In a conference call held on Wednesday conducted by iGamingBusiness, gambling law expert I. Nelson Rose (pictured) discussed the recent proclamation by the U.S. Department of Justice that the Wire Act only applies to sports betting. While some in the industry have contended that online poker could still be frowned upon, Rose took a much more optimistic approach, telling callers that the letter, which was made public on December 23rd, was a “Christmas present for the states.”Rose began by saying that the Wire Act was passed in 1961 as part of a war on organized crime. Designed to cut the telegraph wire that bookies used to get the results of horse races before the bettors did, the Wire Act was long believed only to apply to sports betting. But, up until the final days of 2011, no concrete declaration had been released by the DOJ.
Rose claimed that the DOJ had long taken an extreme position regarding the Wire Act. For example, the DOJ contended that the law applied to all forms of gambling. Even if a form of gambling were legal, it could still be considered illegal if the wire crossed into another state. Rose remarked, “The DOJ backed off these extreme positions. They analyzed the history and purpose of the Wire Act and said it applies only to betting on sporting events.”
Rose concluded, “This is a Christmas present – a gift to the states – which can now raise hundreds of millions of dollars and create thousands of jobs because there is no other Federal law that would apply to intrastate gambling… There is no Federal law that would apply to interstate or even international online gambling that is legal under state law, except sports betting and lotteries.” In essence, the door seems to be flung wide open for states to offer internet poker and other games.Much was made about the timing of the DOJ’s opinion letter, which was released two days before Christmas. Rose speculated why the cat was let out of the bag when it was: “It was announced two days before Christmas. That’s a very slow news cycle and it wasn’t picked up. [Several days later,] anti-gambling advocates and some of the competitors finally started to understand that this decision had been made, so there wasn’t a lot of press coverage from the opposition.”
There are a variety of states already looking at online gaming, including Nevada, California, Florida, the District of Columbia, Illinois, Iowa, Minnesota, New York, New Jersey, Virginia, Maryland, Delaware, Massachusetts, Rhode Island, and Connecticut. The former has already begun vetting licensees and could be the first state to open up rooms this year.
The onus now appears to be on state legislatures to enact internet gambling legislation if they so choose. Rose told callers, “It’ll be up to the state legislature, which is now free to legalize just about any form of gambling. They can legalize it, they can do interstate and even international if they can figure out how to work out the details.”
Could PokerStars begin accepting bets from U.S. players right away? Rose responded that it’s still a sticky situation: “If it’s sports betting, you’re out of luck… If the poker is legal under state law, then in fact it’s legal for an operator to take those bets. The problem is we don’t know any states where it’s clear it’s legal under state law. Simply saying that there’s no prohibition on [poker] doesn’t really work. You have to do a real analysis of the state to find out whether it’s legal under state law.”What about Indian tribes in the United States? Could they open online poker rooms tomorrow? Rose answered, “Tribal gaming can be done using the internet as long as all of the players are on Indian land. Once you go off Indian land, the situation becomes much more complicated.”
Finally, there has been speculation within the online poker industry that a future Presidential administration could reverse the DOJ’s decision. However, Rose was not a believer: “This isn’t a decision from the Supreme Court and it’s not an act of Congress, so it can be reversed, but it won’t be for two reasons. First, administrative agencies, particularly the DOJ, don’t like to reverse themselves very often. Secondly, this decision is legally correct. We have already had court cases where the Federal Court of Appeals has said that the Wire Act only applies to bets on sporting events and races.”
We’ll keep you posted on the latest legal and legislative news.
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