Inside Gaming: Ruling Against Wire Act Reinterpretation a Win for Online Poker

Inside Gaming: Ruling Against Wire Act Reinterpretation a Win for Online Poker

U.S. District Court Judge Ruling Vacates DOJ Opinion, Says Wire Act Only Applies to Sports Betting

There was some interesting and potentially very positive legislative news this week for online poker players. On Monday a U.S. District Court judge in New Hampshire ruled that the 1961 Interstate Wire Act applies only to sports betting and not to other forms of online gambling, including sales of lottery tickets and online poker.

The ruling effectively counters a November 2018 reinterpretation of the Wire Act by the U.S. Department of Justice made public in January of this year. That reinterpretation delivered via a memo from the DOJ's Office of Legal Counsel had stated the Wire Act's prohibitions extended beyond just sports betting to cover other forms of online gambling.

"The 2018 OLC Opinion is set aside," concludes U.S. District Judge Paul Barbadoro in his ruling.

As Forbes explains, Monday's ruling doesn't just benefit the New Hampshire Lottery Commission which had brought the case against U.S. Attorney General William Barr, but "also signals a big win for online poker operators" insofar as it removes a perceived barrier to the creation of interstate player pools between states with legalized online poker.

"For online poker operators, Monday's court decision represents just about the greatest win imaginable at this stage of litigation," comments Mark Edelman for Forbes.

To review the history, on April 15, 2011 — a day remembered by poker players as "Black Friday" — the DOJ unsealed indictments and a civil complaint that targeted the world's largest online poker sites, forcing them to cease operations in the U.S. At the time, the action appeared destined to take away the possibility of operators providing legal, regulated online gambling (including poker) in the U.S. going forward.

However, in December 2011 a memo written by then Assistant Attorney General Virginia Seitz was made public presenting the opinion that the Wire Act — a law originally passed to cover wagers placed over phone lines — only applied to sports betting and not other forms of gambling.

That opinion eventually prompted a few states to consider and eventually pass online gambling legislation. Nevada, Delaware, and New Jersey were the first states to do so in 2013, with Pennsylvania passing similar legislation in 2017 and West Virginia also doing so earlier this year. Eventually interstate compacts between Nevada, Delaware, and New Jersey were established to allow and 888poker (which operates in all three states) to combine online poker player pools.

As other states' lawmakers continued to contemplate various online gambling bills, such momentum was slowed earlier this year by the sudden announcement of the DOJ's reinterpretation of the Wire Act. Most observers commented then how the new interpretation would likely slow the growth of online gambling in the U.S. going forward while also making less likely the creation of further compacts between states with legalized online poker.

Reports at the time also highlighted how the new opinion likely reflected the direct influence of online gambling opponent Sheldon Adelson, the Chairman and CEO of Las Vegas Sands. A major donor to the Republican party, Adelson gave $113 million to support GOP campaigns in 2016, including $20 million to the campaign of Donald Trump, according to The Washington Post.

In early March, the DOJ extended the deadline for compliance with the new reinterpretation of the Wire Act from April 15 to June 14. However the ruling from New Hampshire vacating the November 2018 DOJ opinion removes that obligation for the time being.

It's worth noting as well that amid the current fervor being shown by many states to pass sports betting legislation, the reaffirmation of the Wire Act's applicability to sports betting isn't necessarily great news insofar as it reinforces the illegality of any interstate sports betting compacts.

The battle over the Wire Act isn't necessarily over. Indeed, at a hearing in early April, Judge Barbadoro stated as much when after hearing oral arguments he said "I have a strong feeling that however I resolve the case, or however the First Circuit resolves the case, it is likely going to be resolved by the US Supreme Court either way," as reported by Online Poker Report.

Illinois Joins Rapidly Growing List of States to Pass Sports Betting Legislation

Speaking of sports betting, Illinois became the latest state to pass such legislation this week when the both the House and Senate voted in favor of wide-ranging gambling expansion bill. Governor J.B. Pritzker has already spoken out in favor of the legislation, meaning he is expected to sign the bill into law.

The Chicago Tribune this week provided a handy list of questions and answers regarding the new legislation and how it will affect the future of gambling in the state.

Highlights include the addition of several casinos in the state as well as a "mega-casino" in Chicago (the site for which has yet to be determined), the allowance of additional slots and table games at existing gambling venues and race tracks, and the addition of sports betting.

It isn't clear as yet whether regulations will be in place for Illinois residents to wager on sports in time for the 2019 National Football League season that starts in September.

Wondering about online poker in Illinois. "Sorry," explains the Tribune. "You're out of luck if that's your thing. The legislature didn't budge on allowing that. Maybe some other time."

Just over a year ago the U.S. Supreme Court lifted the federal prohibition against sports betting.

Since then more than a dozen states have passed legislation to allow sports betting, with many others considering such bills. A recent look at ESPN's page tracking the status in all 50 states and the District of Columbia shows no less than 44 states having either "Already there" with sports betting laws, in the "On-deck circle," or "Moving toward legislation."

Photo: "3D Judges Gavel," Chris Potter, CC BY 2.0.

  • Inside Gaming: U.S. District Judge's ruling against Wire Act reinterpretation a win for online poker.

  • New ruling (again) changes Wire Act interpretation; Illinois passes sports betting legislation.

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