Industry Legal

There’s Another Wire Act Update From The Feds

doj

On Wednesday, the Department of Justice reminded the gaming industry that the pesky Wire Act from the year 1961 is still a potential thorn in its side. In a Dec. 18, 2019 memo to U.S. Attorneys and the FBI, Deputy Attorney General Jeff Rosen announced the extension of the enforcement “grace period” until June 30, 2020.

The grace period applies to the late-2018 Office of Legal Counsel opinion that reversed a 2011 opinion that determined the decades-old law only applied to sports betting, or specifically internet sports betting.

Here was the announcement posted to the DOJ’s website:

In the December 18, 2019 memorandum to all U.S. Attorneys, Assistant Attorneys General, and the FBI, the Deputy Attorney General extended the grace period until June 30, 2020, on implementing the Office of Legal Counsel’s (OLC) 2018 opinion finding that all but one of the prohibitions of the Wire Act, 18 U.S.C. § 1084, apply to non-sports gambling. During the grace period, federal prosecutors should not apply the Wire Act to non-sports-related betting or wagering. The Deputy Attorney General also directed that, to ensure continuity across the country, any Wire Act charges must be reviewed and approved by the Criminal Division’s Organized Crime and Gang Section. 

The Wire Act opinion involves online gambling and interstate activity. Multi-state lottery jackpots have been in the crosshairs thanks to the 2018 opinion. Online poker liquidity sharing is also potentially at risk, in addition to any state’s legal online casino gambling that has any interstate transmissions or routing of information. Pennsylvania, for example, has taken steps to insure that its online casino gambling is totally intrastate. New Jersey, which has called the new DOJ opinion a political move, is pursuing legal action.

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Will this slow online gaming expansion?

The memo this week comes as the gaming industry still awaits the outcome of the DOJ’s appeal of a federal judge’s decision in New Hampshire that rebuffed the DOJ’s revised position on the Wire Act. The June ruling from Judge Paul Barbadoro said the Wire Act only applies to sports gambling.

That was a major win for the U.S. gaming industry, but a DOJ appeal was anticipated.

Barbadoro predicted the Wire Act “mess” could wind up before the U.S. Supreme Court. A resolution at the hands of the highest court in the land could take years.

In the meantime it seems the DOJ will continue suggesting that an enforcement action could occur. The impact, until the Wire Act situation is finally resolved in the courts, is a potentially slower pace of online casino gambling expansion in the U.S. Despite the Wire Act, the state of Michigan recently sent an online casino gambling bill to its governor. Other states are expected to consider online gambling in 2020.

The Wire Act situation isn’t stopping or slowing states from legalizing online/mobile sports wagering, made possible by the Supreme Court’s mid-2018 overturning of the Professional and Amateur Sports Protection Act of 1992. The sports betting industry is booming thanks to the legal clarity that came from that law being declared unconstitutional. A similar fate could happen to the Wire Act.

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