25 Dec 11

United States DOJ: Wire Act Doesn't Apply to Online Poker

The US Department of Justice released a legal opinion on Friday in which they stated for the first time that the Interstate Wire Act of 1961 prohibits only sports betting. This new position has positive implications for the future of online poker in the United States.

What is the Wire Act?

The Interstate Wire Act of 1961 is a federal law in the United States which prevents some types of betting and wagering via wire communication (i.e. telephones or the internet) across state lines. One basic purpose of the law is to prevent casinos in states where gambling is legal from accepting wagers on sporting events from individuals located in states where gambling is illegal.

The invention of online gambling has made interpretation of the scope of this law a matter of significant debate over the last several years. It expressly states that "the placing of bets or wagers on any sporting event or contest" is illegal, but games such as online poker seemed to fall into a strange legal area where it was impossible to clearly determine whether or not the law applied to them.

The DOJ's Decision

On Friday, the Department of Justice (DOJ) released an official legal opinion to clarify what the Wire Act actually covers. The opinion was drafted largely because several state-run lotteries were interested in selling lottery tickets online.

The official stance of the DOJ is that "Interstate transmissions of wire communications that do not relate to a 'sporting event or contest' fall outside of the Wire Act."

This means that online poker, as well as several other forms of online gambling, CAN operate while crossing state lines if the state in which the betting takes place has legalized online poker. If their decision had gone the opposite way, it would have been impossible for interstate or international online gambling to exist without the repeal or revision of the Wire Act.

What does this mean for the future of online poker in the US?

It is still difficult to fully understand the impact of this decision, but it seems clear that states now have the ability to legalize online gambling within their own states without the Federal government being able to object.

Furthermore, if several states each legalize online poker, it is conceivable that a shared player pool between them could exist. It may even be possible for US poker rooms to open their doors to international customers, a concept which seemed impossible based on previous Wire Act interpretation.

The state of Nevada has already legalized online poker, and poker sites are likely to be operational within their state borders in 2012. Other states may soon follow suit, especially now that they might not need to license and regulate their own sites - it may be possible to simply make it legal for their own residents to play on Nevada-run sites.

With states more likely to legalize online poker, the federal government itself might act more quickly on national legislation in order to make sure that it has the ability to regulate the industry itself.

Does this impact any Black Friday charges?

No. Preet Bharara, the U.S. Attorney for the Southern District of New York, did not include any Wire Act violations in the indictment against the operators of the three largest online poker sites. Therefore, the cases against them should be entirely unaffected by all of this.

PokerStrategy.com will continue to report on all major developments related to the US online poker market, and we'll be closely watching as Nevada licenses and regulates the first legal poker sites to operate within the United States.

by Matt Kaufman