Wire Act Sports Betting

• Wire Act Sports Betting Ohio
• The Wire Act Sports Betting
• Wire Act Sports Betting Law
• Wire Act And Sports Betting
• Sports Betting Sites

On Jan. 14, 2019, the news broke that the Department of Justice’s Office of Legal Counsel (OLC) had issued a new legal opinion on the Wire Act. The Wire Act of 1961 did not just apply to sports betting.

Jan 21, 2021 US Wire Act only applies to sports betting, federal appeals court rules “The lack of coherence in the government’s proposed reading” of the 1961 law “strains common sense,” U.S. Circuit Judge William Kayatta wrote. Jul 08, 2018 In short, the Wire Act prohibits any person or entity engaged in the business of sports betting from using “wire communication facilities” (such as the telephone or the Internet) to “transmit” bets. Sep 03, 2015 What is the Wire Act? The Wire Act prohibits “interstate transmissions of wire communications” used for sports betting. You might also see it called the: Interstate Wire Act of 1961; Wire Act of 1961; Federal Wire Act; It was signed into law on September 13 th, 1961 by John F.

But in 2011, the DOJ issued an opinion that the act was limited to sports betting.

The 2011 opinion led directly to the introduction of state-regulated online lotteries, online poker and online casino games. The revised opinion appeared to throw the legality of state-regulated online gambling into doubt.

The issue remains unresolved and has already led to Pennsylvania online casinos delaying their launch of online gambling until — at the earliest — July.

The Wire Act of 1961

The text of the Federal Wire Act begins:

“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.”

The issue at hand is the DOJ’s interpretation that the text applies not just to sports betting but all betting.

The big shutdown of online poker on April 15, 2011, was based on this interpretation. The day, deemed as “Black Friday,” saw PokerStarsand Full Tilt domains seized by the DOJ, although the actual charges were based on breaches of the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006.

On July 31, 2012, the government dismissed “with prejudice” all civil complaints against all PokerStars and Full Tilt poker companies.

The dismissal was part of a settlement in which PokerStars agreed to buy Full Tilt. PokerStars and Full Tilt admitted no wrongdoing as part of the settlement. As a result, no court has tested the applicability of the Wire Act to internet gambling.

The DOJ opinion of 2011 and the lottery

In September 2011, the DOJ released an opinion on the Wire Act that stated;

“interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act.”

The opinion came in response to requests from Illinoisand New York for guidance on whether the Wire Act prohibited sales of lottery tickets online.

The DOJ concluded:

“Because the proposed New York and Illinois lottery proposals do not involve wagering on sporting events or contests the Wire Act does not, in our view, prohibit them.”

The new opinion had far-reaching consequences. It meant that the Wire Act also did not apply to online casino or online poker games.

On April 30, 2013, online poker launched in Nevada. Shortly after, online poker and casino launched in Delawareand New Jersey. Pennsylvania became the fourth state to legalize both activities in 2017, although no online sites have yet launched.

The DOJ replacement opinion of 2018

In a document dated Nov. 2, 2018 — but was not released until January — stated that the DOJ issued a replacement opinion on the Wire Act that largely reversed its position:

“Having been asked to reconsider, we now conclude that the statutory prohibitions are not uniformly limited to gambling on sporting events or contests. 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 DOJ opinion was in response to a request from the Criminal Division. The DOJ bases its revised opinion on a plain text reading of the law:

“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.”

The opinion itself is not law. However, it is the DOJ’s interpretation of the law that determines whether or not it will initiate prosecutions.

Potential consequences of the new Wire Act reversal

Four main risks are arising from the new DOJ opinion:

• Any internet gambling that crosses state boundaries may be illegal. This applies to major lottery promotions, such as the Powerball, and interstate poker games authorized under interstate compacts.
• In-state online gambling could be illegal if any of the internet data used crosses state boundaries.
• Operators and regulators could take a cautious approach to the interpretation. This might result in delaying the implementation of existing laws, or postponing or canceling planned legislation. Any successful prosecution by the DOJ on the basis of its new opinion could exacerbate this possibility.
• Online payment processing for online gambling transactions could be illegal if internet data crosses state boundaries.

In a statement issued immediately after the new opinion became public, the American Gaming Association (AGA) minimized the potential impact:

“It is unfortunate that the Department of Justice departed from well-established practice in reversing its previous opinion without a compelling reason to do so. However, the 2018 OLC opinion does not impact the ability for states and tribes to legalize and regulate gaming on a state-by-state and tribal basis, or for companies to provide the exciting products and entertainment experiences our customers want.”

The current situation remains one of legal uncertainty. US Deputy Attorney General Rod Rosensteinissued a memo explaining that the DOJ was giving operators 90 days to change what they needed to comply with the new opinion.

At the end of February, the news broke that the DOJ was extending that window by another 60 days.

An opinion politically motivated by Sheldon Adelson?

Revising an opinion is not usual practice for the DOJ. The government department prides itself on providing business with certainty and stability in its approach to enforcing federal law.

This unusual reversal gave rise to suspicions that the new opinion was actually the result of political lobbying by casino mogul Sheldon Adelson, a long-time opponent of online gambling.

In testimony to the House Judiciary Committee, Acting US Attorney General Matthew Whitaker testified that he had no involvement in the revised opinion. When pressed on whether Adelson was involved, Whitaker said that he had personally never met him, adding:

“So, I think it is very consistent, and your inferences on how that process was corrupted or corrupt is absolutely wrong. And the premise of your question I reject.”

Legal opinions on the new Wire Act opinion

There are already court rulings on the meaning of the language in the Wire Act. Several lower courts have relevant rulings, but the most important in terms of judicial precedent is from the 5th Circuit.

Contrary to the DOJ’s new opinion, the 5th Circuit ruled in 2002 in “In re: Mastercard” that:

“the Wire Act does not prohibit non-sports internet gambling.”

Legal opinions on the DOJ’s opinion have come from far and wide:

Ifrah Law says the new opinion will have a chilling effect

Jessica Feil of Ifrah Law PLLC said the opinion could have “far-reaching impacts,” and that its full reach remains to be seen:

“This opinion may have a chilling effect on state lawmakers that were otherwise looking to follow in the footsteps of New Jersey and Pennsylvania by legalizing online gaming. Further, many lotteries have been incorporating online and mobile products and now those plans may be cast into doubt. However, as we have seen with online sports betting — which has always been subject to the Wire Act — there are viable, fully intrastate solutions for online gaming.”

Absurd language

Scott Balber, the managing partner of Herbert Smith Freehills‘ New York office and the US head of investigations and financial services litigation, pointed out that the DOJ opinion appears to contradict Supreme Court rulings on plain language.

“The 2018 opinion goes on to cite Supreme Court precedent to support the proposition that where statutory language is clear, only an absurdity that no reasonable person could intend should negate its plain interpretation (the “Absurdity Standard”).

However, the Absurdity Standard is only applicable “where (absurdity is) the result of applying the plain language” of the statute. Public Citizen v. United States Dept of Justice, 491 U.S. 440 (1989).”

Internet data accidentally crossing state borders

Anthony Cabot, a distinguished fellow in gaming law at UNLV, gave his take on the subject to Online Poker Report:

“The 2018 DOJ opinion insinuated that the federal Wire Act prevents all state-authorized and regulated online gambling by interpreting that transmitting sports wagers in interstate commerce also bans bets where both the bettor and the sports book operator are in the same state.

A theory exists that any communication over modern telecommunication including digital telephone systems and the internet is considered interstate even where the sender and receiver are in the same state if the transmission was incidentally routed across state lines.

To avoid prosecution, the sportsbook operator would have to prove that not only were the sender and receiver in the same state but that the transmission could not have been incidentally routed across state lines. This could be very problematic.”

Cabot argued that this interpretation was fundamentally wrong:

“The term “interstate commerce,” is a defined term in the federal code that contains the Wire Act and “includes commerce between one State, Territory, Possession, or the District of Columbia and another State, Territory, Possession, or the District of Columbia.” I do not believe that if the sender and receiver of a wager are in the same state that the commerce is between states.”

Cabot also thought that the DOJ would lose when the issue comes to court.

Wire Act Sports Betting Ohio

“The new DOJ opinion strains logic to reinterpret the meaning of “bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest” to apply to wagers other than sports.”

Inconsistent legal analysis

John Holden, J.D., Ph.D., said that the analysis presented in the new opinion was inconsistent. He argued that DOJ analyzed the different parts of the opinion on different legal bases.

“One intriguing feature of the opinion: It appears as though the author knows a fact and could easily resort to the legislative history contained in associated hearings or congressional reports, but chooses not to do so.”

He sees the analysis of the language as:

“tormented efforts to find a means of interpreting the statute that renders a meaning distinct from the plain text of the statute.”

This one will go all the way

Daniel Wallach, of Wallach Legal LLC and co-founding director of the University of New Hampshire School of Law’s Sports Wagering and Integrity Program, said that he could see the case going all the way:

“The opinion acknowledges that the decision will likely be tested judicially. I think we could be headed toward the next big gambling case that reaches the Supreme Court, or at the very minimum, the U.S. Court of Appeals.”

Payment processing is at risk

Tommy Shepherd, an attorney with Jones Walker in Jackson, Mississippi, said the DOJ opinion could extend to payment compliance.

“There are many concerns with the reversal of the years-old DOJ position. A significant concern for the states and their gaming revenue is payment processing… . Will the banks, and other payment processors, be leery of providing the means to facilitate the movement of money through website wagering and mobile app betting?”

Daily fantasy sports unaffected

Joe Brennan Jr. spoke about the new opinion to USBets. He was the director of the Interactive Media Entertainment & Gaming Association (iMEGA) and is the co-founder of SportAD. He pointed out that daily fantasy sports (DFS) should be completely unaffected:

“DFS is unaffected, because it’s granted a specific exemption under the UIGEA law, where Congress has drawn a line between what is defined as sports betting and what is defined as fantasy sports. DFS is actually the least affected by this. So, the only thing that really seems to have been immediately affected, at least from a legal sense, is poker. What it will affect on a more informal basis, how it will affect other stakeholders, that’s what remains to be seen.”

Pennsylvania’s immediate reaction to the new opinion

The Pennsylvania Gaming Control Board (PGCB) almost immediately sent a letter to all its licensed casinos setting out its position on the new opinion. The letter said that all would go on as planned with the rollout of sports betting and online gaming. There will need to be some amendments to accommodate the new opinion.

In particular, the PGCB directed licensees to submit a plan of how they would personally comply with the new opinion. This was especially with respect to keeping data inside the state:

“The opinion does not, however, negate the premise that “intrastate” activity as provided for by state law is permitted. Thus, with any forms of internet or mobile gambling, it appears that diligence in assuring that the transmission of bets and wagers, payments and credits as a result of bets or wagers, as well as the information assisting in placing those bets and wagers (subject to § 1084(b)), does not cross state lines is paramount.”

The impact was immediate. Operators planning to establish game servers outside the state have changed plans to locate them within Pennsylvania. The result is that online gaming will not now begin until July 1 at the earliest.

New Jersey’s reaction to the Wire Act reversal

New Jersey Senate President Stephen Sweeney almost immediately asked the DOJ to rescind its new opinion. He said that if the DOJ did not walk back the opinion, New Jersey would take the DOJ to court.

In a letter to Deputy Attorney General Rosenstein, Sweeney explained why the opinion was incorrect:

“The 2019 opinion, which took 26 pages of tortured analysis of sentence structure and comma placements to determine that the clear language of the Wire Act applied to all forms of gambling, was contrary to the much better reasoned opinion of the 5th Circuit and the “thorough review” of the Department of Justice in 2011.”

He ended:

“If the OLC 2019 Wire Act opinion is not rescinded, I have authorized former Sen. Raymond Lesniak to file suit in US District Court on behalf of the New Jersey Senate for a declaratory judgment that the 2019 OLC Opinion is arbitrary and capricious and that the statutory prohibitions of the Wire Act are uniformly limited to gambling on sporting events or contests.”

Attorney generals of NJ, PA issue letter to DOJ

On Feb. 5, Attorneys General Gurbir Grewal (NJ) and Josh Shapiro (PA) reinforced Sweeney’s view. They wrote to the DOJ stating:

“DOJ’s latest reversal is wrong, and it undermines the values of federalism and reliance that our states count on. We request that you withdraw the OLC opinion or, in the alternative, guarantee that DOJ will not bring enforcement actions against companies in our states that are acting lawfully under state statutes.”

Nevada’s reaction

America’s great gaming state of Nevada threw its weight into the debate. Nevada Congresswoman Dina Titusissued a statement as soon as the new opinion was published:

“Though the full impact of this reckless DOJ reversal remains to be seen, we can be certain that it will inject uncertainty into a well-regulated market and push consumers back into the black market. Unfortunately, the Trump Administration only supports states’ rights when it is politically convenient. Despite this setback, I will continue to lead the fight in Congress to ensure states like Nevada can decide what is best for them on the question of online gaming.”

New Hampshire reacts

Charles McIntyre, the executive director of the New Hampshire lottery, suggested that the state could lose millions of dollars as the result of the new opinion:

“Certainly at the very narrowest interpretation we are looking at $4 million to $6 million this year and $6 million to $8 million next year, as this represents what we are selling now through the internet online channel.”

Massachusetts reacts

MassachusettsTreasurer Deborah Goldberg decided to spend time with the congressional delegation to discuss the impact of the new Wire Act opinion. She is pushing for a Massachusetts online lottery and sees millions of dollars at risk.

“This issue will be part of our discussions with the legislature as they tackle sports betting and online lottery this session. We are taking a proactive approach and working with the attorney general’s office and meeting with congressional members during the NAST Legislative Conference to address the implications of this opinion.”

Lotteries react

The North American Association of State and Provincial Lotteries (NASPL) issued a statement on Feb. 4 reinforcing the gaming state opinions:

“DOJ’s reinterpretation of the Wire Act creates substantial uncertainty concerning the legal status of lottery transactions, including these critical enhancements and improvements, many of which were made in reliance on the 2011 opinion, and the related contractual obligations and the industry’s ability to provide critically needed funding for important public interests.”

The cross-state competitions such as the Powerball are massive money earners for the state lotteries that participate. The losses to state income from lotteries are massively greater than those from restricted interstate online poker.

Gambling opponents react

On behalf of the Coalition to Stop Internet Gambling (CSIG) the former senator of Arkansas, Blanche Lincoln,applauded the new opinion:

“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.”

The legal challenges begin with New Hampshire

Only a few days after Sweeney threatened legal action, New Hampshirefiled its own legal challenge.

In “the New Hampshire Lottery Commission v William Barr,” the lottery demanded an injunction against the DOJ. It wants the judge toorder the DOJ not to enforce its own opinion.

The NH Lottery’s technology supplier NeoPollard has filed an almost identical case, which states:

“As a result of the OLC’s erroneous change in position, gaming activities long thought to be lawful are now under threat of imminent criminal and civil prosecution. This includes not only making lottery products available to consumers for purchase via personal computers and mobile devices, but also traditional lottery sales via brick-and-mortar retail sales agents.”

Gov. Chris Sununu completely supports the challenge. In a statement he said:

“Today, New Hampshire is taking action to protect public education in New Hampshire. The opinion issued by DOJ puts millions of dollars of funding at risk, and we have a responsibility to stand up for our students.”

New Hampshire is part of the 1st Circuit’s jurisdiction. Usefully, the 1st circuit has already ruled that the Wire Act does not extend outside sports betting.

In the case US v Lyons, the 1st Circuit explained:

“In this manner, the Wire Act prohibits interstate gambling without criminalizing lawful intrastate gambling or prohibiting the transmission of data needed to enable intrastate gambling on events held in other states if gambling in both states on such events is lawful.”

The industry trade group iDEAGrowth has now joined the two lottery business lawsuits. Attorney Jeff Ifrah commented:

“We trust that the New Hampshire Court will give appropriate weight to judicial precedent over political factors in making its decision, a decision sure to have a major impact on a fast-growing industry poised to offer significant economic benefits to states across the country.”

New Jersey, Michigan and Pennsylvania add support with amicus briefs

On March 8, New Jersey, Michiganand Pennsylvania joined the legal challenge launched by the New Hampshire Lottery. Both New Jersey and Michigan filed amicus briefs supporting the NH Lottery.

An amicus brief is a brief filed by a “friend” of the court — amicus is the Latin word for friend. Almost anyone can file one.

It is superficially at least, an honest effort to help the court come to a judgment. Amicus briefs highlight issues the sender thinks the court should take into consideration.

New Jersey wants the new opinion ‘null and void’

The New Jersey brief asks for a complete reversal of the DOJ’s new opinion:

“Furthermore, this court can and should grant relief that reaches beyond the parties and the District of New Hampshire, and that protects the interests of third-parties like New Jersey nationwide. Under the Declaratory Judgment Act, the Court should declare that the Wire Act does not cover non-sports-related gambling in any jurisdiction, and under the Administrative Procedure Act, the Court should vacate the DOJ’s 2018 reinterpretation of the Wire Act as null and void.”

Other lottery states sign Michigan’s brief

The Michigan amicus brief comes directly from the Michigan state lottery. But many other state lotteries have also signed the brief:

• Kentucky Lottery Corporation
• Tennessee Education Lottery Corporation
• Virginia Lottery
• Rhode Island Lottery
• Colorado State Lottery Division
• North Carolina Education Lottery
• Delaware

The Michigan brief argues that the DOJ’s opinion is just plain wrong

“The proposed amicus brief is useful and relevant to the Court’s review for two primary reasons: it emphasizes the erroneous nature of the 2018 opinion’s legal conclusions and it demonstrates the need for nationwide equitable relief to combat the 2018 opinion’s nationwide consequences.

The brief will explain that the DOJ’s 2018 opinion is inconsistent with the statute’s language and legislative history and contradicts decisions by the 1st and 5th Circuit Courts of Appeals interpreting the Wire Act to apply only to sports gambling.”

Pennsylvania says the opinion is ‘contrary to the plain meaning of the Wire Act’

Pennsylvania’s motion came as an “intervenor” in the form of an emergency motion from the state Department of Revenue. It argued similarly to the others that the DOJ has got its opinion legally wrong.

“The Pennsylvania Lottery agrees with plaintiffs that the OLC’s reversal of its 2011 opinion regarding the scope of the Wire Act, 18 U.S.C. § 1084, is arbitrary, contrary to the plain meaning of the Wire Act, and inconsistent with directly applicable precedent.”

However, on Monday, March 11, Judge Paul Barbadoro ruled the intervention invalid. According to the judge, the case did not involve Pennsylvania law. Pennsylvania will follow up with its own Amicus brief in the next few days.

There is one bright light from the legal challenge. The court at least recognized the urgency of the case and set it on an expedited schedule. This means that appeals and the long process of getting a final ruling can begin soon.

New Hampshire rules against the DOJ

Later, on June 3, Judge Barbadoro issued his ruling, and it was not good news for the DOJ.

“I hereby declare that § 1084(a) of the Wire Act, 18 U.S.C. § 1084(a), applies only to transmissions related to bets or wagers on a sporting event or contest. The 2018 OLC Opinion is set aside.”

Before dancing a victory celebration, the judge restricted his ruling to the plaintiffs in the case. This means that the New Hampshire and Michigan lottery provider Neopollard can continue online lottery. But it also means that the case isn’t decided legally for the rest of the country.

The DOJ can also appeal the decision.

What is worrying is that the judge was unable to determine the plain text meaning of the law.

“While the syntax employed by the Wire Act’s drafters does not suffice to answer whether § 1084(a) is limited to sports gambling, a careful contextual reading of the Wire Act as a whole reveals that the narrower construction proposed by the 2011 OLC Opinion represents the better reading.”

This looks very much like the judge has used his discretion to make a ruling based on contextual factors. Such a ruling is very open to challenge. It’s a ruling that may not be replicated in other circuit courts around the US.

The first battle is a triumph for the gaming states. As to whether the final victors will be the DOJ or the states, that question remains open.

This U.S. Federal gambling law prohibits the operation of interstate betting activities in the United States. The Federal Wire Act, also known as the Interstate Wire Act of 1961, specifically made it illegal for illicitly run US-based sports gambling businesses to utilize any form of wire communications to send or accept betting information and wagers from across state lines or foreign US-owned territories.

The Federal Wire Act officially amended Chapter 50 of Title 18 of the United States Code of Laws. The law has since been interpreted by the DOJ to include interstate online communications; hence its effective prohibition of interstate online sports betting in the US. For this reason, it is important that players and operators understand the specific laws concerning gambling implemented in countries they choose to participate and practice gaming-related activities in.

History of the Federal Wire Act

Then-US attorney general Robert F. Kennedy, who was emboldened by the presence of his brother John F. Kennedy as the US president, suggested to Congress passing a law which would prohibit interstate gambling. His suggestion led to a newly crafted bill which was introduced in the US Senate as SB 1656. This bill would be later known as the Federal Wire Act. SB 1656 was included in eight bills presented to Congress that year. The Federal Wire Act as proposed by Robert F. Kennedy would help the US Justice Department effectively slow down the sportsbook activities of criminal organizations operating within the United States and its territories. The Wire Act was signed on September 13^th, 1961 by then-US President John F. Kennedy.

What is the Federal Wire Act?

The Federal Wire Act is a law that was designed to curb the illegal bookmaking activities of organized crime syndicates. Its language included and punished domestic businesses and bookies who accepted bets over the telephone or telegraph. This Act was created to specifically address the ongoing and growing issue of organized interstate racketeering and number-fixing which demonstrated to be profitable to criminal organizations and Mafia families. The Federal Wire Act proved to be successful as it severely damaged the 1960’s era mobsters from generating revenue from illegal bookmaking activities. The Act’s language minimized the mobs reach within the nation and cut their connection from U.S. territories.

The Wire Act Sports Betting

What Does the Federal Wire Act Regulate?

The Federal Wire Act regulates the use of wire communication networks by domestic state-based sports betting operations. The Act effectively bans any US-based sportsbooks using wired communications to communicate between states as an attempt to destroy illegal crime networks that profit from game-fixing, racketeering, and wager collecting. While this effectively worked in the 1960’s, the Act was not prepared for the invention of the internet nor capable of foreseeing online gaming markets. A law later on known as PASPA would come to regulate domestic brick and mortar sports betting operations and activities for 25 years before its removal from the U.S. lawbooks.

Does The Federal Wire Act Effectively Prohibit Sports Betting In The US?

The Act gave local state law enforcement more strength to apply stricter punishment to mobsters by imposing longer sentences than previously possible under existing state legislation. The Federal Wire Act cut the flow of wealth provided through illegal bookmaking and number fixing to criminal organizations without effecting casual bettors. The Act was not designed to attack players from the U.S.A. but rather to strike unlicensed gambling services that used wired communicates to collect bets and pay out winnings from and to domestic players, respectively. Therefore, the Federal Wire Act was actually an anti-organized crime law not anti-gambling legislation, as while the law is relevant to gambling it also has nothing to do with gamblers.

It is stated in the Federal Wire Act, those caught in violation “shall be fined or imprisoned for no more than 2 years or both”. This improved the Justice Department’s ability to combat the unlicensed illegal sports betting industry which was at the time run by the Mafia and smaller local bookies. The laws enacted by the U.S. Congress and President Kennedy were known as the 1960’s Interstate Anticrime Acts which empowered the Federal Government to take a more effective role in the fight against organized crime and racketeering. At the time, the Mafia manipulated Labor Unions, shook down businesses, and ran unlicensed gambling rings.

The Act’s language was intended to assist territories and states in enforcing their respective laws on illegal bookmaking. However, as time came to show, the language in the Federal Wire Act could be circumvented by illegal figures through its exclusion of the internet as a wired communication facility. For this reason, in 2001 the Department of Justice under the Bush administration declared the Federal Wire Act of 1961 intended to expand its regulatory prohibition to all forms of US-based online gambling. However, in 2011 the DOJ officially clarified its position that the Federal Wire Act only outlawed US-based intrastate online sports betting operations, and had no application regarding state-regulated online casinos, online sportsbooks, poker sites or other online gambling initiatives allowed by state law.

In 2018, after the repeal of PASPA, the issue of the Federal Wire Act’s relevancy to online sportsbooks was brought into question. It was clarified that the Federal Wire Act only restricted -USbased interstate wagering on sports. Meaning that the Wire Act makes it illegal for any domestic state-regulated online sportsbook to accept bets outside fo their state. This allows state-approved sportsbook the capability to offer wagering online to any bettor residing in or visiting their state without violating the Federal Wire Act.

FAQ’s

DOES THE FEDERAL WIRE ACT AFFECT ONLINE GAMBLING IN THE UNITED STATES?

The Federal Wire Act was once interpreted as federal legislation that could regulate all forms of online gambling, specifically in the 1990’s dot-com era. However, this stance was challenged when the DOJ released a formal opinion on their interpretation of the Federal Wire Act. According to the DOJ’s 2011 statement, the Federal Wire Act only applied to US-based online sports betting and did not apply to casino or poker online gambling nor extend its jurisdiction beyond the United States and its declared territories.

In 2018 following the repeal of PASPA, the Wire Act was once more considered due to the major changes in the US sports betting market. The Wire Act now only restricts interstate online betting, which means that state-regulated online sportsbooks are not permitted to accept bets across state lines or from sources outside of the United States. This is a stark contrast from the law’s previous application which effectively prohibited all US based online sportsbook activity.

DOES THE FEDERAL WIRE ACT MAKE ONLINE SPORTS BETTING ILLEGAL FOR US RESIDENTS?

No. The Federal Wire Act does not criminalize offshore online gambling as it only outlaws interstate wagering through state-regulated online sports betting. For this reason, states are not permitted to accept bets from outside of their state. If an individual state decides to accept out of state wagers, they would immediately face legal actions and injunctions by sports leagues or the federal government for their violation of this law.

DOES THE FEDERAL WIRE ACT APPLY TO OFFSHORE ONLINE SPORTSBOOKS?

No, the Wire Act only has prohibitive jurisdiction concerning betting activities between states within the United States and its territories. Outside of the U.S., governing jurisdictions are free to regulate and license online sportsbooks and offer their betting services to whomever they choose.

The US does not have any federal law on the books that outlaws offshore gambling, therefore, US players are free to access offshore betting destinations. However, the states of Washington and Connecticut do have state laws in place to prohibit residents from engaging in any type of online betting including both US based and/or offshore gambling.

ARE THERE PENALTIES FOR US RESIDENTS WHO BET ON SPORTS ONLINE?

Under the Federal Wire Act, it is only a crime to accept bets outside of a state’s jurisdiction or operate a sportsbook on US soil that is unregulated and unlicensed. However, nowhere in the law does it place prohibitions on bettors from the U.S.A. wagering on sports at legally licensed online sportsbooks.

ARE THERE ANY LEGISLATIVE PUSHES TO REWRITE THE FEDERAL WIRE ACT?

Wire Act Sports Betting Law

Before 2011, the DOJ improperly used the Federal Wire Act to prosecute countless individuals and businesses under the general interpretation of the Wire Act. Since the rise of the internet, the anti-gambling leaning members of Congress intended to use the Wire Act to rid the Internet of casino-style gambling.

In 1996, then-US Senator of Arizona Jon Kyl introduced a bill called the Crime Prevention Act that included an amendment to the Wire Act to encompass the Internet under its prohibitive jurisdiction.

In 1996, then-US Representative Tim Johnson of South Dakota introduced his own bill to take a jab at online gambling called the Computer Gambling Prevention Act.

In 1997, Senator Jon Kyl tried once more to introduce another anti-internet gaming legislation by the name of the Internet Gambling Prohibition Act which would make all contests, sports games, or games of chance classified as a bet or wager thus illegalizing its online forms.

Wire Act And Sports Betting

In 1999, after his previous attempt in 1997, Senator Jon Kyl tried to reintroduce the same legislation.

In 2002, then-US Representative Bob Goodlatte of Virginia introduced his own prohibitive bill called the Combating Illegal Gambling Reform and Modernization Act which would classify bets and wagers to include all gambling activities and games of chance.

All of these attempts to pass anti-internet gambling legislation failed and due to the DOJ’s clarification regarding the application of the Federal Wire Act, few states and government entities were able to prosecute legitimate online businesses and social bettors.

Sports Betting Sites

However, in the past few years a new bill has gained momentum and is aimed to outlaw most forms of online gaming. In 2014, Sheldon Adelson the world’s wealthiest casino owner who has a great distaste for regulated online gambling is the primary supporter and push behind this bill.

RAWA also known as the Restoration of America’s Wire Act which would ban domestically regulated online gambling and immediately criminalize and shut down multiple state-regulated online gaming industries across the US. RAWA could effectively ban online lottery sales, online poker, online sportsbooks, online casinos and online bingo, exemptions include online horse race wagering and daily fantasy sports contests.