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DOJ Memo Reveals that Online Poker Does Not Violate Wire Act

Dec.23, 2011 10:52:PM
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The day after Nevada became the first state in the US to approve online poker regulations, it now appears one major obstacle has been overcome.  A memo released today by the US Department of Justice clarifies that the Federal Wire Act only pertains to sports betting.

The memo was originally drafted by Assistant Attorney General Virginia A. Seitz and released back in September.  It was one addressing proposals by both Illinois and New York to use the internet and out-of-state processors to sell lottery tickets.  The concern was that those transactions would violate the Wire Act.

There are two parts of this memo that are relevant to the defense of online poker.  The first proposes the following:

“you have asked whether the Wire Act and UIGEA prohibit a state-run lottery from using the Internet to sell tickets to in-state adults where the transmission using the Internet crosses state lines, and whether these statutes prohibit a state lottery from transmitting lottery data associated with in-state ticket sales to an out-of-state transaction processor either during or after the purchasing process.”

Directly after this is the statement that sent cheers through the online poker community:

“Having considered the Criminal Division’s views, as well as letters from New York and Illinois to the Criminal Division that were attached to your opinion request,1 we conclude that interstate transmissions of wire communications that do not relate to a “sporting event or contest,” 18 U.S.C. § 1084(a), fall outside of the reach of the Wire Act. Because the proposed New York and Illinois lottery proposals do not involve wagering on sporting events or contests, the Wire Act does not, in our view, prohibit them.”

Furthermore, later in the document the memo addresses subsection 1804(a) of the wire act.  This clause is commonly uses against online gambling as it involves bets and wagers.  It reads:

“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.”

Without going into all the reasons why, the memo answers the confusion regarding the subsection as follows:

“It is less clear that the “sporting event or contest” limitation also applies to the first part of the first clause, prohibiting the use of a wire communication facility to transmit “bets or wagers” in interstate or foreign commerce, or to the second clause, prohibiting 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.” Id. For the reasons set forth below, we conclude that both provisions are limited to bets or wagers on or wagering communications related to sporting events or contests.”

To view the brief in its entirety, check out justice.gov.

The memo has been heralded by many in the poker community, including the Poker Players Alliance who were quick to comment.  Executive Director John Pappas stated, “This is a much needed clarification of an antiquated and often confusing law. For years, legal scholars and even the courts have debated whether the Wire Act applies to non-sporting activity. Today’s announcement validates the fact that internet poker does not violate this law.”

With a major hurdle cleared in the fight for online poker legislation, many look forward to other states as well as Congress moving forward with online poker legislation.  Whether it will happen in 2012 remains to be seen, but at least one major barrier has been removed.