BOSTON – The reinterpretation in January of the Federal Wire Act, deeming all forms of instate online gambling as illegal, continues to have the gaming industry on edge.
A panel at ICE North America said the revised opinion by the DOJ’s Office of Legal Counsel has caused legitimate concerns for the U.S. gaming industry. Meanwhile, sports betting continues to grow in legalization across the country in the wake of the U.S. Supreme Court striking down a federal ban on single-game sports wagering.
Pala Interactive CEO Jim Ryan
“Finally the industry got the break it deserved,” said Jim Ryan, CEO of Pala Interactive. “We’re going to get legislation that will be the catalyst for sports betting and catalyst for online casinos and online poker and then we get the January 2019 analysis of the legal counsel of the DOJ that revises the opinion that it applies to all forms of online gaming, putting a big question mark on this sector again. This sector can’t catch a break is my view on it.”
The Wire Act was interpreted in 2011 by the Obama Administration to apply to sports betting over state lines. Ryan said the previous opinion allowed Nevada, Delaware, New Jersey and Pennsylvania to have the only meaningful online gaming markets.
“For those that participated and wanted to make this happen, that is a pitiful result,” Ryan said. “We are congratulating ourselves at this show about how great things are moving, but if you have been playing this sandbox for the last five, 10 and 20 years, this is not progress in my view. We sit here at the same time with DOJ enforcement uncertainty. Having been the benefactor of that kind of behavior, it isn’t pleasant. I think we have convinced ourselves that it’s unlikely to happen. I got to tell you that if they come after this, they’re not going to come after a casino operator. They are going to do exactly what they did in 2006 and go after payments. We got to come together as an industry.”
Since the issue is driven by the government, Ryan said it’s important to educate legislators on what they can do to minimize the increase in problem gambling, which is the reason for the reinterpretation along with an increase in underage gambling.
Former New Jersey State Senator Raymond Lesniak who helped lead the overturn over the federal ban, said state legislatures need to allocate funds for problem gambling.
“When I sponsored Internet gaming for New Jersey, I predicted that New Jersey would be the Silicon Valley for Internet gaming,” Lesniak said. “This reinterpretation of the Wire Act has put that on hold.”
Lesniak said he’s confident court cases against the reinterpretation will be successful. When Attorney General Robert Kennedy pushed for the Wire Act in 1961, he was targeting sports betting operations of organized crime.
“That was it and how can you say something as the Attorney General did applies to Internet gaming when earlier in 2011, they said it does not,” Lesniak said. “I believe the impetus for this reinterpretation was (Las Vegas Sands Corp. Chairman and CEO) Sheldon Adelson. (He) has been a crusader of this and has been the biggest contributor to the Republican Party, President (Donald) Trump and Senate Judiciary Committee Chairman Lindsey Graham (South Carolina). That is what’s going on here.”
Lesniak thought the effort would eventually fail.
“They will definitely lose but for now everything is at a standstill,” he said. “Americans are being deprived of their right to safe and reliable gambling opportunities.”
Gibson, Dunn & Crutcher sued the Justice Department over the Wire Act reinterpretation in U.S. District Court in New Hampshire. The law firm represents technology provider NeoPollard Interactive, which services the New Hampshire state iLottery system.
Matthew McGill, a partner in the firm, said the Wire Act matter, “came without warning or any type of notice or any opportunity for comment. To me as a lawyer what is most disturbing is it’s not just the United States government reinterpreting statutes. That happens frequently.”
What is unusual is the criminal implications in which people can be jailed, McGill said.
