New Wire Act Opinion by the DOJ Could Spell Trouble for iGaming Industry

Summary: The United States Department of Justice has changed their opinion on the Wire Act of 1961, ruling that all interstate online gambling is illegal.

In 2011, the Department of Justice, under the Obama Administration, ruled that the Wire Act of 1961 was to be changed. The new opinion was that the act only applied to sports betting. This paved the way for individual states to begin legalizing online gambling. New Jersey, Delaware and Nevada have been successful in offering online casino and/or poker gaming. Pennsylvania has legalized the option too, and should start sometime this year.

This week, the DOJ decided to rule that the Wire Act was not interpreted correctly in 2011 and have now applied it to all interstate online gambling. It is rare for the DOJ to issue a new opinion on a subject when it was recently changed, but this administration seems to be set on making changes to the overall landscape of US legislation.

The new opinion was dated the 2nd of November and states that the Wire Act applies to gaming beyond sports betting. It also states hat the 2007 Unlawful Internet Gambling Enforcement Act does not change the Wire Act.

The UIGEA legislation created an exception for fantasy sports involving restrictions of online gaming. With the new opinion, it states that based on the Wire Act, there is no such exemption. With this decision, daily fantasy sports operators need to be worried.

Daily fantasy sports companies and lotteries in the states sell tickets for multi-state draw games. Examples of this would be the Mega Millions and the Powerball. These legal gambling activities would be in violation of the law now based on the change to the Wire Act. But, what action will the federal government take?

Online poker gaming will also be affected. In Nevada, New Jersey and Delaware, online poker player pools are shared. Players in Delaware can access sites in New Jersey and vice versa. The online poker industry in the United States is already struggling so if the player pooling is taken away, revenue numbers will dwindle.

It is possible that the Department of Justice will not take action against states that offer interstate gaming. But why make the change then? The current administration is real chummy with anti-gambling activists like Las Vegas Sands CEO Sheldon Adelson. It could be that the change was made to try and shake up the online gambling industry, in any way possible.

Possible Issues

Because we have no idea how the DOJ will move forward now that the new opinion has been made public, it’s anyone’s guess what could become an issue. Take for example banking. In the past, online operators had trouble getting banks and financial institutions to allow payment processing for online gaming sites. Over the years this issue has been resolved. However, now that interstate change is in play, banks might not be too willing to process payments for gaming in one state when they are based in another.

It could be that payment processing could become a big issue for operators. Banks want to avoid any federal issues. To avoid any risk of prosecution, the financial institutions may stop processing payments in specific states for that reason.

I imagine over the coming weeks we will learn more about what the new opinion of the DOJ on the Wire Act will entail. We will keep our readers updated on any changes and how it affects online gambling in the US.