The Federal Wire Act was passed in 1961 and has been the standing federal law applicable to online gambling in the United States. The law’s scope has changed throughout the course of its existence. The US Department of Justice stepped in during 2011 to make things clear regarding the law. This page is dedicated to covering the Federal Wire Act and how the DOJ changed the online gambling landscape.
The Federal Wire Act Of 1961
In 1961, John F. Kennedy was the Attorney General. He passed the Federal Wire Act in an effort to curtail the illegal racketeering and bookmaking enterprises of the mob. The mob would use wire telegraph and telephone services to place illegal bets. The thinking behind the Federal Wire Act was that by cutting off the methods of communication, the illegal industry would topple.
How The Federal Wire Act Evolved
As the years went on, new technologies developed and some politicians believed the Federal Wire Act encompassed all these new advancements. For example, gambling was revolutionized with the Internet. People could log on to websites for online casino games, poker and sports betting. The exact wording of the Federal Wire Act said that using “wire communication facility” was illegal. Some lawmakers consider computers and the Internet as wire communication facilities, therefore making all forms of online gambling illegal. Others disagreed, which led to numerous debates on the matter.
The US Department Of Justice Steps In
The US Department of Justice decided to step in in 2011. They released public documents stating that any interstate wire transmissions not pertaining to sporting events fall outside the reach of the Federal Wire Act. Basically, they deemed that the sports betting law only applies to online USA sports betting, thus freeing up states to vote in legal online casinos and poker. The DOJ was prompted to intervene when New York and Illinois filed inquiries into the effects of interstate sales with lottery tickets.
Effects of The DOJ Decision
With this decision, the DOJ established new possibilities for online gambling. For starters, states now have the right to introduce legislation for regulated online casinos and poker. So far, only a handful of states have done so, but the option is on the table. Regarding sports betting, the Federal Wire Act pertains to US-based online sportsbooks. The law says nothing about using authorized offshore USA sportsbooks, so US citizens still have legal sports wagering options to consider.
In order for US-based online sports betting to be legalized, the Professional and Amateur Sports Protection Act must be repealed. This may actually happen soon, pending the outcome of a Supreme Court case with New Jersey. If PASPA were repealed, the Federal Wire Act would soon follow, otherwise, states would not be allowed to launch online platforms, which would be counterproductive.
As far as the Unlawful Internet Gambling Enforcement Act is concerned, the DOJ made sure to address that the Federal Wire Act has no bearing on it. The UIGEA deals with banks and other financial institutions. It monitors how they process transactions with online gambling sites and applies to all forms of online gambling.
Support Of The DOJ’s Decision
The Poker Players Alliance heralded the DOJ for their decision, as it freed up online poker to be voted in by states that wanted it. They saw the law as confusing and somewhat antiquated and the DOJ’s refined stance as a point of clarity. They urged Congress to keep going in terms of drafting new regulatory legislation, but not much has happened on the federal level.
On the state level, many appreciate the DOJ’s decision because online gambling presents new lucrative opportunities for state revenue. So far, only a few states have passed legislation, but those that have seem to be enjoying the profits. New Jersey’s online casino sector has done considerably well, though the online poker market pales in comparison. When more states pass legislation, a larger interstate network will likely be created. This will lead to more competition and more wagers.
Opposition To The DOJ’s Decision
While most states support the DOJ’s decision, there has been some opposition on the political front. Some conservatives have launched an initiative known as the Restoration of America’s Wire Act (RAWA), which aims to reverse the DOJ’s decision and expand the Federal Wire Act’s scope to encompass all forms of Internet gambling. All RAWA legislative efforts have failed so far, but there is a possibility things could change under the current US administration.
Attorney General Jeff Sessions has been outspoken against the DOJ’s decision regarding the Federal Wire Act. He even mentioned it during his confirmation hearing. Sessions said he would reexamine the DOJ’s stance on the matter. Fortunately for online sports betting advocates, this initiative is pretty low down on the agenda and likely won’t be formally addressed any time soon.
Casino mogul Sheldon Adelson has funded most of RAWA’s efforts thus far. The casino tycoon is vehemently against online casino gambling through state-regulated ventures because he believes it encroaches on his businesses. Other casino owners do not share the same view. While Adelson doesn’t seem to be giving up, his influence has done little so far in preventing states from passing pro-online gambling legislation.