Online poker's future brightens as DOJ drops Wire Act appeal

Jon Pill
Posted on: June 22, 2021 11:35 PDT

The clock ran out for the Department of Justice's controversial 2018 memo on the Wire Act yesterday. The DOJ had until June 21, 2021 to appeal the previous court decisions against the memo. They have not exercised that option.

This is a huge coup for online poker.

The 2018 interpretation of the Wire Act could have entirely outlawed interstate gambling. As a result, it threatened the combined player pool of New Jersey, Nevada, and Delaware. The 2018 change also most likely spurred Pennsylvania and Michigan to stall their decisions to join the pool. We may now see MSIGA expand to five states instead of three.

The Wire Act memo may also have had a wider hidden influence on how lobbyists pushed for online poker in other states.

The memo would have empowered the DOJ to look more closely at grey market sites like ACR, which serve customers in the United States but are currently unregulated. This is because regulation of gambling is delegated by the Federal Government to the State Governments, not all of whom have legislation on the books about online poker.

With the worries about the Wire Act tidied up, we will hopefully see the MSIGA agreement expand. We'll also likely see a few other advances in interstate online poker. This should instill the wider U.S. online poker scene with greater confidence.

Poker players were quick to respond. Kevin Mathers tweeted: "The deadline for the US DOJ to appeal a January ruling that the Wire Act applies only to sports events expired yesterday [...] Does this mean we'll hear Michigan and Pennsylvania join Delaware, Nevada and New Jersey in the MSIGA in the near future?"

Whence the Wire Act?

The Wire Act was one of the instrumental pieces of legislation — along with UIGEA — that allowed the DOJ to perpetrate Black Friday against the online poker community. On April 15, 2011, the DOJ moved against Full Tilt Poker and PokerStars on a range of charges. The online poker they provided was not the problem, so much as the way payments were processed. The charges were extensive and the prosecution didn't end until last year, when Isai Sheinberg was finally tried.

This is the context in which most poker players view the Wire Act.

In fact, the Wire Act's history goes back to 1961, when it was put in place to kill sports betting across state lines. Late interpretations expanded that to include all forms of betting, but in September 2011 — too late to save Full Tilt — the DOJ ruled that the Wire Act did not apply to "interstate transmissions of wire communications that do not relate to a 'sporting event or contest.'"

This was good news for online poker operators, and allowed the grey market to begin to return. It also removed certain powers from the Federal Government. "Interstate transmissions of wire communications" — like the real money pots of an online cash game — were now the business of the states.

This all more or less created the current landscape of patchwork regulation, prohibition, and semi-legal toleration the U.S. enjoys today.

The 2018 Memo

The more permissive climate changed in 2018, when the Trump DOJ drafted a memo that undid the 2011 interpretation.

The Trump memo began to threaten state lotteries that took payments across state lines. It also threatened the combined online poker player pool. The memo also had the potential of turning the U.S.' grey market for online poker into a black market.

The exact source of the memo remains untraced. However, the Trump family has extensive ties to the brick-and-mortar casino industry. And many Republican donors — including the late Sheldon Adelson — were outspoken anti-online gambling campaigners.

Whatever the source, the result was that the New Hampshire state lottery was potentially in trouble. So the state sued to have the memo repealed.

New Hampshire won, but the DOJ appealed. Then, fortunately for New Hampshire, the administration changed. The Democrats are not as aggressively-funded by anti-gambling puritans or the casino lobby. So the matter appears to have been dropped for now. The Biden DOJ did not appeal the ruling, and the law has reverted to the 2011 interpretation.

Hopes are high but hedged, with industry professionals writing things like: "I think the law is clear. The Wire Act does not apply to non-sports betting. But you are correct that iGaming may never be free from politically motivated shenanigans."

In some ways, it's a small victory for online poker. But it prevented a much larger defeat.