by Michael Ryan, Jr. | The Wire Act. The Unlawful Internet Gambling Enforcement Act. The Professional and Amateur Sports Protection Act. Murphy v. NCAA. Department of Justice Interpretive Memos. State laws and regulations.
These are just a few of the federal and state legal issues at play as online gambling law continues to evolve.
Governor Raimondo, Senate President Ruggerio, and House Speaker Mattiello all support legislation authorizing mobile and online sports betting. And sports betting – both in-person and online – is projected to generate $30 million in state revenue in fiscal year 2020. Organizations with interests in the state budget process should be familiar with this new but important source of state revenue. It is a good time to take stock of the legal landscape surrounding online gambling.
Here’s what we know:
The federal Wire Act prohibits the use of “wire communications facilit[ies]” – including the internet – to place interstate “bets or wagers…on any sporting event or contest.” The Wire Act’s applicability to online gambling unrelated to sports has been and continues to be a contentious legal issue. Historically, the Department of Justice took the position that the Wire Act applied to both online sports gambling and other online gambling activities – like internet lottery sales, online poker, and other related activities.
In a 2011 memo, the Department of Justice reversed this long-standing position, interpreting the Wire Act as impacting only interstate online sports wagering. This narrow interpretation of the Wire Act survived until January 2019, when the Department’s Criminal Division issued a new interpretative memo reversing its 2011 reversal.
In other words, the Department returned to its original interpretation of the Wire Act as prohibiting all types of interstate internet gambling activity – not just sports betting.
The Unlawful Internet Gambling Enforcement Act — another federal statute – is also relevant. The UIGEA essentially prohibits financial transactions relating to internet gambling activity which is unlawful under either federal or state law. As best we can tell, this means the following:
(1) As discussed above, interstate internet sports gambling is prohibited under the Wire Act. Because the UIGEA’s definition of “unlawful” internet gambling “piggybacks” on existing federal and state law definitions of unlawful internet gambling, interstate internet sports gambling is prohibited under both federal statutes.
(2) Intrastate internet gambling appears to be permitted under 10th Amendment principles. Whether an intrastate system for certain games (namely poker) is financially sustainable in small states is another matter.
(3) Between 2011 – 2019, interstate non-sports gambling conducted online (e.g. internet poker) appeared to be permitted under the Wire Act and UIGEA under certain conditions. Interstate internet gambling appeared to be permitted so long as the type of gambling was allowed under the laws of the states where the wager was initiated and received.
(4) In light of the new DOJ memo, the legality of the Multi-State Internet Gaming Agreement – an interstate compact permitting interstate online poker – is in question.
The impact of the DOJ’s memo on state activity related to online gambling will unfold in the coming months. And only time will tell if either Congress or the court system have an opportunity to provide clarity to the Wire Act’s interpretive conundrum.
Michael Ryan, Jr. is an Associate with Duffy & Sweeney and is part of the DS Government Strategies team. Learn more or contact Mike here.