Inside Asian Gaming

INSIDE ASIAN GAMING | January 2012 42 the door to many forms of online gaming, including fantasy sports, skill games, and intra-state gambling. It was the last that led to the announcement by the DoJ. The UIGEA expressly allows states to authorise gambling when the bettor and operator are in that state. And it says to ignore the fact that communication wires might cross into another state. But the DoJ had always taken the position that the Wire Act outlawed all forms of gambling, and that this federal law applied so long as the gambling information crossed, even temporarily, into another state. The state lotteries of Illinois and New York asked the DoJ whether they could take lottery bets online, even though some of the payment processing took place in other states. And after the District of Columbia announced it had authorised online poker and other games, the current majority leader of the Senate, Harry Reid (D.-NV), and the second most powerful Senate Republican, Jon Kyl (R.-AZ), sent a letter, demanding that the DoJ do something about Internet gambling. The DoJ decided the only way out of its legal mess was to reinterpret the Wire Act. If this statute applied only to sports bets, then it wouldn’t matter if phone lines happened to carry lottery or poker bets into and out of other states. The conclusion by the DoJ that the Wire Act’s “prohibitions relate solely to sport- related gambling activities in interstate and foreign commerce,” eliminates one of the only federal anti-gambling laws that could apply to gaming that is legal under state laws. There simply are no other federal statutes that would make Internet poker and casino games illegal, even if the operators are in one state and the players in another, so long as the games are legal under the laws of those states. In fact, there is now no reason for states to limit their online gambling to residents of the United States. The Wire Act and the anti-lottery laws are the only federal anti- gambling laws that can apply to legal games. Every other federal anti-gambling statute is designed to go after organised crime. These laws are all written as applying only to illegal gambling. Any state that wants to, can now authorise Internet gambling and allow operators to take bets from residents of that state and of other states and nations that have also legalised online gaming. Questions remain. The Wire Act still applies to bets on horse races. In December 2000, Congress amended the Interstate Horseracing Act to expressly allow the states to decide for themselves whether their residents can make bets on horse races by phone and computer. More than half the states have passed laws allowing this remote betting, called Advanced Deposit Wagering, including across state lines. But theDoJ’s official position is still that the ADW operator and the bettor have to be in the same state. No one else, including the World Trade Organization, agrees with the DoJ. And payment processors have to figure out who is right. Another federal statute, the Professional and Amateur Sports Protection Act, grandfathers-in Nevada, Delaware and a half-dozen other states, while prohibiting any other state from legalising sports betting. This is now being challenged in the courts, because New Jersey voters approved sports betting in November 2011. What impact will all this have on proposed federal laws? Proponents are trying to spin the DoJ opinion. The Poker Players Alliance stated, “However, this ruling makes it even more important that Congress act now to clarify federal law, and to create a licensing and regulation regime for Internet poker, coupled with clear laws and strong enforcement against other forms of gambling deemed to be illegal.” But the reality is that Congressional U-turn—the US Department of Justice says gaming-wise the 1961 Wire Act only applies to sports betting, paving the way for an explosion of Internet gambling in the country Since states are now clearly free to legalise intra-state online poker, and perhaps even interstate, there is not much reason to even bother with a federal law. Gambling and the Law ®