April 29th, 2017
US Attorney General Jeff Sessions could be about to be put the kibosh on US iGaming if recent reports are to be believed. Even before Sessions was voted into office following the election of Donald Trump, he'd already made his feelings about iGaming fairly clear and rumours suggest he hasn't changed his tune.
Although he stopped short of announcing any plans to overturn the current dynamic that allows states to control their own fate, he has said he was "shocked" by a 2011 move by the Department of Justice.
The issue Sessions wants to address essentially stems back to the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). Up until one day in April 2011, aka Black Friday, some operators remained active in the US in spite of UIGEA. As UIGEA only outlawed financial transactions between US players and online poker/casino sites, the games themselves were never illegal.
This was enough for some companies to find ways around the payment processing issues and stay operational. When the DOJ put a stop to this in 2011, it wasn't long before the state of Illinois was calling for the legal body to review the 1961 Wire Act. When the law was first penned, it was designed to stop telephone betting scams linked to horse racing.
In this sense it was never intended to cover online poker, casino games or, as the state of Illinois was interested in, lottery ticket sales. After reviewing the legal particulars, the DOJ concluded that online betting that wasn't linked to sports wasn't covered by the Wire Act.
"Interstate transmissions of wire communications that do not relate to a sporting event or contest fall outside the reach of the Wire Act," reads the DOJ's September 2011 summary.
Illinois' victory turned out to be US poker and casino players' gain as the verdict trumped UIGEA and, essentially, paved the way for state-by-state regulation. Indeed, following the official interpretation of the Wire Act, Nevada, Delaware and New Jersey all formed their own online gambling laws that have since allowed state residents to play via their desktops and mobiles.
However, it's this 2011 interpretation that Sessions claims he is "shocked" about. Despite the internet, let alone online betting, not existing when the Wire Act was conceived, the AG has suggested that doesn't matter. When Sessions indicated that he would consider revisiting the Wire Act ahead of his confirmation back in January 2017, a number of prominent bodies spoke out against the move.
From the online poker world, the Poker Players Alliance said that it would go against a sound legal judgement:
"A reversal of this decision would be a radical departure from the precedent given to the independent and legally based opinions generated by DOJ’s Office of Legal Counsel (OLC)," said PPA Executive Director John Pappas.
In addition to industry members speaking out against the decision, the National Governors Association wrote to Sessions to voice its concern over an iGaming ban. The collection of state governors, chaired by Terry McAuliffe and Brian Sandoval, essentially called for state rights and for Sessions to consider the effectiveness of current iGaming laws.
"We encourage you to take note of the current regulatory mechanisms put in place by the states to ensure that consumers and children are protected, and that licensees comply with strict standards of conduct. States are best equipped to regulate and enforce online gaming," read the 3 April letter.
Despite opposition from all sides, Sessions appears to be intent on enacting a federal ban on online betting. According to a report by the Huffington Post, "chatter on the Hill" is that Sessions hasn't altered his position and may be set to review the Wire Act in due course. While this may come as a concern to industry insiders and players in the US, Forbes has already described a federal ban on iGaming as a "tough sell".
Moreover, the AG has the pressure of state rights and a loss of tax revenue to contend with. President Trump is a known supporter of state rights and will likely be hard pushed to support a move that would essentially revoke them in favour of a federal decree. Additionally, Trump has previously hinted that he is in favour of online gambling.
Long before he was President, Forbes asked Trump about his thoughts on online gaming and his rhetoric seemed to echo the sentiments conveyed during his campaign i.e. the US is falling behind the rest of the world.
"Online gambling has to happen because many other countries are doing it and, like usual, the US is just missing out," Trump told Forbes in 2011.
Whether he still maintains this position is unclear, but this could be another reason Sessions will struggle to enact a federal ban on the industry. However, with anything possible in US politics, it looks like this sword of Damocles will be hanging over the industry for the foreseeable future.