The Wire Act Questioned Again
The Wire Act is at the heart of the online gambling debate from a legal perspective in the United States, and the Department of Justice has officially appeal a federal court ruling from New Hampshire that determined the law only applied to sports betting.
The importance of the interpretation of this law cannot be understated: One interpretation opens the door for legalization and regulation of the industry, and the other spells complete doom for all online gambling.
The history behind this law, what it was used for and so on makes it clear what the intent really was, but there are a lot of complications legally and historically that throw a proverbial wrench into the gears of the whole mess. In short, a situation has been created that is borderline absurd, and there’s no telling how it’s going to go for players.
What the Wire Act Does
In the early 1960s, the US government passed a law called the Interstate Wire Act. It was intended to give the police and federal officers another tool to fight organized crime, which made a significant amount of its funding through illegal sports betting that took place over the phone.
In short, the Wire Act made it illegal federally to take or place wagers on “any sporting event or contest” using telephone lines, and that law was used to target these types of organized criminal activity. To most people in the industry, it’s clear that this means “any sporting event or sporting contest,” but opponents of online gambling have taken it to mean “any sporting event or any other type of contest whatsoever,” which can be extended to mean any type of gambling.
The courts have already ruled that the part about it taking place over telephone lines includes wagers taken over the Internet, which is clearly not what was intended by this law in the first place.
So overall, it’s a fairly absurd situation where a law from decades before the Internet was used is being leveraged in a way to try to prohibit activities on the Internet that would otherwise be legal.
What to Expect From This Situation
What’s interesting here is that the Department of Justice has switched opinions on whether the Wire Act applies to online gambling in several instances, sometimes issuing opinions in favor and sometimes not.
This being taken to court and escalated is exactly what we need to have happen so that there’s clarity on the issue, but sometimes you have to be careful what you wish for because things might not go the way you want them to, and that’s the case here as well. It’s one of those things where industry figures know that it needs to happen, but that doesn’t mean that it happening is going to lead to the result that we’re hoping for.
Moving forward, there’s a lot that could happen. The worst case scenario is that it becomes cemented that the Wire Act applies to all online gambling, and in that case, everything from regulated online casinos in states like New Jersey and Pennsylvania to regulated state-based lotteries that allow you to purchase numbers online are going to be in jeopardy.
Enough people and companies will probably complain at that point that something will be done, and there’s no guarantee that they’ll rule that the Wire Act applies to all gambling, but we’d rather be prepared for the worst and hope for the best than the other way around.