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Will DOJ’s Stance on Wire Act Be a Roadblock to Greater US Online Gaming Market?

The US DOJ issued a legal opinion stating that all forms of online gaming are under the Federal Wire Act. How will this affect the US online gaming market?

The prospect of a larger online gaming market in the United States might be in jeopardy. This is because the Department of Justice (DOJ) changed its view regarding a contentious decades-old Federal Wire Act that will heavily affect established iGaming companies and prospective online casino operators.

DOJ’s Office of Legal Counsel published this January its November 2018 legal opinion, which argued that the prohibitions of the Wire Act of 1961 cover not just sports betting but also the entire gaming scene.

Also known as the Interstate Anti-Crime Act, the Wire Act amended chapter 50, title 18 of the United States Code to outlaw the use of wire in transmitting bets, wagers, and related communication across different federal states.

Steven Engel, US assistant attorney general, said:

“Only the second prohibition… which criminalizes transmitting “information assisting in the place of bets or wagers on any sporting event or contest,” is so limited. The other prohibitions apply to non-sports-related betting or wagering.”

In 2011, then-Assistant Attorney General Virginia Seitz asserted that the Wire Act can be enforced only on a “sporting event or contest.” This previous viewpoint of the Department was now replaced by the new and completely different 2018 opinion.

US federal prosecutors are now tasked to adopting the current opinion only 90 days after January 15.

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September 14, 2018

What Now for Online Gaming Operators

However, the new legal opinion of the Justice Department does not affect intrastate or inter-tribal online gaming as the Wire Act only prohibits the transmission of bets “in interstate or foreign commerce.” Simply put, players in New Jersey—and other states where online gambling is legal—can still legally withdraw winnings on regulated gaming hubs in their state like 888 Casino.

However, the new opinion could derail the interstate online gaming market that many casino-goers and online poker players dream of.

For one, banking institutions will be more wary of providing support to online casinos. One report suggested that some of the biggest banks in the United States—including American Express and the Bank of America—thought that giving service to gaming hubs would immediately put them under the Wire Act since these financial institutions move their clients’ funds electronically.

In addition, a number of operators who offer interstate gaming could be forced to change their structure. A memorandum from the attorney general reminded operators “that relied on the 2011… opinion time to bring their operations into compliance with federal law.”

Many analysts were alarmed as this development could see the collapse of the interstate online poker agreement between Nevada, Delaware, and New Jersey—states where online poker is legal.

The new opinion, undoubtedly, threw the future of interstate online gaming into muddy waters. As one gambling expert quipped, no one knows how exactly the legal opinion will change the industry.

Meanwhile, the ball is now on pro-online gambling groups, personalities, and politicians to fight for interstate online gaming on the courts and on the legislative stage.

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