Wire Act Delays DraftKings Online Sportsbook Launch in West Virginia
John Myers – director of the state Lottery Commission (WVLC) which oversees West Virginia sports betting had previously approved Hollywood Casino at Charles Town Races on May 23 to launch an online / mobile sportsbook operated by DraftKings. That approval was supposed to be followed days later by a soft launch of the DraftKings betting app across the Mountaineer State. However, gaming regulators put the brakes on to ensure full compliance with federal law.
Under the Wire Act of 1961, sports betting related business cannot be conducted across state lines using telephonic means. After the U.S. Supreme Court repealed a federal ban on sports betting itself (outside of Nevada) last May, individual states have been free to establish regulated sports betting industries so long as they remain intrastate only.
Start and Stop for State’s Emerging Industry
West Virginia sports betting legislation was passed even before the Court’s decision came down. Last August, Hollywood Casino at Charles Town Races subsequently became the state’s first venue to accept legal wagers. Online / mobile wagering commenced last December via Mardi Gras Casino and its affiliated BetLucky app. However, that product was later suspended in March due to a dispute with software provider Miomni.
The state has lacked an online / mobile sportsbook presence since then, but Myers seemed to give DraftKings the go-ahead in May.
Instead, as Myers told WV Metro News on June 4, the testing phase revealed an issue with the company’s computer servers which could potentially run afoul of the Wire Act:
“The location of one of the servers was in question during the testing period. I think we have agreement among everybody that that needs to be located in the state of West Virginia in order to make sure that there is not an issue or violation of the federal Wire Act.”
Logistical Fixes Needed Before DraftKings Can Launch
According to Myers, DraftKings sought to comply with the Wire Act’s interstate ban by building its “bet server” in West Virginia.
This network server provides bettors with access to the DraftKings Sportsbook platform. But financial transactions are routed through a secondary “wallet server” used to verify a user’s bank account or credit card is backed by sufficient funds.
Because the company launched its first online sportsbook in New Jersey, DraftKings’ wallet server is currently located in the Garden State.
Per Myers, both the WVLC and DraftKings executives believe exercising an abundance of caution – by waiting to reconfigure its West Virginia bet server into a dual wallet server – is the correct course of action:
“I don’t know that they’re 100 percent confident from their side. They are going to have to split two functions that are on that existing server.
For that to occur, it’s going to have to take some time to reprogram and create that split of information on that server. That will allow us to move forward.”
Myers also made it clear that both regulators and operators alike are still trying to navigate the Wire Act’s fluid scope:
“There is not a precedent to go by in the law. There’s not a precedent to go by in creating platforms and these systems that move the data around.
We are kind of learning as we go.”
West Virginia Sports Betting Delay
In January, the U.S. Department of Justice expanded the Wire Act’s purview to ban all forms of interstate online / mobile gambling, including casino games, poker, and lottery sales. But after the New Hampshire Lottery Commission (NHLC) sued to block this expansion, a federal judge concurred by ruling that the Wire Act cannot be applied to lottery sales.
Asked about the import of that decision, Myers confirmed that his agency’s online / mobile sports betting regulations must remain in compliance with the Wire Act:
“They ruled basically that lotteries are not included, but they did specifically address sports betting as being under the Wire Act.”
Asked for a prediction on when DraftKings’ server issues might be resolved, Myers hardly sounded optimistic in replying to the Charleston Gazette-Mail:
“It could be football season before they get that built. It looks like it’s certainly going to be delayed.”