After the Monday report of the Justice Department which reversed its 2011 stance on interstate gambling, online gambling operators are left in jeopardy. Eight years ago, the Department under the Obama administration interpreted the Wire Act and said that online gambling between the states was not illegal. It has reversed the statement since then, suggesting that the Wire Act clearly prohibits any kind of gambling between the states.
The burgeoning online wagering sector is under stress because of the DoJ’s statement. The sports betting industry will remain relatively untouched since it wasn’t a part of the original 2011 interpretation as well. Online lottery offerings, casino games, and online poker will be drastically affected since some states started offering them interstate post-2011.
According to Jennifer Roberts, associate director of the International Center for Gaming Regulation at the University of Nevada-Las Vegas, the statement may have a significant impact, but it would depend on whether the DoJ wants to impose it strictly on the states or not. She noted that a very strict interpretation would shut down fantasy sports leagues, that have gained massive popularity in the recent years.
Roberts also said that even if the betting is taking place in a state where it is legal, if the communication is coming from another state, it would be qualified as illegal under the Wire Act. The 1961 act bans the use of telecom for gambling purposes in order to plug organized crime in the country. Since 2011, Delaware, New Jersey, Pennsylvania, and Nevada became a handful of states offering online gambling to the users.
There is no comprehensive breakdown available on the revenues that US online gambling operators make. However, New Jersey wagers improved by 22 percent to reach $298 million in last year. The largest portion of this revenue came from the online betting segment.
The Justice Department presented its new interpretation but did not make any statement about its seriousness towards its implementation. However, on January 15, deputy attorney general Rod Rosenstein said that prosecutions could begin in this case after 90 days. He noted that this 90-day window would provide the businesses that started providing these services in 2011 to make their operations comply with the federal law.
The US casino industry has been against the online gambling sector, even though some traditional gaming operators have moved towards online gambling operations. Caesars Entertainment and Golden Nugget are now taking online bets, which has now become easier since the smartphone market is becoming better.