Breaking News: DOJ says only sportsbetting violates Wire Act

[The Buzz]

In a story that has broke only an hour or so ago, the U.S. Department of Justice revealed that it has changed its long-held position and found that the federal Wire Act of 1961 only applies to sports betting. This is a potential game-changer in the online poker community, as the DOJ often relied on the law when asserting that all forms of Internet gaming were illegal.

From the GPWA:

In a 13-page legal opinion written by Assistant Attorney General Virginia Seitz dated Sept. 20, the department noted that nothing in the materials supplied by the criminal division suggests that the New York or Illinois lottery plans involve sports wagers but were just lotteries. The opinion was posted Friday.

"Accordingly, we conclude that the proposed lotteries are not within the prohibitions of the Wire Act."

[The Buzz]

A statement from the PPA, who are obviously thrilled by today's announcement:

WASHINGTON, D.C. -- (PRESS RELEASE) -- The Poker Players Alliance (PPA), the leading poker grassroots advocacy group with more than one million members nationwide, today applauded the ruling by the U.S. Department of Justice that online poker does not violate the Wire Act, 18 U.S.C. § 1084. The DOJ memo was apparently in response to an inquiry from one or more state lotteries as to the application of the Wire Act to intrastate sales of lottery tickets on the Internet. The memo, written in response by Assistant Attorney General Virginia Seitz, overruled the long-held position of the DOJ’s Criminal Division and found that the Wire Act applies only to sports betting.

“This is a much needed clarification of an antiquated and often confusing law. For years, legal scholars and even the courts have debated whether the Wire Act applies to non-sporting activity. Today’s announcement validates the fact that Internet poker does not violate this law,” said John Pappas, PPA’s executive director. “The PPA commends Assistant Attorney General Seitz for recognizing this. However, this ruling makes it even more important that Congress act now to clarify federal law, and to create a licensing and regulation regime for Internet poker, coupled with clear laws and strong enforcement against other forms of gambling deemed to be illegal.”

Until today, the highest court that has ruled on the Wire Act, the governing federal law, found that it only applied to sports betting. In in re: Mastercard (2002) the Fifth Circuit Court of Appeals dismissed a civil suit predicated on the idea that the Wire Act prohibited non-sports betting, and no other Circuit to date has found otherwise. Today’s announcement from DOJ accepts the Fifth Circuit’s position for the first time.

Pappas continued, “This will provide policy makers at both the state and federal level with the legal confidence to move forward with licensing and regulation of online poker and other non-sporting activity within their respective jurisdictions. However, it is our hope that our federal policy makers see this as an incentive to move quickly to enact federal licensing and regulation before various states produce a mix of individual state schemes that may not be the best model to serve consumers.”

Federal licensing and regulation, like H.R. 2366, the Online Poker Act of 2011, would create a U.S. regulated online poker framework, requiring all online poker sites to measure up to strict safety and consumer protection standards - requirements that do not exist today. More importantly, this bill will create an open and competitive market, giving players a choice of many sites on which to play against others from across the country and the world.

“PPA’s million-plus members have spoken loud and clear: they prefer clear, consistent federal legislation to a patchwork of state laws to license and regulate the game they love. Protection of the right to play and of the integrity of the game is of paramount importance to the poker community,” said PPA Chairman former Senator Alfonse D’Amato. “State by state licensing and regulation could result in a balkanized online poker world where players across the nation would be limited in their choices of where and against whom they could play. This could potentially reduce the number of total players, reducing revenues state lawmakers project from this activity. At the same time, it would deter entrepreneurs from entering the online poker market, as there would essentially be 50 different sets of laws and rules to which they would have to adhere.”

D’Amato continued, “We urge members of Congress to act quickly based on today’s announcement and pass legislation like H.R. 2366 to license and regulate online poker at the federal level.”

[The Buzz]

The GPWA's Vin Narayanan just published a piece on today's blockbuster news:

The Department of Justice gave American online gamblers a Christmas present Friday when it said individual states had the authority to license and regulate non-sports related intrastate online gambling.

The legal opinion issued by the DOJ came in response to inquiries from New York and Illinois about online lottery sales and a letter written by Senate Majority Lead Harry Reid (D-Nev.) and Sen. Jon Kyl, (R-Ariz.) asking for clarification on the legality of online gaming.

For years, the DOJ had maintained the Wire Act prohibited all forms of online gambling. But in a letter written to Reid and Kyl, the DOJ announced it was adjusting its position after its Office of Legal Counsel (OLC) reviewed the law.

"The Wire Act only applies to the transmission of bets or information assisting in the placing of bets or wagers relating to sporting events or contests," wrote Assistant Attorney General Ronald Weich.

"Since state lotteries conducted by New York and Illinois do not relate to sporting events, OLC concluded that the operation of these lotteries would not violate (the law)," Weich added.

After addressing the lotteries issue, Weich turned his attention to other forms of online gaming, including online poker.

"Although the OLC conclusion differs from the Department's previous interpretation of the Wire Act, it reflects the Department's position in Congressional testimony at the time the Wire Act was passed in 1961. It also provides much needed clarity to those state governments that would like to permit wholly in-state, non-sports Internet gambling, including Internet lotteries." (emphasis added)

Weich went on to say that in places where online gaming is clearly illegal, the DOJ would prosecute violators.

"Furthermore, in states that ban various forms of gambling -- including Internet poker -- the Department will be able to investigate and prosecute those gambling businesses under the Unlawful Internet Gambling Enforcement Act and other sections of the criminal code," Weich wrote.

"Of course, if Congress wishes to give the federal government greater enforcement authority over non-sports related Internet gambling, it could do so by amending the Wire Act."

Reaction from the online gaming industry poured in swiftly as the letter to Reid and Kyl and the accompanying legal opinion entered the public realm.

“This is a much needed clarification of an antiquated and often confusing law," said John Pappas, executive director of the Poker Players Alliance. "For years, legal scholars and even the courts have debated whether the Wire Act applies to non-sporting activity. Today’s announcement validates the fact that Internet poker does not violate this law.”

"This will provide policy makers at both the state and federal level with the legal confidence to move forward with licensing and regulation of online poker and other non-sporting activity within their respective jurisdictions," added Pappas. "However, it is our hope that our federal policy makers see this as an incentive to move quickly to enact federal licensing and regulation before various states produce a mix of individual state schemes that may not be the best model to serve consumers."

The American Gaming Association seconded Pappas' call for a federal solution to regulating online gaming.

"The Department of Justice’s interpretation regarding the scope of the federal Wire Act validates the urgent need for federal legislation to curb what will now be a proliferation of domestic and foreign, unlicensed and unregulated gaming websites without consistent regulatory standards and safeguards against fraud, underage gambling and money laundering," the AGA said in a statement.

Nevada is in position to become the first state to offer intrastate online gaming to its residents.

Earlier today, the Nevada Gaming Commission approved regulation for online poker. It is the first time an American state has adopted regulations that would govern online poker.

[TravG]

Awesome news! However as an affiliate I kinda have mixed emotions. With the AD blitz they will be able to do (the poker rooms) will folks still search the net for poker rooms? I'm wondering if this will help or hurt us. Not to mention the tax implications.

[boczom1]

Good news.

What about the FBI's long standing stance on "online gambling" being illegal ?

Maybe the lobbyists have gotten to them too...

[boczom1]

I'm still a little confused..

what does this mean now for those 11 dudes in New York or wherever that were indicted in the online poker crackdown ?

They were convicted of violating the Unlawful Internet Gambling Enforcement Act, and the Illegal Gambling Business Act. No mention of anything in their convictions regarding the Wire Act.

Is Internet Gambling (besides SportsBooks) still illegal or no ? (according to them) Or if it is legal now depending on which state you live in, which states are good and which aren't ?

Is it ok to advertise online casinos in the U.S. again ? ... have the flood gates been re-opened ?

ton of questions there....my bad.

[Moonlight Cat]

Good News! This is better than nothing.

[usaonlinecasino]

Yes, it is still confusion. The news itself did indicate if other online gambling activities like online poker, online casino, etc are legal. Maybe it gives a chance to every state to regulate which is permitted. That will be interesting to see the outcomes soon.

[ALEX777]

Finally, some good news! Let's see what will happen in near future. But something tells me that there will be a strong monopoly.

[grem]

weren't sportsbetting domains taken in black friday? If so it is a bit contradictory.

[lots0]

Best Xmas present I have ever gotten.

It does look like we will have "open" states and "closed" states as the UGIEA is based on the Wire Act or on the state laws prohibiting online gambling.

So if a state does not have specific laws against online gambling... It seems to me that it will be legal to gamble online in those states.

[boczom1]

Best Xmas present I have ever gotten.

It does look like we will have "open" states and "closed" states as the UGIEA is based on the Wire Act or on the state laws prohibiting online gambling.

So if a state does not have specific laws against online gambling... It seems to me that it will be legal to gamble online in those states.

That seems to be what's going around lately...how the UGIEA is practically useless without the Wire Act.

Or to be more specific : the UGIEA is useless in trying to prosecute Online Casinos if the Wire Act already doesn't recognize Online Casinos as being illegal.

I wouldn't get too excited just yet as it's xmas eve and I think a lot of us are just hoping for the best.

Johnny 5 needs more input...

[Caruso]

To the best of my knowledge, noone ever said the Wire Act related to anything other than sports. I've never heard suggestions to the contrary.

Bit of a non-event, appears to me. All the various legal actions have been post-UIGEA.

[felku]

This seems a little confusing but I think that this may lead to some good news in 2012

[baldidiot]

To the best of my knowledge, noone ever said the Wire Act related to anything other than sports. I've never heard suggestions to the contrary.

Bit of a non-event, appears to me. All the various legal actions have been post-UIGEA.

I think the point is that they were using the wire act in the post-UIGEA prosecutions, implying that the UIGEA alone wasn't enough. It will be interesting to see what comes of it!

[Casinorep]

Another development and they are sort of back to where they were when this industry first began.

[Anthony]

At least the DOJ have stated a position for the record. It was always a reach to say the wire act included anything other than sports anyway. This still does not change their stance on UIGEA. I do think this is good and a welcomed surprise.

[boczom1]

Drudge Report just put this up on their site -

Web gambling gets boost from Obama administration

http://www.reuters.com/article/2011/...7BO0HA20111225

am I sensing an online casino blitz now ... ? Maybe Casino Coins will reconsider & come back..

[lots0]

The wording in the UIGEA is very specific to "illegal" online gambling... the authors of the UIGEA were relying on the Wire Act(or some other law) to make online gambling illegal. So no Wire Act... no illegal online gambling for the UIGEA.. with the exception of State and other local laws.

I. Nelson Rose agrees with me, this will blow everything wide open. Check out his article on this new development.
http://www.gamblingandthelaw.com/blo...r-24-2011.html

[LuckyLizzy]

What a great way to begin the New Year!!! I'm so excited and hopeful that this will lead to federal regulation for online gaming in the US but even if it's just on a state level I'm fine with that too.

I was really coming close to losing hope but this news has truly given me that light at the end of the tunnel I'm sure most of us have been searching for.

It looks like Nevada is ready to jump on board with licenses already pending approval!