Latest Attempt at Federal Online Gambling Ban Is Severely Flawed

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Sheldon Adelson continues to push for Federal online gaming prohibition.

Yet another attempt to prohibit online gambling at the federal level is afoot in the United States Senate, and Sheldon Adelson is widely believed to be the man behind it.

Adelson’s war against online gambling began back in 2013 when he told Forbes Magazine he would spend whatever it takes to prohibit online gambling legalization. In the ensuing years several bills have been introduced in Congress, and several hearings have been held. Adelson is widely believed to be the driver of all of the bills.

None of these efforts moved the needle, largely because of the contradictory way the bills’ (known as the Restoration of America’s Wire Act) sponsors, Representative Jason Chaffetz and Senator Lindsey Graham, have tried to sell a federal prohibition as a protection of states’ rights. This absurd rationale has been challenged by Republicans and Democrats alike at RAWA hearings.

The latest bill, S 3376, introduced by Senator Tom Cotton (R-AR) and cosponsored by Senators Lindsey Graham (R-SC) and Mike Lee (R-UT), is a bit different from the other anti-online gambling bills that have been introduced in recent years.

The neutering of RAWA

The previous versions of RAWA required the Wire Act to be amended by using some form of the following language:

“To restore long-standing United States policy that the Wire Act prohibits all forms of Internet gambling, and for other purposes.”

And by clearly defining the term “wire communication” as:

‘uses a wire communication facility for the transmission in interstate or foreign commerce of any bet or wager’ includes any transmission over the Internet carried interstate or in foreign commerce, incidentally or otherwise;
S 3376 doesn’t have a short title or catchy acronym at this time, nor does it try to amend the Wire Act.

So what does it do?

The bill is described in the text as, “A bill to ensure the integrity of laws enacted to prevent the use of financial instruments for funding or operating online casinos are not undermined by legal opinions not carrying the force of law issued by Federal Government lawyers.”

The bill attempts to create the same outcome, but differs from the casino magnate’s previous efforts in scope and language. Instead of trying to amend the 1961 Wire Act to include a prohibition of online gambling, the new bill simply tries to make a 2011 Department of Justice Office of Legal Counsel opinion disappear (thereby making online gambling illegal in the United States) and calling on law enforcement to use UIGEA to prosecute financial institutions processing online gambling payments.

In order to bring this about, the Cotton bill tried to get Congress to ignore a 2011 Department of Justice legal opinion that limited the scope of the 1961 Wire Act to sports betting and allowed states to legalize online gambling within their borders:

“The Memorandum Opinion for the Assistant Attorney General of the Criminal Division of the Department of Justice, dated September 20, 2011, shall have no force or effect for the purposes of interpreting section 5362(10) of title 31, United States Code.”

The 800 pound gorilla in the room

To call this new effort strange is quite the understatement.

Anyone familiar with how we got to this point is aware that the 1961 Wire Act doesn’t mention online gambling, and no law has ever been passed that prohibits a state from legalizing online gambling, so long as it’s not sports betting.
The Cotton bill is pretty much making the case against the Cotton bill, as it asks Congress to ignore DOJ legal opinions.

This becomes problematic when you consider it was a Department of Justice legal opinion in 2002 (the same type of opinion the bill is saying we need to ignore because it doesn’t carry the weight of law) that first stated the Wire Act applied to online gambling of all types. The 2011 opinion simply narrowed the scope to sports betting, based on a far more traditional reading of the Wire Act.

As the Competitive Enterprise Institute explains:

“The understanding that the Wire Act applied only to interstate sports wagering conducted via telegraph or telephone lines stood until the early 1990s. It was President Bill Clinton’s Justice Department that first used the Wire Act to prosecute sports betting on the Internet. It was not until 2002 that the DOJ, under George W. Bush, decided the Wire Act applied to all online gambling, not only sports betting. This decision ignored both Congressional history and court decisions to the contrary, and provided no rationale for the reinterpretation.”

Experts have looked into the Wire Act, and the Fifth Circuit Court of Appeals has ruled that the Wire Act only applies to sports betting. The only indication that the Wire Act prohibits non-sports-betting online gambling is the 2002 opinion letter by the DOJ.

This raises the question: Why does Senator Tom Cotton and his allies want Congress to ignore a 2011 DOJ opinion, but abide by a 2002 DOJ opinion?

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