The DOJ Legal Opinion Memorandum On The Federal Wire Act

official seal of the US DOJThis U.S. Memorandum given by the Department of Justice for its legal opinion over the Federal Wire Act absolutely transformed the US gambling market - twice.

In 2001, the DOJ intervened to change the United States online gambling market for the worst and, in fact, sent the market into the dark ages so to speak.

In 2011, the DOJ’s Formal Opinion on the Wire Act was released and gave a whole new meaning to the US gaming sphere on what constituted as prohibited under the Wire Act’s jurisdiction. Thanks to the DOJ’s Formal Opinion, access to allowing state-regulated online gaming emerged.

Why the Department of Justice Intervened

The Federal Wire Act has caused many debates throughout its passing regarding its context and interpretation. In 2001, the DOJ under the Bush Administration stated that the Wire Act encompassed all internet gambling which supported anti-gambling legislators’ efforts to put an end to online gambling. This statement along with later efforts by the UIGEA forced online gambling operators out of the US market.

Therefore, the DOJ’s recent intervention in reinterpreting the Wire Act provided much-needed clarification granting the individual US states the authority to determine their own destiny regarding state-regulated online poker and casino gambling.  The law also emboldened multiple licensed offshore online gambling operators to re-enter the US gambling market.

What Did the DOJ Opinion Change?

The Justice Department’s Formal Opinion Memorandum provided the much-needed clarification of the law’s application. The Opinion determined that the DOJ did not uphold the belief that the Wire Act extended itself beyond the jurisdiction of sports wagering.  This permitted states to pursue their own state-sanctioned online casino and poker initiatives.

The Department of Justice literally transformed the US online gambling market with their decision and opened the doors for US-based online casinos, poker sites, online lottery and more.

The only form of US-based online gambling entertainment that remained prohibited at the time the opinion was released was sports betting, however, this too has changed with the repeal of PASPA in May of 2018.

Numerous states then began offering state-regulated online casinos and poker such as Delaware, Nevada, and New Jersey for their residents and state visitors. The flexibility of the DOJ’s renewed opinion provided states the ability to explore interstate compacts and shared player pools.

These pools will no doubt will be commonly used in the future as more states join the regulated online gambling bandwagon, which may occur as states begin reporting annual tax revenue earned from state-licensed online gambling.

However, the DOJ’s opinion relevant to sports betting is now somewhat irrelevant. A previously active US gambling law known as PASPA prevented domestic physical sportsbooks in all but 4 states and has since been thrown out.

The immediate result is that states have churned out legal sports betting bills one after another since PASPA’s restrictions no longer prevent them from doing so. With the federal ban on domestic sports betting out of the picture, the application of the Federal Wire Act now only applies to inter-state betting, which is a component not addressed in the DOJ's memorandum.

With the new application of the Wire Act, numerous states have placed contingencies within their sports betting bills to allow online sportsbooks as well. To provide additional information, there is a Congressional hearing scheduled to discuss sports gambling and its implications and legality, but this hearing has been delayed as of this writing.