by Andrew Walden
Just in time for the opening of the Hawaii Legislature, a US DoJ memo released December 23 overturns decades of legal interpretation and effectively legalizes intra-state online gambling as long as no sporting events are involved. The illegality of internet gaming was a key argument against efforts to legalize on-line poker in the last legislative session. Executives who had been lobbying Hawaii were subsequently indicted by the US DoJ.
Although laws cannot be changed by executive fiat in a democracy, the Obama administration’s sudden reversal of decades of legal interpretation will dictate federal enforcement inactivity at least until a new President orders the issue to be reinterpreted of Congress acts. In essence, the DoJ is stating how it chooses to enforce the existing law. Election Day is November 6, 2012. The next President will be sworn in on January 20, 2013.
Full Text of the memo: www.justice.gov/olc/2011/state-lotteries-opinion.pdf
Commentary and analysis:
CSM: Obama’s tax on the poor, Internet Gambling by States
December 27, 2011: A campaign by powerful gaming interests to legalize online gambling in America has won a crucial victory. On Friday, the Justice Department issued a legal opinion that allows states to authorize Web-based, nonsports gambling.
The 13-page memo opens a door to a host of problems.
Doubts remain over whether states can indeed restrain such digital games of chance to residents while also keeping children from playing them. And once enough states jump into Internet gambling, they will likely be able to create a national scheme for such activity. That would violate the spirit if not the letter of a 2006 federal law banning such interstate activity….
The memo was written by Virginia Seitz, head of Justice’s Office of Legal Counsel and a possible Obama nominee to the Supreme Court. To win Senate approval to serve on the court, she would need the support of Senate majority leader Harry Reid, D-Nevada. Last year, most of Nevada’s big casinos became big backers of an effort to overturn the federal Unlawful Internet Gambling Enforcement Act of 2006.
Still, Seitz’s opinion tries to make a case that the 1961 Wire Act – which deals with communication of bets – was passed only to prevent interstate betting on sports, allowing states to approve nonsports Internet gambling. Her opinion overturns decades of contrary interpretations under previous presidents.
… Regulatory safeguards to contain Internet gambling would require a vast and intrusive scheme.
read … Christian Science Monitor
A Present from the DoJ: Internet Lotteries (and Poker?) Are Legal
December 24, 2011 Gambling and the Law
The United States Department of Justice (“DoJ”) has given the online gaming community a big, big present, made public two days before Christmas. President Barack Obama’s administration has just declared, perhaps unintentionally, that almost every form of intra-state Internet gambling is legal under federal law, and so may be games played interstate and even internationally.
Technically, the only question being decided was, “Whether proposals by Illinois and New York to use the Internet and out-of-state transaction processors to sell lottery tickets to in-state adults violate the Wire Act.” But the conclusion by the DoJ that the Wire Act’s “prohibitions relate solely to sport-related gambling activities in interstate and foreign commerce,” eliminates almost every federal anti-gambling law that could apply to gaming that is legal under state laws.
If the Wire Act is limited to bets on sports events and races, what other federal anti-gambling statutes are left? There are prohibitions on interstate lotteries, but Powerball and the other multi-state lotteries show how easily these can be gotten around, even before Congress passed an express exemption for state lotteries. And poker is not a lottery under federal law.
So, all that are left are the federal laws designed to go after organized crime. These all require that there first be a violation of another law, like the Wire Act, the federal anti-lottery statutes, or a state anti-gambling law. If a state has expressly legalized intra-state games like poker, as Nevada and the District of Columbia have done, there is simply no federal law that could apply.
If the bettors and operator are all in the same state, and the gambling does not involve a sports event or race, the Wire Act cannot be used against the operator, even if phone wires happen to cross into another state. And if the state legislature has made the online game legal, it does not violate any other federal anti-gambling law….
read … Gambling and the law
New DoJ Interpretation Could Lead to State-by-State Online Betting, Despite UIGEA
Dec. 28, 2011 Digital Transactions
A 5-year-old law that bans U.S. banks and processors from handling online-gambling transactions won’t stand in the way of a U.S. Justice Department opinion released last week that appears to clear the way for intrastate online betting.
The DoJ on Dec. 23 released a 13-page memorandum giving states the authority to sell lottery tickets online within their states. Experts have interpreted the document as a green light for intrastate online poker and other wagering games as well, and have said cash-strapped states are likely to forge multistate agreements to allow individuals to use the Web to buy tickets or place bets across state lines.
The DoJ document, which was completed in September but not released until just before the Christmas holiday, came in response to requests for a ruling from New York and Illinois, which are looking to set up online lottery sales. The states were fearful of running afoul of the Wire Act of 1961, which is widely interpreted to ban electronic forms of betting. But the DoJ’s memo reads the Wire Act to apply only to online sports betting.
read … New DoJ Interpretation Could Lead to State-by-State Online Betting, Despite UIGEA
Related Issue: The Unintended Consequences of Internet Regulation