U.S. DoJ Reverses Course On Wire Act Interpretation

This week the U.S. Department of Justice issued a new opinion on the Wire Act of 1961, stating that the law applies to both sportsbetting AND online betting, reversing a decision that came in 2011 and opened the way for states to offer online betting.

The opinion was released this week but was written on November 2nd, 2018 by Assistant Attorney General Steven Engel. The opinion is based on a piece of verbiage from the 1961 law, which reads in part that "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" is illegal under federal law. The opinion decides that the language applies to both sportsbetting as well as online betting, despite the internet not existing when the law was passed.

The decision overturns a 2011 opinion by former AG Eric Holder, who said that the text was ambiguous and said that it was logical to assume that the law was meant to only apply to sports wagers. That opinion opened the door for the state of New Jersey to pass online betting laws, which has proven to be very lucrative and is spreading to other states.

It's likely that states will challenge the opinion in court should the feds try to clamp down on their online and sportsbetting markets. In New Jersey, sportsbetting handle has already surpassed $1 billion, and the activity is providing a lot of tax revenues for cash-strapped jurisdictions.

We're keeping an eye on this story and will keep readers abreast on the developments.