Welcome to the News desk.
|New interpretation of the Wire Act of 1961 breathes new life into
Online Gambling in the USA
Department publishes opinion that Wire Act only applies to sports
Late last Friday, the US Department of
Justice (DoJ) published its new interpretation of the Wire Act of 1961,
concluding that interstate transmissions of wire communications that do
not relate to a sporting event or contest fall outside of the reach
of the Wire Act. Thus the Obama administration has cleared the way for
states to legalize Internet poker and certain other online betting in a switch
that may help them reap billions in tax revenue and spur web-based
A Justice Department opinion dated September and made public
on Friday reversed decades of previous policy that included civil and criminal
charges against operators of some of the most popular online poker
Until now, the department held that online gambling in all forms
was illegal under the Wire Act of 1961, which bars wagers via
telecommunications that cross state lines or international borders.
new interpretation, by the department's Office of Legal Counsel, said the Wire
Act applies only to bets on a "sporting event or contest," not to a state's use
of the Internet to sell lottery tickets to adults within its borders or abroad.
Numis Securities said: This
is a major change in the position of the US DoJ. At the very least it clears
the way for state level online poker legislation. Potentially it opens the way
for gambling services to be provided from offshore and this may encourage the
US Congress to legislate before the floodgates open.
an analyst at Panmure Gordon, added: In effect this will make state
online lottery, casino and poker legal, where appropriate state regulations
exist and lay the foundations for interstate, non-sports
The question at issue which brought this review was
whether proposals by Illinois and New York to use the Internet and out-of-state
transaction processors to sell lottery tickets to in-state adults violated the
Nelson Rose, a gaming law expert at Whittier Law School said
the department's conclusion would eliminate "almost every federal anti-gambling
law that could apply to gaming that is legal under state laws," and went on to
say that if a state legalized intra-state games such as poker, as Nevada and
the District of Columbia have done, "there is simply no federal law that could
apply" against their operators.
The department's opinion, written by
Assistant Attorney General Virginia Seitz, said the law's legislative history
showed that Congress's overriding goal had been to halt wire communications for
sports gambling, notably off-track betting on horse races.
had been concerned about rapid transmission of betting information on baseball,
basketball, football and boxing among other sports-related events or contests,
she summarized the legislative history as showing.
"The ordinary meaning
of the phrase 'sporting event or contest' does not encompass lotteries," Seitz
wrote. "Accordingly, we conclude that the proposed lotteries are not within the
prohibitions of the Wire Act."
The department expressed no opinion about
a provision in the law that lets prosecutors shut down phone lines where
interstate or foreign gambling is taking place.
Many of the 50 U.S.
states may be interested in creating online lotteries to boost tax revenues and
help offset the ripple effect of a federal deficit-reduction push.
global online gambling industry grew 12 percent last year to as much as $30
billion, according to a survey in March by Global Betting and Gaming
Consultancy, based on the Isle of Man, where online gambling is
Federal prosecutors in April charged three of the biggest
Internet poker companies with fraud and money-laundering along with violations
of another federal law, the Unlawful Internet Gambling Act of 1986.
government outlined an alleged scheme by owners of the three largest online
poker companies - Full Tilt Poker, Absolute Poker and PokerStars - to funnel
gambling profits to online shell companies that would appear legitimate to
banks processing payments.
Online gaming stocks were the big winners on
Wednesday, as investors bet that the US government could relax its approach to
Bwin.Party was the top performer among the mid-cap
stocks, rising 23% to 160p on the first trading day after Christmas
the US authorities went after online gaming in 2006, then FTSE 100 group
PartyGaming was the big loser. So it seemed only fitting on Wednesday that
Bwin.Party, a merger of Austrian firm Bwin and the former PartyGaming, should
be a key beneficiary of the apparent about-face. 888Holdings was also up
sharply, rising 9% to 39p, while Playtech rose 15% to 266p.