The Office of Legal Counsel’s opinion has stood since 2011.
The U.S. Department of Justice is preparing an opinion which would reverse the 2011 Office of Legal Counsel’s opinion on the Wire Act. The exact nature of the new opinion isunknown, but a change of policy could be a threat to state-licensed online casinos and poker sites.
Those with knowledge of the OLC’s deliberations say it is uncertain whether a new DOJ opinion will be issued. If the DOJ does release a new policy on online gambling, it would be released later in the week or early next week, to bury it during the Christmas break.
The 2011 opinion said online sports betting was banned under the UIGEA, but not online casinos and poker sites. The UIGEA states any form of gambling which would have been banned for interstate telephone lines under the 1961 Wire Act is illegal (under UIGEA) for Internet and Wi-Fi.
The Wire Act specifically bans sports gambling, but makes no mention of poker, slots, or casino table games like blackjack, baccarat, or roulette. Since the Wire Act banned gambling over the telephone, the 2011 DOJ opinion took the stance that poker and casino games could not be played over the phone — so they were not covered.
Wire Act and UIGEA Interpretations
Proponents of the interpretation of UIGEA which held from 2006 to 2011 — that online poker rooms, casinos, and sportsbooks are illegal — infer that lawmakers who passed the 1961 Wire Act would have banned poker and casino games over the phone lines — if it were possible.
If the Office of Legal Counsel changes the 2011 opinion, it would give federal prosecutors the (theoretical) authority to ban state-sanctioned online gambling in New Jersey, Delaware, Pennsylvania, and Nevada. Those familiar with the current DOJ decision makers note that such theoretical authority might never be used.
“Titanic Shift…on DOJ’s View of Wire Act”
John Holden, an Oklahoma State University professor who is an expert on the Wire Act, told Legal Sports Report, “A reversal of the 2011 Office of Legal Counsel memo would be a titantic shift in the Department of Justice’s view of the Wire Act.”
The OSU professor emphasized the DOJ opinion is guidance for the 46 US Attorneys’ Offices and not an order to prosecute. Holden said, “An opinion is guidance of the DOJ’s view of the scope of the statute, as opposed to a binding interpretation [of the] law, which would need to be passed by Congress. But this is not good news for poker, and online casinos, though it remains unclear what effect this purported policy shift would have on state-regulated markets.”
Comparison to Sessions’ Prison Policies
Those wondering about the implications of such a decision might look at former US Attorney General Jeff Sessions’ opinion on prison sentences in February 2017. US attorneys were instructed by the new AG the should pursue the “most serious, readily provable offense” when prosecuting alleged criminals.
The Holder DOJ avoided minimum mandatory sentences for low-level, non-drug offenses, but instead pursued the most serious offenders. Sessions reversed that policy, at least in his guidance to US attorneys. Each individual attorney’s office still could pursue cases as they deemed fit, but it opened the door for ambitious attorneys to prosecute cases they might have overlooked before — and warned those who were lax they might have to answer for failing to follow the guidance.
The same would be the case for a new interpretation of the Wire Act and UIGEA. In short, US attorneys could exploit the decision, though the new guidance might have no effect whatsoever. Federal prosecutors only have so many resources.
New Federal Online Gambling Legislation
The real effect might be to spur new federal legislation on online casinos and poker rooms. A direct line could be draw between Sessions’ prison policy and the prison reform bill which was signed this week. It emerged in the spring of 2018 that Jared Kushner was pushing back on Sessions’ punitive policies, while President Donald Trump contradicted Sessions’ policy in October 2018. In December 2018, a bipartisan prison reform bill championed by a group as diverse as Jared Kushner and Sen. Dick Durbin (D-Illinois) made it through both houses of Congress and to the desk of Donald Trump.
A new policy might give reason for anti-online gambling politicians like Sen. Lindsey Graham (R-South Carolina), Sen. Jim Sensenbrenner (R-Wisconsin), and Sen. Dianne Feinstein (D-California) to pursue the passage of another version of Restore America’s Wire Act — draft legislation of an online gambling ban supported by GOP mega-donor and casino mogul Sheldon Adelson since 2014.
Schumer and Hatch: Sports Betting Bill
The new opinion comes at a time when a bipartisan effort to pass federal sports betting legislation is gaining state. Senate Minority Leader Charles Schumer (D-New York) and departing Sen. Orrin Hatch (R-Utah) introduced a bill which would give sportsbook licensing responsibility to the U.S. Department of Justice.
Such a bill would undermine state control of licensing decisions and stop the rapidly expanding US sports betting industry in its tracks. Since a Supreme Court decision in May 2018, six US states and the District of Columbia have legalized single-game sports bets.
In relatively short order, power over American online gambling and sports betting could shift from individual states to the US federal government. It is a paradoxical situation where the conservative party wants to strip power from the states and concentrate it in the nation’s capital.
Conclusion
One should not overreact to yesterday’s announcement. The 2018 DOJ opinion on online gambling might not affect the online gambling industries in New Jersey, Nevada, Delaware, and Pennsylvania. Instead, it might clear the way for federal prosecutors to go after unregulated offshore online casinos and poker sites which accept real money US play. The issue is fluid and no one knows for sure the implications.
Even that theory has holes in it. Under current DOJ guidance, online sportsbooks which accept American play is illegal, yet widespread. Sites with servers in Costa Rica, such as Bookmaker.eu and 5Dimes Sportsbook, accept US players and have since before the UIGEA. Prosecutors have not blocked their domains yet.
Whatever the case, the next two weeks could be an uncomfortable time for those with a stake in the US legal online gambling industry.
