Early Christmas Gift: Department of Justice Changes Position on Internet Gambling

Written by:
C Costigan
Published on:
Department of Justice Changes Position on Internet Gambling

The DOJ was playing Santa Claus for the Internet poker industry coming into this Christmas weekend. 

The Department of Justice on Friday announced it has changed its long held stance related to Internet gambling.  The federal Wire Act of 1961 will now only apply to sports betting and not to online poker.

“The Department’s Office of Legal Counsel (“OLC”) has analyzed the scope of the Wire Act, 18 U.S.c  § 1084, and concluded that it is limited only to sports betting,” U.S. Deputy Attorney General James Cole wrote in a letter on Friday.

Nathan Vardi of Forbes.com writes: 

For years the Department of Justice’s criminal division argued that the application of the Wire Act went far beyond sports wagering. The previous position not only impacted state lotteries, it played an important role in the Justice Department’s ongoing legal battle with offshore online gambling firms, particularly those that offer for-money online poker to U.S. players.

The US Attorney in Missouri, Catherine Hanaway, had previously said that the Wire Act applied to all forms of Internet gambling.  Ms. Hathaway was responsible for taking down one of the largest Web sports betting firms, BetOnSports, back in July of 2006. 

“The Department of Justice’s view is and has been for some time that all forms of Internet gambling, including sports wagering, casino games and card games, are illegal under federal law. While many of the federal statutes do not use the term ‘Internet gambling,’ we believe that the statutory language is sufficient to cover it,” Hanaway said. “As we have stated on previous occasions, the department interprets existing federal statues, including 18 U.S.C. Sections 1084, 1952, and 1955, as pertaining to and prohibiting Internet gambling.”

The Justice Department’s previous position on the Wire Act has in the past been seen as the backbone of its argument that online poker violated U.S. law, Forbes.com’s Vardi noted. 

The Justice Department’s office of legal counsel is saying that the criminal division got it wrong on the Wire Act. “We conclude that the Criminal Division’s premise is incorrect and that the Wire Act prohibits only the transmission of communications related to bets or wagers on sporting events or contests,” the new legal opinion says.

Mark Hichar, a partner who heads the gambling law group at Edwards Wildman, told Forbes that the opinion could potentially open the floodgates for online poker sites. “The Department of Justice at long last has removed a cloud that existed with respect to intrastate Internet wagering and we have yet to see how far reaching its implications will be,” Hichar said.

- Chris Costigan, Gambling911.com Publisher