DOJ grants 90 day reprieve on Wire Act adjustments
US-facing operators were stunned earlier this week by news that the US Department of Justice (DOJ) is reversing the 2011 opinion on the 1961 Wire Act, the one that made online gambling legal. But late Tuesday, the DOJ granted a 90-day reprieve so that operators can adjust their businesses to the new rules, according to Fortune.com.
But what exactly are operators supposed to adjust? And, more importantly, why did the DOJ issue this surprise ruling in the first place and who was it really intended to serve?
The DOJ’s surprise re-interpretation of the Wire Act reverses a previous interpretation that stated the Act only applied to sports betting. This opened the door to all kinds of regulated online gambling in the US, including interstate lotteries, poker liquidity pools, and daily fantasy sports. Under the new interpretation, all interstate activities are no longer legal. This latest announcement gives operators 90 days to comply, but it’s a near certainty that this issue will be tied up in court for the foreseeable future.
One question that’s certain to arise in any court case is, why was the interpretation changed in the first place? After all, there hasn’t been a public outcry regarding online gambling and business seems to moving along nicely for US operators. Because the new interpretation so neatly serves the interests of casino magnate Sheldon Adelson, and came just days after an election in which Adelson gave more than $100 million to GOP candidates – it’s likely that lawyers will hone in on the crony capitalism side of the case.
This theory was supported in a fiery New York Daily News editorial by former Congressman Ron Paul, who called the move, “…one of the most brazen examples of crony capitalism since President Trump was elected,” (which is really saying something).
As of this writing, no formal legal challenges have been made to the ruling, but expect to hear a great deal more on this subject as the US online gambling industry mounts its defense against a very sketchy ruling.