling, that’s their prerogative.
We do have regulated gambling in the U.S. already though, but save for the pact between Nevada and Delaware to share a poker network, it is intrastate in nature. So this is within a state’s rights to regulate all the commerce within its boundaries, and the bets have to be transmitted across state lines for the federal government to have any say in the matter at all.
However, there’s been a lot of concern about the RAWA shutting down state regulated online gambling, although you would think that this shouldn’t be a problem at all, as long as both the bettors and the servers are located within the state. So all states should have to do is ensure this is the case and the RAWA would then simply not apply to this betting at all.
Given that federal authorities are not well known for their precision in interpreting gambling laws, as clearly evidenced by their mistaken view about the Wire Act for many years, even ignoring the opinion of the federal courts, it should not surprise us that they are looking to misinterpret things once again with their bold claims about what kind of power the RAWA would provide them.
The Bold Claims of the Government Concerning the RAWA
What is being claimed here is that the internet itself is an interstate medium, and because the internet does cross state lines, everything on the internet is interstate by nature. This is a bad argument though because just because a communication could cross state lines, whether it does or not is what matters, as a matter of fact.
It a company offering betting within a state were to be charged under the RAWA, if passed, the government would have to demonstrate that, among other things, the bets in question did cross state lines, not that they could. Courts decide criminal cases based upon the facts and not hypotheticals. The position of the federal government on this matter is nothing short of ridiculous actually.
Still though, it’s probably better for the pro side of online gambling that they are proposing to use it for this, because this now brings in the lottery lobby, who are threatened by it as well, and this is a powerful lobby which is more than enough to give Mr. Adelson and his gang a run for their money. There’s also several pro gambling states involved as well who are no slouches either.
When the opposition is just limited to offshore gambling sites, it can be a one sided affair, as was the case with the passing of the UIGEA for instance. With the RAWA, they have awoken some big players stateside, ones that do indeed have quite a bit of influence, and it is not near enough to just throw a bone to the horse racing industry to leave them alone, or “permit” lotteries to sell their tickets at point of sale terminals although not online.
As a result, RAWA is going the way of the other online gambling bills, the pro ones, and is just set to die without doing much other than riling some people up and perhaps scaring them. There’s no reason to think this bill will ever become law though, and it’s especially very likely that states will continue to enjoy the power to regulate their own intrastate gambling, as has always been the case.