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DOJ Changes Stands on Online Gambling

Tuesday, 25 March 2014 14:01    
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The Obama administration gave states and the gambling industry an early Christmas present December 23 in the form of a controversial Department of Justice (DOJ) opinion that reversed years of federal policy covering online gambling. As reported by Reuters News Service, previously the DOJ had held that “online gambling in all forms was illegal under the Wire Act of 1961, which bars wagers via telecommunications that cross state lines or international borders.”

The recent DOJ opinion, dated in September but released only in late December, makes the qualification that “[i]nterstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act.”

Law professor and gaming industry consultant I. Nelson Rose told the Times that the DOJ's opinion represented “quite a Christmas present” for both the online gaming industry and states who see Internet gambling as a potential tax revenue gold mine. “Given the continuing budget crisis, and so many states looking for ways to raise money, it’s really a major decision.” Writing on his blog site Gambling and the Law, Rose predicted that the DOJ opinion would mean the elimination of “almost every federal anti-gambling law that could apply to gaming that is legal under state laws.”

The 2006 law facilitated the high-profile federal takedown of three popular online gambling sites — Full Tilt Poker, PokerStars, and Absolute Poker — with the operators facing charges of fraud and money laundering. Because the three websites are based in Antigua and the Isle of Man, they are beyond the arm of American law. But because the companies running the sites had to use American banks to process the transactions of the millions of Americans who used the sites, the DOJ was able to charge the companies with violating the 2006 law that restricts such payment transfers. However, because the restrictions do not to apply to financial transactions within a state, the latest DOJ opinion opens the door to allow states to set up poker and other non-sports-related online wagering.

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