The rejection of the Department of Justice's Federal Wire Act puts the sports betting and online gambling scene at risk
On Biden's inauguration day, the Federal Circuit Court rejected the Justice Department's (DOJ) 2019 proposal to modify and improve the Federal Wire Act.
Back in 1961, Congress introduced the Interstate Wire Act of 1961, also known as the Federal Wire Act, which prohibits the operation of specific betting businesses in the US.
This was introduced due to their concern that sports betting and the bookmaking black market was providing sophisticated organised crime groups the power and wealth they needed to succeed.
Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.
The Wire Act introduced in 1961 was held for quite a substantial time, some 40 years, until Bush decided to make sure that the Act will cover all forms of online gambling, a position that the majority of legal experts disagreed with.
This resulted in the Wire Act returning back to its original roots in 2011 - covering sports betting only.
Controversially, however, there is a slight problem for those advocating for the legalisation of sports betting and online gaming. The issue - the lack of a comma in the Federal Act. This grammatical blunder has effected all types of online gambling which means that all the states that have legalised sports betting and mobile gambling, are violating the Act.
This led to the Department of Justice to set in motion "an opinion" in November 2, 2018, published in January 2019, looked to reverse the 2011 opinion, stating that the Wire Act's restrictions are "not uniformly limited to gambling on sporting events or contests."
Unfortunately the DOJ's 2019 reinterpretation of the Federal Wire Act has been rejected by the Court. This has raised concerns among professionals and gaming experts that this could bring an end to online gambling activities, online lottery ticket sales and mobile sports betting.
Sadly, this rejection comes at the same time when the US were finally opening up to sports betting and online gambling as many states were looking at these betting activities as an alternative source of tax revenue.
The clause is undoubtedly badly written - and federal courts usually look to language of a statute when clarifying the meaning. Therefore, the Wire Act may be stuck in a loop since there are many ways to interpret the content of the Act.
The questions one must ask are - Will the DOJ seek a rehearing? Will there be enough pressure from several states to turn the decision around? What will happen to the future of online gambling in the US - a sector that just started to take off? or will Attorney General Merrick Garland overturn the decision himself?
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