The Future of Online Gambling in the US Hangs in the Balance

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In 1961, US federal legislators passed the 1961 Wire Act. The law sought to make it illegal for gamblers to use conventional wiring facilities to fund offshore gambling accounts. To be clear, online gambling has never really been considered an illegal activity. The Wire act simply made it illegal to send wire transfers or use credit cards to fund gambling accounts.

In 2011, the US Department of Justice (DOJ) offered the online gambling industry a bone when the department issued an opinion that stated the Wire Act was only applicable to online sports gambling. The new opinion made it possible for gamblers to fund online lottery, fantasy sports, horse racing, and casino accounts via Western Union, wire transfer, and debit/credit cards. This also made it easier for gamblers to fund sports betting accounts (wink wink). Instead of worrying about how to fund wagers, sports bettors only had to worry about things like securing better odds on in-play markets when betting on their favorite sports.

In a surprise move, the DOJ decided in January of 2019 to reverse the course. They now plan to uphold the Wire Act, covering the full spectrum of online gambling markets. The move comes in what appears to be a knee-jerk reaction to the US Supreme Court lifting the 2006 ban on sports gambling in the US. With the right to regulate sports gambling remanded to the state level, a number of states have already passed and implemented the necessary regulations.

In reality, the DOJ appears to be caught in the middle. On one side of the issue is a large number of states have already passed legislation to allow online lottery ticket sales, horse racing and playing of fantasy sports. Four states (New Jersey, Pennsylvania, Delaware, Nevada) have also passed legislation that legalizes online casino gambling and sports betting.

On the other side of the issue sits lobbyists, who are supporting Indian casino concerns and powerful land-based casino moguls like Sandy Adelson of the Las Vegas Sands Corporation. These gambling operators are in no hurry to see its business models interrupted by a dramatic increase in online gambling activities.

With the opponents set to square off in front of the US Supreme Court, the future of online gambling in the US hangs in the balance. Arguments from both sides are scheduled to begin in mid-April with a possible decision being released as early as mid-May.

The biggest concern for online gambling proponents in the potential loss of millions already spent setting up the infrastructure to allow state residents to easily fund their accounts and wager on pretty much anything without having to visit an actual brick and mortar gambling establishment. An adverse decision could be devastating to states like New Hampshire, which garners most of its lottery revenues through online transactions.

For the most part, this is all uncharted territory. The Wire Act was passed long before there was an Internet. The original intent was to keep gamblers from easily interacting with illegal bookmaking operations run by organized crime. There’s a lot riding on this ruling as the Supreme Court decides how to interpret Congress’ intent almost 60 years ago.

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