Congress passed the Interstate Wire Act of 1961, typically referred to as simply the “Wire Act,” to combat organized crime.
The law is often attributed to then-Attorney General Robert F. Kennedy. The Wire Act gave law enforcement another weapon to put mobsters behind bars for longer sentences than previously possible under state laws.
The main objective was the Wire Act was to stop sports betting. The concern was that the integrity of contests could be compromised by the bookmaking black market. The enormous wealth created by illegal sports betting was giving organized crime power that the federal government looked to quash.
The Wire Act was only applied to sports betting for its first 40 years on the books. A 2001 Bush Administration Department of Justice opinion declared that it covered all forms of online gambling. This was an interesting position as the Wire Act specifically mentions only interstate betting on sports. Most legal experts outside the federal government disagreed with this interpretation.
In 2011, the US Department of Justice clarified this position. The prevailing opinion now states that the Wire Act only covers interstate sports betting.
There is a push by Sheldon Adelson and his company Las Vegas Sands to specifically outlaw most forms of online gambling. This could happen under a federal bill known as “The Restoration of America’s Wire Act.” Many industry observers note that the bill restores nothing since the most widely accepted legal position is that online poker and online casino games were never covered by the Wire Act.
Professional and Amateur Sports Protection Act
The Professional and Amateur Sports Protection Act (PASPA) is a federal law that passed in 1992. The goal of the law was to stop the expansion of sports betting.
Major sports leagues pushed the bill after Oregon launched Sports Action, a parlay card system offered by its state lottery. Some Nevada interests were in the process of rallying off-track betting facilities to lobby state legislatures to expand sports betting when PASPA stopped that effort in its tracks.
PASPA exempts Delaware, Montana, Nevada and Oregon. This is due to these four states having existing sports betting statutes on the books. Oregon and Delaware had sports lotteries. Montana had sports pools. Nevada offered a full slate of sports betting.
New Jersey had the opportunity to legalize sports betting within one year of PASPA’s enactment. The state legislature failed to do so.
Delaware’s sports lottery lasted just one year in 1976. The state looked to bring it back in 2009. The new law permitted a full menu of sports options identical to Nevada. The sports leagues challenged this state law in court, asserting Delaware could only offer NFL parlay cards, the only product permitted under state law prior to PASPA. The sports leagues prevailed.
New Jersey attempted to circumvent PASPA. Its first effort hoped to have a court declare PASPA unconstitutional. That failed in the courts due to the challenge to the New Jersey law. A second legal battle is headed to an en banc hearing in the Third Circuit Court of Appeals after the sports leagues once again prevailed in the lower courts.
New Jersey is hoping that its deregulation of sports betting will help it win this time around.
Unlawful Internet Gambling Enforcement Act
The Unlawful Internet Gambling Enforcement Act (UIGEA) passed Congress in September 2006. President George W. Bush signed it into law the following month. The UIGEA was a rider to the unrelated Safe Port Act, a counterterrorism measure that was a must-pass form of legislation before the midterm election recess.
The UIGEA did not make any new forms of gambling illegal. It simply added additional punishment for payment processors that move money for illegal gambling sites. Horseracing and fantasy sports enjoy an exemption from the UIGEA.
There is some debate about the fantasy sports exemption. Some daily fantasy sports sites assert that this explicitly makes their business model legal. This is contrary to the language in the UIGEA that the federal law does not preempt states’ rights to regulate gambling within their borders.
States have the option of specifically legalizing online poker, casino games and lottery ticket sales.
POTENTIAL CHANGES ON THE HORIZON IMPACTING ONLINE GAMBLING IN THE US?
In recent years, licensed casino operators were legally allowed to do business with those in other states that have legal online gambling. Nevada, Delaware, and New Jersey began a shared liquidity deal in May 2018 that allows for online poker players in each state to compete against each other.
The Department of Justice of Legal Counsel now has a different opinion about the legality of interstate gambling. According to the new opinion:
“Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.”
However, it remains unclear just how much an impact this will have on the future of online gambling in the US. For the time being, don’t expect many changes. But as the legal process continues and the anti-gambling crusaders continue to fight, it’s possible some major changes could be made in the future