NEW YORK – Nevada gaming attorney Mark Clayton attempted to summarize some of key points of the 1963 Federal Wire Act, which prohibits the acceptance of a wagers or, crucially, the transmission of information that assists the placing of a wager, across state lines.
“It’s one of the few gambling laws at a federal level that defines what is illegal gambling,” Clayton said Tuesday during a panel discussion at the at ICE Sports Betting USA 2018 conference.
Clayton, a shareholder and co-chair of the Global Gaming Practice at Greenberg Traurig LLP; enumerated some of the more obscure points in the Act and why it was passed into law.
“It’s clear that they were going after illegal (gambling),” Clayton said. “But clear language (in the Act) says that it covers only those engaged in the business of betting.”
The attorney added that that would mean anyone who would accept a sports wager – and it doesn’t differentiate between legal and illegal wagering.
The panel discussion was billed as an International Masters of Gaming Law masterclass on clarifying the Wire Act for a legal sports book operation. The speakers all agreed the transmission of information pertaining to sports wagering in the digital age is murky.
“It wasn’t imagined that there would be lawful sports betting” when the law was passed, said Mark Hichar, also a Greenberg Traurig shareholder Global Gaming Group member. The issue, he said, is that “as courts have interpreted it, it would prohibit the intermediate routing” of wagers or information. “The question is, is that interstate commerce?”
Michael D. Lipton, a senior partner at Dickinson Wright LLC, moderated the panel, which included Daniel Wallach, a shareholder at Becker & Poliakoff, and Louis Rogacki, deputy director of the New Jersey Division of Gaming Enforcement.
Lipton acknowledged at the outset the discussion was intended to “clarify some of the haze that may be hovering with respect to the Wire Act.” He added that it had taken him a long time to learn what the legislation was about and he that he was still learning.
Clayton said in illustrating the issue of information transmission, “that could be what’s the line, how big is the wager, even something like a weather report.”
Per the Wire Act’s language, a transmission between two points in the same state that travels to a third point outside the state constitutes interstate commerce.
“The Internet itself is interstate commerce,” Wallace said.
The Florida-based gaming attorney went on to describe a passage in the Murphy decision – the U.S. Supreme Court ruling in May that overturned the Professional and Amateur Sports Protection Act and opened legal sports betting to any state. Wallach said Justice Samuel Alito indicated that a user needed to break a state law before it becomes a federal felony.
“Historically, the Wire Act did not require a state law violation,” Wallach said. “Justice Alito may have muddied the waters.”
Wallach went on to say that Alito was referring to a subsection of the Wire Act that allows for a safe harbor for the passage of wagering information from one state where betting is legal to another.
Rogacki said that New Jersey addressed wagering transmission into the state’s sports betting regulations.
“The servers had to be at the racetrack or in Atlantic City (and) the sports pool managers can only receive advice and recommendations from jurisdictions where sports wagering is legal,” he said. “We thought we’d insulate ourselves that way.”
Rogacki also said that New Jersey is considering having servers dedicated solely to the transmission of information.
Clayton suggested a scenario in which a sports book that’s “maxed out” on a particular game takes a bet in one jurisdiction and then sends it to another sister sports book that has room to take the bet.
“Theoretically? There’s a lot of nuances that an aggressive prosecutor could try to draw,” Clayton said.
Added Rojacki, “Right now, you have to physically be in New Jersey to place a bet.”
In 2011, New York and Illinois received a memorandum from the U.S. Department of Justice concluding that the Wire Act applies only to sports betting – not online casino games or poker.
Lipton mentioned Restore America’s Wire Act, a campaign backed by Las Vegas Sands Corp. Chairman Sheldon Adelson, a billionaire who is opposed to Internet gaming and has vowed to spend millions of dollars to end the activity.
Lipton asked Clayton if there was any likelihood of the campaign succeeding.
“No one saw UIGEA (Unlawful Internet Gambling Enforcement Act of 2006) coming when it was slapped onto the Safe Ports Act,” he said. “You could clarify (the Wire Act) to say what it was intended for, illegal operators.”
Wallach later suggested a federal law that would establish a minimum betting age, provide funding for responsible gaming, and a provision to establish “mandatory information sharing and cooperation along state lines.”
Right now, he said, “the discretion over whether there’s an unusual bet or suspicious wager… is left in the hands of state operators… With sports betting, the activities take place across state lines, and the jurisdictional limits… stop at the state border.”
The American Gaming Association has said that there is no need for federal legislation.
