US DoJ Changes View on Online Gambling

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2011 has been the toughest year for US online gambling. Following the closure of major online poker rooms in April this year, the online gambling traffic has hit an all time low and major online casino groups like English Harbour had to shut down. Now, in the dying moments of 2011 the US Department of Justice (DoJ) has given a huge ray of hope for the coming year.

The DoJ has announced that from now on the Wire Act of 1961 will apply only to online sports betting and not to online casino gambling or online poker. Readers will recall several legal actions and intimidations under the Wire Act against high profile online gambling operators like PartyGaming. Both individuals and online gambling operators have paid hundreds of millions of dollars to the DoJ and this change of heart will be little consolation for them.

The change of opinion has been attributed to a re-evaluation of the Wire Act by the Office of Legal Counsel, which functions under the DoJ. The re-evaluation followed queries from the states of New York and Illinois, which had asked in 2009 for the opinion of the DoJ regarding their plans to sell lottery tickets over the Internet. In a 13 page legal opinion written by Assistant Attorney General Virginia Seitz and dated September 20, 2011 the DoJ stated that the lottery plans of the two states did not have anything to do with sports betting. The opinion said, "Accordingly, we conclude that the proposed lotteries are not within the prohibitions of the Wire Act."

Another related announcement from the DoJ was that individual states had the authority to license and regulate intrastate online gambling that did not involve sports betting. This was in response to a letter written by Senate Majority Leader Harry Reid and Senator Jon Kyl asking for clarification on the legality of online gaming. However, the DoJ warned that in states that ban various forms of online gambling, it will be able to investigate and prosecute illegal online gambling operators under the UIGEA.

The online gambling industry experts feel that the DoJ has aligned its new view with several court decisions. This is a strong indication of a political move to shortly legalize at least online poker and possibly all online gambling. The online gambling industry hopes that the momentum created by this announcement will be carried forward. A statement released by the American Gaming Association said that the time is opportune for federal legislation to curb a proliferation of domestic and foreign, unlicensed and unregulated online gaming websites. Consistent regulatory standards and safeguards against fraud, underage gambling and money laundering should be put in place.

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