One of the key questions posed in the aftermath of last week’s new Wire Act opinion published by the Justice Department’s Office of Legal Counsel (OLC) was, “Will this even have any effect on online poker?” It didn’t take long to find out the answer, as the Pennsylvania Gaming Control Board quickly sent a letter to the state’s casinos informing them of adjustments they need to make in light of the new Wire Act interpretation.
To quickly review, the Wire Act was passed in 1961 to try to stem organized crime, making sports betting over “wire communication facilities” illegal. With the advent of online poker, the Justice Department interpreted the Wire Act to include a ban on all interstate internet gambling. In late 2011, though, the OLC issued an opinion – responding to the Illinois and New York lottery commissions, who wanted to sell lottery tickets online – stating that the Wire Act did, in fact, only apply to sports betting (as is rather obvious by the Act’s text).
The DoJ was under a different administration back then, though, and the current one has been influenced by Las Vegas Sands CEO Sheldon Adelson, who is using his billions of dollars in wealth to try to stamp out online gambling. Hence, the new OLC opinion, which says all interstate online gambling is illegal.
In the letter, obtained by Online Poker Report, PGCB Executive Director Kevin O’Toole told the casino general managers and counsel, “Thus, with any forms of internet or mobile gambling, it appears that diligence in assuring that the transmission of bets and wagers, payments and credits as a result of bets and wagers, as well as the information assisting in placing those bets and wagers [subject to § 1084(b)], does not cross state lines is paramount.”
Pennsylvania casinos have likely been in the final stages of prepping for the launch of their online gaming platforms and now they have to rework their systems. State regulations permitted internet gaming operators to have their servers located outside of the state, provided they met certain specifications, but now, not so much.
“As a result of the Opinion and at this time, we no longer believe it is consistent with law as articulated in the Opinion to locate the interactive gaming devices and associated equipment in any jurisdiction other than in Pennsylvania,” O’Toole wrote.
While we fully recognize that this change may alter the plans of licensees in implementing expanded gaming offerings, it is a change not of the Board’s making but one commanded by the changing interpretation by federal law enforcement authorities. It is your obligation to comply with the federal law in all respects in establishing your gaming operations which must now be entirely “intrastate.”
These gaming operations also included payment processing, which almost certainly routed outside of the state for every operator. Now they have to figure out how to keep all internet traffic confined within state borders. It is likely possible, though all of it is probably a huge pain in the ass to change.
O’Toole also noted that U.S. Deputy Attorney General Rod Rosenstein issued a memo saying that operators should be given 90 days to get into compliance before the new Wire Act is enforced, but the PGCB wants to see compliance plans from operators within a month.