The US Department of Justice can’t seem to make up its mind about the legality of online gambling. For the third time since 2002, the DOJ recently modified its interpretation of the federal Wire Act.
The latest, restrictive opinion from the Office of Legal Counsel is widely believed to originate with Sheldon Adelson. The casino magnate and political mega-donor has overtly fought to ban US online gambling since 2013.
Below is a full timeline of the battle between Adelson’s allies in the federal government and the spread of legal internet gambling.
At the behest of the Illinois and New York lotteries, the DOJ’s legal counsel reexamines federal law as it pertains to online gambling.
Following the review, an opinion written by Assistant Attorney General Virginia Seitz clarifies that the 1961 Wire Act applies only to sports betting. Her opinion runs counter to a 2002 DOJ policy memo which had broadened its scope.
The 2011 OLC opinion paves the way for states to legalize online lotteries, casino games, and poker within their borders. And several states jump at the opportunity.
Spurred on by the 2011 OLC opinion, several states authorize and launch online lotteries and online casino games. By 2013 online gambling is live in:
The spread of online gambling doesn’t go unnoticed.
The website stopinternetgambling.com launches. The site and the advocacy group will later morph into the Coalition to Stop Internet Gambling.
The man behind the anti-online gambling movement is Las Vegas Sands owner Sheldon Adelson. His CSIG begins life as a rather discreet lobbying arm for Sands. As time wears on, though, Adelson escalates the group’s involvement in gambling policy.
Opposition comes to a head as New Jersey prepares to launch full-scale online gambling on November 21, 2013. Just before the big day, Adelson moves his anti-online gambling message into the public domain.
The Washington Post reports that the casino magnate has hired a team of “lobbyists and public relations experts in Washington and in state capitals nationwide” to “persuade Congress to ban Internet betting.” Adelson argues that online gambling is a “danger to society and could tarnish the industry’s traditional business model.”
The Post goes on to divulge Adelson’s plans for a public campaign that casts online gambling in a negative light:
“In January, Adelson plans to roll out an advocacy group, the Coalition to Stop Internet Gambling, that aides say will include advocates for children and others who are considered vulnerable to the temptations and potential harms of online betting.”
Soon after the launch of online casinos in New Jersey (and Delaware), Adelson takes to the pages of Forbes. The billionaire political donor says he’s “willing to spend whatever it takes” to stop online gambling.
“My moral standard compels me to speak out on this issue because I am the largest company by far in the industry and I am willing to speak out. I don’t see any compelling reason for the government to allow people to gamble on the Internet and nobody has ever explained except for the two companies whose special interest is going to be served if there is gaming on the Internet, Caesars and MGM.”
A united front forged by the American Gaming Association and the Poker Players Alliance carry an online gambling hearing before a Congressional subcommittee.
One of Adelson’s top lieutenants is on hand to push the anti-online gambling message, but it falls on deaf ears.
Andy Abboud is dragged over the coals during the hearing by two members of the committee, Rep. Joe Barton (R-TX) and Rep. Jan Schakowsky (D-IL). After calling on Congress to ban online gambling, Barton and Schakowsky note that Sands’ stance against online gambling is hypocritical considering the casino offers mobile sports betting in Nevada.
Abboud is the subject of scorn at the hearing, but he and his boss will ultimately have the last laugh.
The first inkling of Adelson’s strategy emerges when a draft of the Internet Gambling Control Act is leaked. After receiving a new name, the draft eventually makes its way to Congress.
Several prominent legislators join the calls for a ban. In addition to supporters in Congress, no less than five governors pen letters supporting a federal prohibition of online gambling during 2014.
Adelson enlists federal lawmakers to push his online gambling prohibition in Congress.
The Restoration of America’s Wire Act (RAWA), which he backs, is first introduced by Rep. Jason Chaffetz (R-UT) in the House. A companion bill is later introduced in the upper chamber by Sen. Lindsey Graham.
The bill gains a bit of traction during the lame duck period at the end of 2014 but is ultimately scuttled. Similar efforts will emerge in subsequent legislative sessions.
Online gambling becomes a wedge issue among members of the American Gaming Association. With the debate threatening to fracture its membership, President Geoff Freeman and the organization abandon ship.
The about-face garners plenty of criticism, considering the AGA was publicly opposing Adelson as late as January 2014. The trade group’s new position is one of “no position” when it comes to online gambling.
With the AGA sitting on the sidelines — and Adelson making good on his promise to “spend whatever it takes” — online gambling progress comes to a grinding halt across the country.
In an effort to remove one powerful opposition group, RAWA 2015 takes on many forms.
Supporters toy with the idea of giving state lotteries a carveout and even a RAWA-lite version that would impose a moratorium on new online gambling laws. None of these changes work, and the legislation never gains momentum.
Things get even worse for RAWA proponents at hearings in March and December. Committee members on both side of the aisle criticize the bill for a variety of reasons, ranging from crony capitalism to 10th Amendment concerns.
At the end of the day, the hearings have the opposite effect the bill’s sponsors hoped for.
By 2017, online gaming opponents have fully shifted away from legislative efforts like RAWA. The new strategy? Overturning the 2011 OLC opinion.
As he did during Loretta Lynch’s 2015 confirmation hearing, Sen. Lindsey Graham peppers Attorney General nominee Jeff Sessions about online gambling during his confirmation hearing. Sessions says he is “shocked” by the 2011 opinion and tepidly indicates he will review the matter.
That, coupled with his ardent opposition to gambling of any kind, causes concern within the industry and among some advocacy groups.
The Wire Act and Sessions’ plan to review the 2011 OLC opinion largely fall off the radar for most of 2017 and 2018. The issue will return with a vengeance in 2019, though.
Online Poker Report is first to confirm the existence of a new OLC opinion, but odds are against it seeing the light of day.
The general consensus is that the DOJ would be loath to tighten the screws on online gambling — a cause championed by a Republican mega-donor — in a hyper-polarized political climate amid a period of upheaval at the Justice Department.
How wrong we were.
A couple weeks later, the DOJ makes it official.
The Department publishes its new opinion on the Wire Act, broadening its scope to apply to all forms of interstate online gambling. The opinion was penned during Jeff Sessions’ tenure as Attorney General, but it is released under the watch of acting AG Matthew Whitaker.
Pushback is immediate and wide-ranging.
The most consequential action, though, is the New Hampshire Lottery Commission filing a federal lawsuit against the DOJ. The filing makes a strong case against the new opinion, and the battle over the Wire Act will be fought in the First Circuit.
It’s a big day for the industry. US District Court Judge Paul Barbadoro listens to the plaintiffs (the New Hampshire Lottery et al.) and defendants (the DOJ) make their cases in Concord.
The judge is far more sympathetic to the plaintiffs’ arguments, but a ruling in their favor is far from a certainty. Barbadoro calls the issue “one of the most challenging statutory constructions” he’s seen in 26 years as a jurist.
“I have to get it right,” he says. “I have to do my best to get it right, and that’s going to take some time because it’s a complex issue.”
And now we wait.
“I hereby declare that § 1084(a) of the Wire Act… applies only to transmissions related to bets or wagers on a sporting event or contest. The 2018 OLC Opinion is set aside.”
Those words are part of a scathing 60-page District Court ruling issued by Judge Barbadoro in favor of the plaintiffs. The judge declares that the Wire Act does not apply broadly to online gambling, and the DOJ’s 2018 opinion does not apply to the New Hampshire Lottery Commission or its vendor, NeoPollard.
What the ruling means for other parties in other jurisdictions remains to be seen.