- The Department of Justice (DOJ) issues a new Opinion eyeing reversal of the Wire Act
- Enforcement of the opinion will almost certainly affect cross-state online poker
- DOJ phrases the Opinion to make legal challenge difficult
Rumors that the Department of Justice’s Office of Legal Counsel was preparing to reverse the Wire Act decision from December 23, 2011 are now substantiated. The DOJ has issued a new opinion deliberating on the significance of the previous ruling.
The Historic Backdrop of the Wire Act Woes
In December 2018, Gambling News was among the many media outlets out there to take a closer look at an interesting development at the Department of Justice (DOJ)’s Office of Legal Counsel, with the institution reportedly considering a reversal of the Wire Act decision dated December 23, 2011.
The 2011-decision was the result of a petition lodged by the States of New York and Illinois which sought to challenge the Wire Act, a common deterrent to scaling gaming operations, including poker, on their territories.
Thread for those wondering what the DOJ Wire Act reversal means: In 2010 Illinois and New York wanted to sell lottery products online (some transmissions would cross state lines) and asked the DOJ if that would violate the Wire Act.
— Steve Ruddock (@SteveRuddock) January 15, 2019
The ruling that followed the nearly 2-year case determined that the Wire Act applied only to sports betting, opening up opportunity to legalize activities such as poker and expand the reach of lotteries.
A reversal of this decision would be a form of digress many have estimated, although not enough to inflict a killing blow to the burgeoning iGaming and poker industries.
Immediate Effects of a Potential Wire Act Reversal
The Wire Act reversal could have immediate legal consequences by restricting the reach of gambling activities (be that online gambling or lotteries), with the main places in the United States currently running large-scale gaming operations being Nevada, New Jersey, Delaware, and most recently Pennsylvania.
The 23-page opinion entitled “Reconsidering Whether the Wire Act Applies to Non-Sports Gambling” doesn’t make specific claims as to the state of affairs in the online industries at the moment and how it could affect online poker and casinos, but it mentions the existence of cross-state activities, giving readers sufficient reason to worry.
Despite the woolly phrasing of the document, the fact that the opinion can affect cross-state operations seems disconcerting enough to a majority of people. Previously, Online Poker Report journalist Dustin Gourke said that even if a reversal is seen through, it would still be difficult to unsettle the industry as we know it, although it could dim the long-term prospects of online poker, for example.
Now You Are Endangered
What segments are at a risk then? Online poker (inter states) seems to be a likely casualty in this odd twist of events alongside other inter-state activities such as:
- Daily fantasy sports
- Online lotteries
- Shared-liquidity online poker
- Other forms of gaming
The potential impact on the shared-liquidity online poker between Nevada, New Jersey and Delaware is what comes to mind immediately, although a setback such as this would most likely not go unchallenged.
Hold On! It’s an Opinion, Not a Reversal
It’s important to notice that this is just an opinion and not an actual legislation that has been voted upon and passed. Still, this is an interesting dissonance between state and federal legislation. On the one hand, states have been embracing the idea of legalizing various activities, including online poker and casino, to speak nothing of the sports betting industry, with New Jersey’s total handle hitting $1.2 billion in total handle, with the industry heading for even bigger numbers.
But online bets almost inevitably cross state lines thanks to routing. Going to be a tricky road from here.
— Chris Grove (@OPReport) January 14, 2019
According to Chris Grove, commenting on Twitter, while a reversal wouldn’t affect the betting that occurs within states, it could potentially affect the cross-state activities because of routing. Mr. Grove described it as “tricky”.
So yes, this is still just an opinion, but it has the potential to inflict enough damage so as to make the life of operators difficult, dimming some of the prospects and immediate promises of the future (such as expanding the online poker pool to give incentive to even more players to join and existing ones to win more concrete sums).
I Will See You in Court
It’s very possible that should the opinion be enforced, litigation would ensue. However, the masterminds of the opinions have stated that state courts would not be able to rule against DoJ’s decision, come what may:
But under the conclusion we adopt today, such prosecutions may proceed where appropriate, and courts may entertain challenges to the government’s view of the statute’s scope in such proceedings.
While the possibility of judicial review cannot substitute for the Department’s independent obligation to interpret and faith-fully execute the law, that possibility does provide a one-way check on the correctness of today’s opinion, which weighs in favor of our change in position.
In other words, even if states want to fight it in court, it’ll be more of busywork than a meaningful development, or so the Opinion tries to suggest.
Payments No More
When it comes to online gaming, the main issue for many has been payments. US lawmakers loath of the idea of online poker have long been introducing hinders in the payment system, arguing that such activities were used to subsidise terrorist units in the United States.
No such proof has ever surfaced. A possibility though is having payment processors thread even more carefully with a DOJ that’s planning to go back on a patchy decision.