Change in Policy on Online Gaming by the United States Department of Justice

Department of Justice USABy changing the terms of the Wire Act of 1961 the United States Department of Justice has greatly improved the outlook for the future of the American online gaming industry. The Department of Justice has stated that from now on the Wire Act of 1961 will apply to online sports betting and will not be applied in the case of online gaming and online poker.
It released a legal opinion in December 2011 that “Interstate transmissions of wire communications that do not relate to “a sporting event or contest” fall outside the reach of the Wire Act”. This clarification was needed as several state-run lotteries wished to sell their lottery tickets on the internet. The Department of Justice issued a legal opinion stating that “ lotteries are not within the prohibitions of the Wire Act”.The Interstate Wire Act also known as the Federal Wire Act was enacted by Congress in 1961 to prevent certain types of betting operations in the United States. It was also to prohibit betting over wire communications across state lines so that casinos in states where gaming was legal couldn’t accept bets from players in states where betting was illegal. Until the Department of Justice released the recent legal opinion there were problems with the interpretation of whether the words “sporting event or contest” were applicable to internet gaming or not. Now it is clear that the Wire Act only refers to sports betting and not to online gaming or online poker.The Department of Justice has also recently announced that once sports betting is not involved, that individual states may legalize online gaming within their own state without fear of objections from the Federal Government. (See article: “New Jersey: Renewed Attempt to Legalize Online Gaming”).  There are indications that there is now a political will to legalise online gaming possibly starting with online poker.The online gaming industry suffered greatly in the first part of 2011 when almost 8 million dollars were seized by the FBI from processors working with the sites Absolute Poker, Poker Stars, Full Tilt Poker and Ultimate Bet. Also in April 2011 the domains of Full Tilt Poker, Poker Stars and Absolute Poker were seized on “Black Friday” and some poker site owners were arrested.

These events had a major effect on the online gaming industry but now the Department of Justice’s legal opinion clarifying that the 1961 Wire Act refers to sports betting and not to online gaming has positive implications for the future of the online gaming industry. The hope now is that online gaming will be legalised and regulated to prevent illegal operators entering the market.

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