Justice Department Determines Wire Act Not Applicable to Poker

The US Justice Department issued a ruling Friday that may spell good news for the future of online poker. According to the relatively low-key legal memo, the Office of Legal Counsel at the Department of Justice has made a determination that the Interstate Wire Act – the law most commonly cited by the government when attempting to prohibiting online gambling – only applies to bets made in regards to sporting events or contests.

This determination was not exactly groundbreaking. Passed in 1961, the Wire Act prevents the transmission of “bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest.”

It has always been clear that the Wire Act was designed primarily to target sports bets placed over the phone. However, the wording of the bill – which also allows for fines and imprisonment for communications that allow players “to receive money or credit as a result of bets or wagers” – had led the Department of Justice to interpret the law as prohibiting all forms of gambling by phone or internet.

But that interpretation has always been controversial, and some previous court rulings have suggested that – as intended – the law would only apply to sports betting. The Office of Legal Counsel has now come around to taking the same interpretation: that the “receive money or credit” portion is meant to apply to “any sporting event or contest,” rather than being taken as a separate clause.

“Reading “on any sporting event or contest” to modify “the transmission . . . of bets or wagers” produces the more logical result,” the OLC said. “The text could be read to forbid the interstate or foreign transmission of bets and wagers of all kinds, including non-sports bets and wagers, while forbidding the transmission of information to assist only sports-related bets and wagers. But it is difficult to discern why Congress, having forbidden the transmission of all kinds of bets or wagers, would have wanted to prohibit only the transmission of information assisting in bets or wagers concerning sports. . .”

The key to this ruling in terms of online poker is that it is now clear that no specific federal statue in the United States outlaws the game. That said, it doesn’t make all of the international online poker sites legal operators – so PokerStars, Full Tilt Poker and Absolute Poker are likely not off the hook – but it should help state and federal efforts to regulate online poker, since it should be clear that the Wire Act does not apply.