Wire Act: What is that & how does it Affect My Online Casino?
The Wire Act 1961 has become a subject of confusion and controversies, especially in the gambling industry. This confusion is fueled by recent interpretations given to the Act by the United States Department of Justice (DOJ) in 2011, 2018 and 2019. Questions such as how do these interpretations affect online intra-state poker? What do these interpretations portend for subsisting laws on sports betting and online betting? Is online inter-state poker now illegal? How will state lotteries carry on their businesses with the interpretations? begs for answers. This article provides detailed, comprehensive, informative and in-depth answers to just not the above question but to several other questions, you might have concerning the Wire Act and how it affects online gambling. First of all, we’ll start with how the Wire Act came to be and the reasons for it.
- The Wire Act singles out sportsbooks and betting operator
- The DOJ’s opinion carries no force of law and is non-binding until they are enforced
- No US Federal law makes online betting expressly illegal
Wire Act 1961 Overview
Also known as Interstate Wire Act, the law was passed by President Robert Kennedy back in 1961. At the time, he was Attorney General and John Kennedy was the president and they worked together to try and stop organized crime. The main aim of the Wire Act was always the businesses involved with remote gambling, namely all types of payment processing services and banks. Unlike what many people believe, the Wire Act does not mean much for individual players.
The Wire Act also brought about laws that were related to potential cheating in gambling of all sorts. These laws made it criminal to report the results of bets to individuals via telephone before the they were published to others players. However, the law specifically mentioned only sporting contests and events and did not at the time talk about casino games as they were not the issue at hand. Later, the Wire Act was actually linked to online casinos, poker rooms and other gambling businesses.
The Wire Act was further empowered by another bill passed in 2006, dubbed the UIGEA or officially the Unlawful Internet Gaming Enforcement Act. This particular law had the word internet right in its name and it was directed against online gaming operators directly. By making it illegal for payment processors to process any payments for online gambling businesses, the government basically made all online gambling illegal. At this time, many of the operators that have now returned to the USA in a legal way left the country and stopped serving American players. Others, however, believed that they can keep on doing as they please and cannot be prosecuted by American law enforcement as they are operating from offshore sites. Regardless of all this, the fact remains that UIGEA does not make any form of online gambling illegal in those words.
Interpretations of the Wire Act 1961
In 2001, the Department of Justice opined that the provisions of the Federal Wire Act 1961 apply to all types of online betting and not only to sports betting. The stand of the DOJ on this was striking because the Act only made mention of ‘interstate sports betting’. This interpretation was disputed by many legal luminaries, especially those that were not working with the federal government. All this happened during President George Bush’s administration.
In September 2011, the United State Department of Justice made its stand on the Wire Act clearer by publishing an official legal opinion on the Act’s purview. The opinion states that ‘interstate transmission of wire communications that do not relate to a sporting event or contest fall outside the reach of the Wire Act’. This recent opinion nullified the 2001 interpretation by outlawing only sports betting. With this opinion, the DOJ emphasized that casino and poker games are removed from the purview of the Act.
The 2011 interpretation made states like Delaware, Pennsylvania, Nevada, and New Jersey establish their own online gambling markets. This subsequently led to the states of New Jersey, Delaware, and Nevada starting a shared liquidity agreement giving access to online poker players in their states to contest against one another. Poker and casino games were also taxed and regulated by state laws to prevent the gambling market being run by mobs.
However, on November 2, 2018, the new official opinion was formed while it was released in January of 2019. According to this new opinion regarding the Interstate Wire Act, this federal law forbids all forms of online casino gaming as well as all forms of online sports betting. At the time, the United States Department of Justice gave betting and gambling operators ninety days to comply with the new 2018 opinion.
The latest United States Department of Justice’s opinion contradicted the US Court of Appeal’s ruling. According to this ruling, states which are not allowed to offer online sports betting activities are not necessarily forbidden from offering other forms of online gambling and online betting activities. However, the US Supreme Court has not made any official pronouncement of the new Wire Act interpretation.
In a bid to further contest the opinion of the DOJ, the New Hampshire Lottery Commission on 15th February 2019 made a formal complaint to the US District Court asking the court to set aside the Department of Justice opinion with the claim that their yearly returns will be significantly reduced. The summary judgment to this complaint was given on the 3rd of June 2019. The judgment set aside the DOJ’s opinion and stated that the Federal Wire Act applies only to sports betting.
The Department of Justice has released a statement stating that it was reviewing his opinion.
How does the 2018 Interpretation Affect Online Gambling?
Although the 2018 interpretation does not have an instant effect on online gaming industry in the United State, it has thrown the betting market into frenzy mode as the major players in the industry wait for further clarification.
If the Department of Justice enforces the 2018 interpretation, all forms of online gambling will be declared illegal, including lotteries and casino games. Sports betting has been banned already. However, opinions such as that of the DOJ carries no force of law and are non-binding, so there is uncertainty regarding its implementation.
As mentioned earlier, the 2011 interpretation made states like Delaware, Pennsylvania, Nevada, and New Jersey establish their own online gambling markets. This subsequently led to the states of New Jersey, Delaware, and Nevada starting a shared liquidity agreement giving access to online poker players in their states to contest against one another. Poker and casino games were also taxed and regulated by state laws to prevent the gambling market from being run by mobs. States like New Hampshire, Illinois, Michigan, Kentucky, and Georgia now sell online mega-million tickets. The Supreme Court’s decision in Murphy v. NCAA also added more boost to the betting industry. The decision removed the ban placed on sports betting, thereby playing sports betting legal in the US.
The massive growth witnessed by the gaming and gambling industry in the US after the 2011 interpretation will all go up in flames if the opinion given by the Department of Justice in 2018 is effectively enforced.
How Can 2018 Interpretation be overridden?
One way to do this is to lobby for an Act of Congress to rescind the Department of Justice opinion and shed more light on the Wire Act. Attempts to promulgate sports betting laws have gathered some pace.
Another way is to approach the court for an injunction to set aside the opinion. For example, the state of Nevada, Delaware, and New Jersey may sue the federal government if the interpretation is effectively enforced because the enforcement can terminate their shared liquidity agreement.
It must, however, be noted that the fact that the Department of Justice pronounces all forms of gambling illegal does not mean it will be enforced.
The 2018 Interpretation, Online Gambling, and Financial Transactions Options
The effect of the latest interpretation on online gambling and financial transactions is adverse. Many payment processors and banks have stopped all dealings with the gambling market. These payment processors decline cards used for betting transactions even in states like New Jersey and Nevada, where online gambling is legal and the online gambling industry is booming. The payment processors are careful because gambling transactions constitute a little fragment of their operations, and the risk also outweighs the revenue.
Due to recent uncertainties in the US gambling market, many United State citizens and residents have turned their attentions to offshore gaming and gambling. There are still reputable and trustworthy betting sites that accept wagers from US residents. To deposit money on these sites, you need an efficient money transfer service and an international credit card.
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