In Bad News For Online Gambling, AG Sessions Might Be Eyeing Reversal Of DOJ’s Position

April 17, 2017
In Bad News For Online Gambling, AG Sessions Might Be Eyeing Reversal Of DOJ’s Position

The latest news for US online poker and gambling is not good. US Attorney General Jeff Sessions could be poised to change the current status of online gambling at the federal level.

What’s going on with online gambling at the federal level?

With the administration of President Donald Trump facing several investigations into alleged scandals, it looks like the pet cause of a billionaire casino mogul and mega-donor for the Republican Party — Las Vegas Sands chairman Sheldon Adelson — could jump to the front of queue at the Department of Justice.

Rumors are swirling that Sessions is considering overturning (paywall) the 2011 Department of Justice Office of Legal Counsel opinion that paved the way for states to legalize and regulate online gambling within their borders.

This is not a hot-button issue like health care or immigration. In the three states where online gaming has been legalized (Nevada, Delaware, and New Jersey) everything is running very smoothly, as is the case in the four states that have legalized online lottery since 2011.

Federal action on this issue has very little support and plenty of opposition.

Still, supporters of legal, regulated online gambling are concerned that the new administration and the ultra-conservative attorney general have shown a willingness to revisit the decision. A reversal would undo progress on protecting consumers and creating jobs and revenue.

Which is why…

…not many people want an online gambling ban

The bills seeking to ban iGaming introduced since 2014 possess the extremely rare mix of policies that rankle Republicans and Democrats alike. Both sides of the political spectrum call the bill crony capitalism.

Republicans, particularly the small government types such as the Freedom Caucus, see it as federal overreach and an affront to the 10th Amendment. Historically, gaming issues are the domain of individual states. A straw poll at CPAC indicated nine out of 10 Republicans oppose a federal online gambling ban.

For their part, Democrats see an online gambling ban as unnecessary federal regulation. They are also skeptical of anything openly pushed for by Adelson.

In the end, there are no redeeming aspects of a federal online gambling ban. It would:

  • Stifle business
  • Kill jobs
  • Leave states scrambling to replace lost revenue.

As Chris Grove stated in a Huffington Post column:

“Banning states from making their own choices on regulated online gambling is a terrible idea that represents federal politics at its very worst.”

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Failure on iGaming ban leads to a shift in strategy

Efforts to enact a federal online gambling ban are believed to largely be the work of Adelson. But attempts to pass such legislation have languished in Congress, gaining only modest support in the House of Representatives and the Senate.

With RAWA unable to gain traction, the supporters of a federal ban started looking for an alternative path to achieve their agenda. They turned their attention to the 2011 OLC opinion.

Sessions could reverse this opinion in much the same way it happened in 2011: through the Department of Justice at the behest of the attorney general.

But this would require an attorney general willing to take some heat, since overturning the decision would almost certainly lead to a legal battle, which even Sessions may have doubts the government could win. Such reversals are also exceedingly rare.

At his confirmation hearing, Sessions said he was “shocked at the memorandum” and would revisit it. But he also noted that even though he may not agree with it, the OLC opinion is likely on solid legal ground.

“Apparently there is some justification or argument that can be made to support the Department of Justice’s position,” Sessions said.

Scholars and lawyers who have looked into the matter agree: The OLC opinion is the correct interpretation of the law. Courts, in the couple of cases that have come before them, also agree. (See, for instance, In re Mastercard International Inc., 2002, United States Court of Appeals, 5th Circuit; U.S. v. Lyons, 2014, United States Court of Appeals, 1st Circuit.)

In the end, an attempt to overturn the 2011 OLC opinion could bring some closure to this debate. But it’s unlikely to turn out the way Adelson and online gambling ban proponents hope.

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