On Tuesday, January 15th, the new Office of Legal Counsel (OLC) at the Department of Justice came up with a different interpretation of the widely disputable Wire Act. The new opinion states that the Wire Act applies to all forms of betting and not only sports betting, throwing the US online gambling market into doubt. The original legal document was enforced back in 1961 and has been causing some trouble in the online gambling industry since its initial establishment, mostly due to its wording.

What Has Changed?

DoJ Delays Enforcement of New Wire Act Opinion Till 2020 Though many in the online gaming industry were displeased at the Department of Justice's(DoJ) overly broad reinterpretation of the Wire Actreleased early this year, actual enforcement has not yet begun. 14, the US Department of Justice (DOJ) sent shockwaves through the online gambling world by releasing an updated opinion regarding the interpretation of the Wire Act of 1961 (18 U.S.C. § 1084) (the “Wire Act”), applying its prohibitions to all online wagering, not just online sports betting.

The latest opinion regarding this Act came back in 2011, during the presidential term of Barack Obama. Back then, it was determined that the law refers specifically to the interstate provisioning of online sports betting gambling activities.

Alternately, under the presidential rule of Donald Trump, the same Act has obtained yet another understanding. This opinion has been elaborated and signed by Assistant Attorney General Steven Engel at the Office of Legal Counsel.

All of this comes at an interesting time since the new opinion is dated November 2nd, 2018. It’s considered fairly strange that someone would stall such a decision for two whole months.

What Does the Wire Act Opinion Say?

Before analysts and experts delve deeper into the motifs and the background of this move, a more urgent matter refers to the actual consequences of such a change. The new opinion has reinterpreted the lack of a comma in the part regarding sports bets and wagers as implicitly referring to this gambling service. It now seeks to prohibit all interstate, wire-facilitated gambling services.

In the words of the opinion:

Only the second prohibition of the first clause of section 1084(a), which criminalizes transmitting ‘information assisting in the placing of bets or wagers on any sporting event or contest,’ is so limited. The other prohibitions apply to non-sports-related betting or wagering that satisfy the other elements of section 1084(a).

The 2006 enactment of the Unlawful Internet Gambling Enforcement Act did not alter the scope of section 1084(a).

While the Wire Act is not a model of artful drafting, we conclude that the words of the statute are sufficiently clear and that all but one of its prohibitions sweep beyond sports gambling. We further conclude that the 2006 enactment of UIGEA did not alter the scope of the Wire Act.

In any case, the Office of Legal Counsel isn’t the only involved party with an opinion on the matter. The most implicated parties in this restrictive stance are the online poker platforms sharing their player pool across state borders – Nevada, New Jersey, and Delaware. Partners are experiencing a plunge in revenue and stock value, with even greater repercussions expected to come in due time.

The Coalition to Stop Internet Gambling (CSIG) firmly supports this turn of events. Many opinionated individuals involved claim that CSIG is working to protect their leading figure, Sheldon Adelson’s land-based casino “kingdom”. The casino magnate has been a long time opponent of online gambling.

On the other hand, the Department of Justice has been facing some opposition just as well. Some courts and similar establishments have expressed their disagreement with the proposed opinion. They claim that the consequences would take effect over extremely wide service coverage while hindering everyone’s benefit.

How Will This Affect the Online Gambling Industry?

There’s a lot of uncertainty around this turn of events. The new Wire Act opinion could potentially affect all forms of legalized online gambling. At a standstill and bewilderment, the DOJ has officially provided respective operators with a 90-day period to conform to the new regulations, explaining the delay as “an internal exercise of prosecutorial discretion”.

Following weeks of whispering as to the Department of Justice’s (DOJ) willingness to once again ban online gambling on the federal level, the hammer has finally come down. In an opinion dated November 2 of 2018, which was only made public last week, the DOJ’s Office of Legal Counsel revised a previously issued interpretation of the Wire Act.

Under the 2011 opinion, the Wire Act of 1961 – a federal law prohibiting gambling-related business from being conducted across state lines via telephonic means – was ruled to be applicable only to sports betting. Prior to the 2011 opinion, the DOJ loosely connected the Wire Act to all forms of online gambling – including poker, casino games, lottery ticket sales, and sports betting.

Obama Admin DOJ Determined Limited Wire Act Scope

Doj Online Gambling Opinion Survey

But when the DOJ under the Obama Administration took a second look, the Office of Legal Counsel determined that the Wire Act’s scope should be limited specifically to sports betting. This opinion paved the way for individual states to establish their own laws and regulations pertaining to any other form of iGaming.

Within two years of the 2011 opinion’s release, Nevada, New Jersey, and Delaware capitalized by legalizing online poker and/or casino gaming. As of today, that trio has since been joined by Pennsylvania, while several states have also legalized online sports betting courtesy of last year’s landmark ruling by the U.S. Supreme Court.

Nonetheless, the Trump Administration’s DOJ reversed course last week, writing that the Wire Act does indeed ban any and all gambling activity conducted via the internet:

“While the Wire Act is not a model of artful drafting, we conclude that the words of the statute are sufficiently clear and that all but one of its prohibitions sweep beyond sports gambling.

We further conclude that that the 2006 enactment of UIGEA did not alter the scope of the Wire Act.”

Rosenstein Provides 90-Day Window for Operators to Comply

As of now, there is no clear consensus on how the most recent opinion will affect statewide iGaming industries.

Thanks to an interstate gaming compact forged last year between Nevada, New Jersey, and Delaware, sites like WSOP.com and 888 Poker may already be in violation of the law.

But with several federal courts – including the Fifth Circuit and the First Circuit Courts of Appeals – previously ruling that the Wire Act’s ban is exclusive to sports betting, the new opinion is likely to face several challenges before it can be implemented.

Doj Online Gambling Opinion Report

In recognition of this legal quagmire, acting Attorney General Rod Rosenstein issued a memo clarifying that the new opinion will take effect after a 90-day window:

“As an exercise of discretion, Department of Justice attorneys should refrain from applying Section 1084(a) in criminal or civil actions to persons who engaged in conduct violating the Wire Act in reliance on the 2011 OLC opinion prior to the date of this memorandum, and for 90 days thereafter.

A 90-day window will give businesses that relied on the 2011 OLC opinion time to bring their operations into compliance with federal law.

This is an internal exercise of prosecutorial discretion; it is not a safe harbor for violations of the Wire Act.”

Doj Online Gambling Opinion Check

Sheldon Adelson’s Anti-iGaming Crusaders Celebrate Reversal

Doj Online Gambling Opinion Form

Reversing the 2011 Wire Act opinion has long been a pet project of Sheldon Adelson, the billionaire casino mogul and owner of the Las Vegas Sands Corporation who vehemently opposes all forms of iGaming.

Under the auspices of an Adelson-funded lobby group known as the Coalition to Stop Internet Gambling (CSIG), lawmakers on Capitol Hill and DOJ policymakers have been under pressure to reexamine the issue for the last eight years.

In a press release issued by CSIG, the group praised the DOJ for seeking a renewed federal ban on iGaming:

“CSIG is pleased to see today’s decision by the Department of Justice to reverse an Office of Legal Counsel opinion that was as problematic legally as it was morally.

Today’s decision seamlessly aligns with the Department’s longstanding position that federal law prohibits all forms of internet gambling, as well as with Congress’s intent when it gave law enforcement additional tools to shut down the activity through the overwhelmingly-passed Unlawful Internet Gambling Enforcement Act in 2006.

Today’s landmark action to rightfully restore the Wire Act is a win for parents, children and other vulnerable populations.”