Online Poker and the Wire Act: New Jersey Demands Answers, Industry Stakeholders Weigh Options Online Poker and the Wire Act: New Jersey Demands Answers, Industry Stakeholders Weigh Options
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As the calendar moves towards June 14, the imminent threat to online poker in the US is prompting those with a vested interest to take action while others search for creative solutions that would allow online poker to flourish.

June 14 is the enforcement deadline set by the US Department of Justice by which online gaming operators must be in compliance with the new reinterpretation of the Wire Act. In January the Office of Legal Counsel for the DOJ released a revised opinion of the Wire Act stating that 1961 law applies to online interstate wagering activities beyond sports betting.

With interstate online poker under threat of being closed down and other forms of internet-related gambling in jeopardy even though the activities are explicitly legal in states such as New Jersey, Pennsylvania, Nevada and Delaware, interested parties including state government agencies benefiting from the millions of dollars in tax revenue being generated by online gaming are finding it necessary to take action in order to preserve their interests.

On Tuesday, New Jersey Attorney General Gurbir Grewal filed suit against the DOJ in an attempt to discover the motivation behind the reversal of the seven-year stance by the Department that the Wire Act restrictions were limited to sports betting.

The legal action taken by Grewal follows the failure by the DOJ to provide the requested documents or justify withholding them as is required to by law.

“Online gaming is an important part of New Jersey’s economy, and the residents of New Jersey deserve to know why the Justice Department is threatening to come after an industry we legalized years ago,” Grewal is quoted as saying in a press statement. “It’s especially important that we figure out whether this federal crackdown is the result of a lobbying campaign by a single individual seeking to protect his personal business interests.”

In support of the Freedom of Information Act Request (FOIA) filed in February, Grewal cited several media reports linking the DOJ U-turn to the lobbying efforts of billionaire casino tycoon and internet gaming opponent Sheldon Adelson.

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In particular, an article in the Wall Street Journal by Byron Tau and Alexandra Berzon connects an unsubstantiated 2017 legal analysis that the Wire Act applies to gambling beyond sports betting to an Adelson lobbying firm. The report also confirmed that the legal analysis was in the possession of “a top ranking official in the Justice Department” at the time it flip-flopped on its opinion of the Wire Act.

Despite being in violation of its own policy regarding FOIA requests, the DOJ continues to stonewall New Jersey citing only “unusual circumstances” as the reason for its noncompliance.

Working Around the Wire Act

Meanwhile, industry stakeholders are looking to ways to keep interstate online poker and other forms of igaming operational in spite of the revised DOJ opinion.

Representing the US igaming industry advocacy organization iDevelopment and Economic Association (iDEA) as an amicus curiae in the case of the New Hampshire Lottery Commission (NHLC) v. the United States Department of Justice, Ifrah Law has speculated that there may be two potential paths forward for online gaming operators looking to offer services across state lines.

In response to the law suit brought by the NHLC, the DOJ backpedaled a bit on its new interpretation stating that it is still reviewing “whether the Wire Act applies to State lotteries and their vendors.”

If in the end, the DOJ decides to exempt state lotteries and their vendors, Ifrah law sees the potential for states to avoid Wire Act restrictions by bringing igaming operations under lottery supervision similar to the way that online poker and casino games are structured in the state of Delaware.

“Whether or not the NHLC is correct that state lotteries and their vendors are beyond the reach of the Wire Act, such a workaround should not be necessary. The Wire Act and other federal gaming enforcement mechanisms were drafted with an intent to target gambling operations that were illegal under state law, and often times located offshore,” Andrew Silver of Ifrah Law told pokerfuse.

Another potential way for interstate online gaming to coexist with the latest interpretation of the Wire Act is by limiting its restrictions to those igaming operations deemed illegal under state law.

“Although the DOJ’s new interpretation of the Wire Act attempting to expand its reach beyond sports gambling is improper, it is likewise inappropriate for DOJ to target legal operators who have received the blessing of state governments, regardless of whether they are state vendors or private operators,” Silver continued.

An interpretation of the Wire Act that preserves states’ rights over their own gambling activities would align with other federal laws such as the Illegal Gambling Business Act (“IGBA”) and the Unlawful Internet Gambling Enforcement Act (“UIGEA”).

“Interpreting the Wire Act in the same way would harmonize with the traditional approach of using federal criminal enforcement mechanisms solely to help prosecute flagrant violators of state law, rather than to attack activity made legal by states,” Silver and colleague James Trusty stated in an Ifrah Law blog post.

A law supporting the efforts of the states to clamp down on illegal online gaming activity would also help protect consumers against unscrupulous actors. In addition, channeling those consumers to legal regulated operators would help state governments financially through tax revenues generated by its online gaming market.

Multistate Online Poker Continues for Now

Though the future of interstate online poker is in jeopardy, the US’s only multi-state online poker network, the All American Poker Network (AAPN), made up of 888poker, and three racino skins in Delaware, continues to operate.

Last week the World Series of Poker confirmed to pokerfuse that the first two of nine online bracelet events during the 50th anniversary series this summer will be open to players in New Jersey.

Those online events will take place before the DOJ enforcement deadline of June 14. The next online bracelet event after that is scheduled for June 16 and may be limited to players within the state of Nevada unless another extension is granted, an agreement with the DOJ is reached, or a favorable ruling is handed down in the courts.