It’s been less than one month since the U.S. Department of Justice (DOJ) issued a memo expanding the Wire Act of 1961 to ban all forms of online gambling, but that DOJ Wire Act opinion decision is already sparking contentious debate.
In an opinion titled “Reconsidering Whether the Wire Act Applies to Non-Sports Gambling,” which was made public on January 14, the DOJ’s Office of Legal Counsel (OLC) reversed itself regarding the Wire Act’s scope.
Following a 2011 opinion by the OLC, the Wire Act – a federal law that “outlaws the interstate transmission of information that assists in the placing of a bet on a sporting event” – was applied only to sports betting. This allowed individual states to legalize and regulate online casino and poker industries, and today platforms like WSOP.com and 888 Casino thrive in Nevada, New Jersey, and Delaware. Pennsylvania also authorized iGaming in late 2017, with a full range of operators expected to launch early this year.
The future of those lucrative statewide iGaming industries is in doubt, however, as the DOJ’s latest Wire Act opinion now applies the ban to any form of online wagering.
In a letter dated February 5, Gurbir Grewal and Josh Shapiro – the Attorneys General for New Jersey and Pennsylvania, respectively – wrote directly to Acting Attorney General Whitaker and Deputy Attorney General Rosenstein of the DOJ.
Grewal and Shapiro opened their missive by directly challenging the Wire Act reversal:
“We … write to express our strong objections to the Office of Legal Counsel’s opinion announcing that federal criminal law could apply to the state-sanctioned online gambling that has taken place for years across this country.
That new opinion … reverses the Department of Justice’s 7-year-old position expressly allowing online gaming to proceed. This about-face is wrong and raises significant concerns in our states.
We ask that DOJ withdraw its opinion altogether or assure us that DOJ will not bring any enforcement actions against companies and individuals engaged in online gaming in our states – where it is appropriate under state law.”
In an email to the Las Vegas Review-Journal, Anthony Cabot – a law professor at the University of Nevada Las Vegas who specializes in iGaming – postulated that the letter signals the start of a coordinated backlash against the DOJ’s revised stance:
“This letter from the attorneys general of New Jersey and Pennsylvania is a clear indication that the recent DOJ opinion on the federal Wire Act will not go unchallenged.”
During a hearing held by the House Judiciary Committee on February 8, Representative Jamie Raskin (D-MD) sought to link Acting AG Whitaker to campaign contributions from Sheldon Adelson – the Las Vegas Sands casino mogul and multibillionaire donor to conservative causes.
In a heated exchange regarding the DOJ Wire Act opinion, Rep. Raskin asked Whitaker who contributed the funds which paid the latter’s salary as the sole employee of the Foundation for Accountability and Civic Trust (FACT).
Adelson is widely believed to fund the organization – along with the anti-iGaming lobby group Coalition to Stop Internet Gambling (CSIG) which failed to push its “Restore America’s Wire Act” bill through Congress over the last few years – but Whitaker would neither confirm nor deny the identity of FACT’s primary patron.
Rep. Raskin went on to outline his theory as to Adelson’s direct and indirect involvement in shaping the DOJ’s new position on the Wire Act:
“But Congress wouldn’t change the law according to the demands of Mr. Adelson.
So rather than change the law, he decided to try to get the Department of Justice to change the interpretation of the law. And he threw millions into a campaign to remake the DOJ and get the Office of Legal Counsel to perform a complete reversal and say that The Wire Act bans the kind of lotteries that states have online, even though the language plainly only prohibits sports betting.
And when Donald Trump won [the presidency] and Mr. [Jeff] Sessions became attorney general and you became [Sessions’] chief of staff, DOJ ordered a reevaluation of this legal question.
And what do you know, it reversed the plain reading of the interpretation, which was clearly about sports betting.”
Whitaker adopted an indignant tone while refuting Rep. Raskin’s insinuation:
“Your inferences on how that process was corrupted or corrupt is absolutely wrong. And the premise of your question I reject.”