Nearly 60 years have passed since Congress created the Federal Wire Act. U.S. Attorney General Robert Kennedy pushed the legislation as a deterrent to organized crime by making the transmission of interstate gambling information illegal.
But the Wire Act has outlived its usefulness.
In today’s modern gaming universe, commercial and tribal casinos are found in 43 states, legal sports betting is available in 20 states, online casinos are now accessible in six states following Michigan’s launch on Friday.
Attorney General Robert Kennedy, center, meets in the Oval Office with President John F. Kennedy, right, and Vice President Lyndon Johnson.
This week’s ruling by the Fifth Circuit Court of Appeals made the Wire Act all but obsolete. The New Hampshire Lottery sued over a 2018 opinion by the Justice Department that would have halted the state from accepting online ticket sales, potentially costing New Hampshire’s education system $100 million annually in tax revenues.
“This ruling is a major victory for New Hampshire,” said Gov. Chris Sununu of the justices’ opinion in favor of the state. “New Hampshire stood up, took action, and won.”
The Court’s decision reverted the Wire Act back to a 2011 ruling that said the law only pertained to sports betting. Online-gaming proponents rejoiced.
“This is a day many in the gambling world have been waiting for, and it really could not have been a bigger win,” John Holding wrote in Legal Sports Report. He is an assistant professor at Oklahoma State University, whose research focuses on sports-corruption policy issues. “The decision lifts a dark cloud of uncertainty that hung over the non-sports online gambling industry since 2018.”
Legal experts said the Justice Department wouldn’t appeal the decision and called for the Wire Act to be amended.
The growth of sports betting has led to countless services that supply sports betting data and information to help handicappers set lines, including analytics used for in-game wagering. The professional sports leagues – once strongly opposed to legal sports betting – now provide their “official data” at a cost to the various services.
So my question is this: Why not just repeal the Wire Act altogether?
I posed that issue to several interested parties. The primary reason for keeping the Wire Act around is the continued effort to quash illegal online gambling operations.
AGA CEO Bill Miller testifies in front of the Senate Judiciary Committee in July 2020.
American Gaming Association CEO Bill Miller said the industry has continual discussions centering on the various federal and state laws that either advance or inhibit gaming. The Wire Act is central in that debate.
“While we define our strategy, we can all agree that federal law and resources should be calibrated to address illegal gambling, which remains both a threat to the American public as well as the success of our legal, regulated businesses,” Miller said.
Nevada gaming attorney Marc Rubinstein, a partner in Reid Rubinstein Bogatz in Las Vegas, said it was naïve to think illegal bookmaking would disappear as part of the exploding legal sports betting market. He suggested the Wire Act still has use as a law-enforcement tool to diminish and marginalize illegal operations.
Las Vegas gaming attorney Marc Rubinstein
“However, the Wire Act should be modified to permit regulated, licensed, sportsbooks in different regulatory jurisdictions to lawfully pool wagers and share wagering data,” Rubinstein said.
Global Market Advisors Director of Government Affairs Brendan Bussmann said the Wire Act, at a minimum, should be modernized, even just removing the terminology related to sporting events and interstate transmission.
“The Wire Act remains one of the most archaic pieces of legislation that casts a long shadow on the gaming industry,” Bussmann said. “This is no longer the telegraph’s world and operator-assisted calls.”
The challenge, however, is timing. Bussmann said the Wire Act is not a priority for Congress, which is grappling with COVID-19 relief and other pressing matters. Still, gaming observers are hopeful the Biden Administration will have a friendly view toward the industry.
“(Modernizing) the Wire Act, along with a handful of other items, would assist the industry and states in regulating gaming to grow in the current and future world,” Bussmann said.
Eilers & Krejcik Gaming analyst Chris Grove cautioned the industry, however, on making changes in existing gaming laws, such as the Wire Act.
In a LinkedIn post following the New Hampshire ruling, Grove wrote, “Online gambling stakeholders have a tough decision ahead: Start a federal process aimed at dismantling those roadblocks that could result in unintended consequences or leave it alone and deal with the low-level headache.”
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgmaing.com. Follow @howardstutz on Twitter.
