On Friday, the Department of Justice (DOJ) reversed its previous stance on the Interstate Wire Act of 1961, often called the Federal Wire Act, saying that interstate bets that are not related to a "sporting event or contest" are not prohibited by the Wire Act. The Wire Act therefore does not relate to online gambling the DOJ has said.
Richard D. Bronson, Chairman of U.S. Digital Gaming (USDG), said the change would give states the ability to legally operate online gambling beginning with poker and also sell lottery tickets on the Internet.
The Interstate Wire Act of 1961 in art reads as follows: (italicized)
Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for 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, shall be fined under this title or imprisoned not more than two years, or both.
It might be suggested, however, that the phrase "or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers" speaks to all forms of gambling inclusive of online poker. The U.S. Fifth Circuit Court of Appeals has, however, ruled that the Wire Act prohibition on the transmission of wagers applies only to sports betting and not other types of online gambling.
The DOJ released a 13-page legal opinion dated September 20, 2011, written by Assistant Attorney General Virginia Seitz in response to a 2009 request by New York's lottery division and the Illinois governor's office to analyze the application of the Wire Act to their plans to use the Internet and out-of-state processors to sell lottery tickets. The opinion noted that "nothing in the materials supplied by the Criminal Division suggests that the New York or Illinois lottery plans involve sports wagering, rather than garden variety lotteries. Accordingly, we conclude that the proposed lotteries are not within the prohibitions of the Wire Act."
A co-founder of Absolute Poker, was charged in April, along with the founders of PokerStars and Full Tilt Poker, of breaking a variety of U.S. laws, including money laundering and illegal-gambling offenses. Those three websites were the largest poker sites operating in the U.S. at the time.
"This is 'Exhibit A' as to why we need to have a fully-regulated, above-board gaming industry in this country that operates in the light of day and within the context of the law," explained Richard Bronson.