The Wire Act prohibits individuals involved in the business of gambling from transmitting types of wagering-related communications over “the wires,” which includes the Internet. It was originally enacted in 1961 and later clarified, in 2011, as a measure that is limited to having an effect on sports gambling.
On January 14, the Department of Justice came back to its prior clarification and made a switch in its position. It now says that the Wire Act is not limited to gambling on sporting events or contests. It has a lot of people wondering what the ramifications will be for those operating in the gaming space who had previously believed that the provisions of the Wire Act did not apply to them.
The key portion of the Wire Act states as follows: “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.”
What is the immediate effect of the new interpretation on the above? Not much, initially. Deputy Attorney General Rod J. Rosenstein will direct prosecutors to delay enforcing the new Wire Act opinion for ninety days. This gives people time to conduct internal diligence and determine whether any operating practices need to be altered.
After the ninety days are up, who should be concerned? People who operate lotteries that cross state lines, to be sure. It could also affect daily fantasy sports operations running contests across multiple states, as well as any marketing concerning any type of gaming that crosses state lines. One would think that strictly instrastate activity is immune from the scope of the Wire Act, but many seem to be somewhat unsure based on the new opinion provided by the Department of Justice.
Further, there seems to have been very little regulatory activity surrounding those who offer information surrounding gambling, specifically when it comes to sports wagering. It is unknown whether the Department of Justice’s new position will have any effect on enforcement in this area as well.
Online gambling, outside of gambling on sports betting, has become legal in states such as New Jersey, Nevada, Delaware and Pennsylvania. Other states have debated passage of similar legislation since the 2011 opinion was delivered on the Wire Act.