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NEWS 5 June 2019

Analysis: Wire Act reinterpretation’s credibility stripped at first genuine hurdle

By Tim Poole

I have a big announcement to make: I’m going to start calling chicken meat. It isn’t generally considered meat, rather poultry, but technically I can argue it is – so I’m going to change its meaning.

Think that’s pointless? Welcome to the world of the Department of Justice (DoJ).

When the DoJ reinterpreted the meaning of the Federal Wire Act in the US last November (only making it public a couple of months later), certain sectors of the gaming sector took guard. Was this going to impact casino and poker? Could this affect a wager made in a certain state even if the player was physically in that state, courtesy of payment transaction data crossing state borders?

The DoJ’s opinion was certainly successful in causing a tangible level of uncertainty within gaming.

As Gambling Insider explained at the time, the original Wire Act of 1961 outlawed all interstate wagers placed – or information passed on pertaining to wagers – via telephone or wired communication facility. Its primary aim was to combat match-fixing and, in 2011, was deemed by the DoJ to apply only to sports betting.

For some reason though, a reason which still doesn’t appear to have been formed by any kind of logic, the DoJ completely reinterpreted the exact same language in November, applying it to online casino, poker and lottery, too.

Becky Harris, former Chair of the Nevada Gaming Control Board, said at the time: "There is an interstate compact between Nevada, Delaware and New Jersey, where Nevada participates with regard to poker only, and that’s [now] in question."

Former Senator Ray Lesniak added: "If I go online to gamble on my phone [and] my internet connection goes through a transmitter out of the state, that can be considered a violation of the Wire Act. Same thing with payment processes."

In other words, there was real concern this new DoJ interpretation could be the cat among the pigeons. Share prices even fell for UK-based operators William Hill, Paddy Power Betfair (now Flutter Entertainment) and 888 Holdings, said to be directly linked to the reinterpretation. Why they would fall as a result made little sense, likely the aftermath of a misunderstanding among the general public.

But this is exactly what the reinterpretation did: create at the very worst panic and at the very least confusion.

State lotteries were next to ask where this new interpretation leaves them. That of course, was the best possible outcome overall, as it was New Hampshire’s lawsuit which prompted Judge Paul Barbadoro to this week conclude the Wire Act will only apply to sports betting.

Having issued a 60-page opinion on the matter, Judge Barbadoro said: "I hereby declare the Wire Act only applies to transmissions related to bets or wagers on a sporting event or contest. The 2018 Office of Legal Counsel opinion is set aside."

Good news however, almost created disappointment. Disappointment in the DoJ for wasting its time on such a menial issue, when it seems to have been pulled apart in the first genuine test of the November opinion's credibility.

Whether its intentions were to support the Coalition To Stop Internet Gambling or simply to slow an industry which is very much on the up, why did it even bother?

Naturally, the DoJ’s ability to appeal means this ruling is unlikely to be the end of the matter entirely.

But numerous US gaming execs in recent months have expressed their belief the Wire Act reinterpretation will not stand in the long term.

In April, Continent 8 CEO Michael Tobin told Gambling Insider the DoJ’s new opinion “borders on ridiculous.” More recently, SVP and Managing Director of Worldpay Gaming, Joe Pappano, also spoke to Gambling Insider about the gaming industry’s confidence of being unaffected by the reinterpretation (that interview is coming soon).

Now that a Federal Judge has so emphatically ruled against the DoJ, I just wonder what the point of its November opinion really was.

Alas, I shall return to calling chicken poultry.

RELATED TAGS: Online | Legal & Regulatory | Lottery | Feature
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