Interstate Online Gambling
Though the Interstate Wire Act has been re-interpreted to allow some forms of online gambling, the DoJ still claims that the Wire Act makes Internet sports gambling illegal. Passed in 1961, the Interstate Wire Act continues to have a massive impact on the US gambling market more than fifty years later. Brian Sandoval and Delaware Gov. Jack Markell announced the first-in-the-nation deal on Tuesday. It creates a framework for regulating interstate gambling, and would eventually allow.
A piece of legislation aiming to correct an erroneous omission in the 2019 onlinecasino gambling law by allowing interstate onlinepoker cleared the House Regulatory Reform Committee on Tuesday.
The bill, SB 991, would allow upcoming Michigan-sanctioned onlinepoker sites to pool their players in Michigan with their players in another state where the platform also offers onlinepoker, pending all regulatory approvals. The new law would allow the Michigan Gaming Control Board to enter into agreements for interstate onlinepoker. It would be up to the board, as the bill wouldn’t require the MGCB to do so or provide any timeline for reaching such an agreement with another jurisdiction.
Currently, only the onlinepoker network from Caesars/888, operational in Nevada, New Jersey, and Delaware, shares online liquidity. Caesars is Nevada’s only iPoker operator, while New Jersey has three.
Michigan’s SB 991 is supported by both the state gaming control board and Flutter Entertainment, the parent of PokerStars. PokerStars is live in New Jersey and is currently the only onlinepoker site live in Pennsylvania. It’s likely to be the first poker platform in Michigan, but it’s unclear when iPoker will begin.
Online gambling launch coming in mere weeks
It’s looking like late December is when Michigan will see its first sportsbooks and casinos launch over the internet and on smartphones. It’s unclear if onlinepoker will begin on the first day the other online options become available. It took months for iPoker to join the online gambling mix in Pennsylvania.
SB 991, which cleared a full Senate vote nearly unanimously in early October, could find its way to Gov. Gretchen Whitmer’s desk and receive a signature by the end of the year. The law passing doesn’t mean PokerStars or any other onlinepoker operator could start pooling players with another U.S. state right away. It would likely take some time for the nuts and bolts of that arrangement to be hashed out. Pennsylvania still hasn’t allowed PokerStars to pool players with its sister site in New Jersey.
Michigan may move much more quickly than Pennsylvania, but interstate onlinepoker won’t be available right away. There were no details given about a timeline for actually having active interstate onlinepoker during Tuesday’s committee hearing on the legislation.
One wild card in the whole process of allowing multi-jurisdictional onlinepoker is the U.S. Department of Justice. Under the Trump DOJ, the online gambling industry had concerns about potential enforcement of the 1961 Wire Act, a law that was re-interpreted during the Obama years in a way favorable to online gambling firms. With a Biden Administration set to take office in January, a federal crackdown on gambling industry activity taking place across state lines appears a non-concern. This could lead to Pennsylvania finally pursuing interstate onlinepoker, which its 2017 gambling expansion law allowed.
Michigan state Sen. Curtis Hertel, sponsor of SB 991, said Tuesday that “the only way it [online poker] really works is if you have a robust” player pool. For Hertel, there is no point to onlinepoker in Michigan if the platforms licensed by the state can’t share liquidity with their sister platforms elsewhere.
He’s right. Though the pandemic has been a big boost to onlinepoker in New Jersey, growth for the game lags behind other forms of online gambling. Liquidity is the name of the game.
Hertel’s bill would not allow any Michigan onlinepoker site to use a network that includes players located overseas. Sharing players internationally would still be prohibited for a regulated site.
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Don’t let the window for bringing your business into compliance slam shut on you!
Interstate Online Gambling Websites
Originally published in The Green Sheet, April 22, 2019
Beginning in 2011, businesses involved in non-sports-related interstate ongoing gambling had good reason to believe that certain prohibitions pertaining to the knowing use of a wire communication facility to place bets or wagers, assist in placing bets or wagers, and/or transmit information assisting in placing bets or wagers did not apply to them. However, that is no longer the based on a new opinion that the Department of Justice’s (“DOJ”) Office of Legal Counsel (“OLC”) recently issued.
On November 2, 2018, the OLC issued an opinion (the “2018 Opinion”) that reversed an opinion it previously issued in 2011 (the “2011 Opinion”) with respect to the applicability and scope of Section 1084(a) (“1084(a)”) of the Wire Act, 18 U.S.C. § 1084, to sports-related gambling. 1084(a) states:
“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.”
The OLC determined in the 2011 Opinion that the prohibitions in 1084(a) were limited to sports-related gambling. However, the OLC determined in the 2018 Opinion that the prohibitions in 1084(a) are not limited to sports-related gambling. Rather, the OLC determined in the 2018 Opinion that only one specific prohibition in 1084(a) – which criminalizes “the transmission . . . of . . . information assisting in the placing of bets or wagers on any sporting event or contest,” is limited to sports-related gambling.
The OLC also determined in the 2018 Opinion that the other prohibitions in 1084(a) apply to non-sports-related gambling that satisfy the other elements of 1084(a). Those prohibitions include the knowing use of a “wire communication facility” for “the transmission in interstate or foreign commerce of bets or wagers” by someone “engaged in the “the business of betting or wagering”. In other words, the OLC has essentially determined in the 2018 Opinion that non-sports-related online interstate gambling is now illegal under 1084(a).
Related to the 2018 Opinion, the United States Deputy Attorney General recently issued a memorandum on January 15, 2019 (the “Memorandum”) advising DOJ attorneys that they should adhere to the 2018 Opinion, which is the DOJ’s operative position on the meaning of 1084(a). However, the Memorandum also advised DOJ attorneys that, as an exercise of discretion, they should refrain from applying 1084(a) in criminal or civil actions to persons who engaged in conduct that violated 1084(a) in reliance of the 2011 Opinion prior to January 15, 2019 (the date of the Memorandum), and for 90 days thereafter. The Memorandum notes that the 90-day window will give businesses that relied on the 2011 Opinion time to bring their operations into compliance with federal law. However, the Memorandum also emphasized that the 90-day window is an “internal exercise of prosecutorial discretion”, and that the 90-day window is not a safe harbor for violations of 1084(a) or the Wire Act.
Interstate Online Gambling Games
Businesses with operations that may be subject to 1084(a) have only very little time remaining to bring their operations into compliance with 1084(a), as the 90-day window for doing so will soon slam shut. Those businesses that fail to bring their operations into compliance with 1084(a) will soon be in violation of federal law for engaging in activities that would not have violated federal law only a few short months ago. Businesses with operations that may be subject to 1084(a) should consult an attorney as soon as possible to determine what is necessary to bring their operations into compliance with 1084(a) before the window for doing so slams shut.