New Study Looks at the Implications of the Wire Act and Internet Gambling

The tone in Washington can be described as one of gridlock, and though that isn’t always a bad thing it can certainly cause some to be wary when issues that are bad for taxpayers or states’ rights begin to gain traction. One issue that continues to pop up is the move to pass a federal ban on Internet gambling. There have been voices speaking up on this debate and there have also been interesting alliances formed, leaving no doubt that more activity will arise as this issue progresses in the near future. The Taxpayers Protection Alliance (TPA) has already laid out specific concerns regarding any move on a possible federal ban and why it would be the wrong way to go regarding this issue. Preventing states from making their own decision on this issue, and using federal law as a means to regulate the Internet are two of the most obvious problems. Many have looked at the issue but there is a new study by Michelle Minton of the Competitive Enterprise Institute (CEI) that should renew interest and attention to this issue.

Minton’s study is a detailed look at the Wire Act of 1961, and how it fits in with what proponents of the federal ban on Internet gambling are attempting to do, including legislation (S. 2159: Restoration of America’s Wire Act) that was introduced in committee earlier this year. According to the report:

Members of Congress are attempting to use a 1960s-era law governing organized crime and sports betting to regulate one of the Internet-age’s favorite pastimes: online gambling. New analysis by Competitive Enterprise Institute consumer policy expert Michelle Minton delves into the history of the “Federal Wire Act” and why it was never meant to apply to online poker in the 21st century.

“Anyone concerned about over-criminalization or federal government encroachment on states rights should beware of this campaign aimed at eliminating online gambling,” said Minton, author of “The Original Intent of the Wire Act and Its Implications for State-based Legalization of Internet Gambling,” published by the Center for Gaming Research at the University of Nevada, Las Vegas.

Just a few months ago Minton appeared on the TPA podcast to discuss her prior work on the issue of internet gambling and also provide a preview of this recently released study. The introduction provides a historical context of the original Wire Act, while putting forth what has led up to the point Congress is at today and where they may end up:

Recognizing the growing threat of organized crime, then U.S. Attorney General Robert F. Kennedy sought to get the “bankrollers and kingpins” by introducing the Federal Wire Act in 1961, which sought to target the mob’s most profitable racket—bookkeeping on horseracing and sports gambling by prohibiting such gambling on the nation’s communication system at the time (telephone and telegraph). More than 30 years later members of Congress sought to use the Wire Act to stop the rise of casino-style gambling on the Internet. However, the scope of the Wire Act has been disputed among lawmakers, courts, and federal agencies. In 2011 the Office of Legal Counsel in the Department of Justice announced its belief that the Act applied only to sports gambling, dispelling ambiguity and opening the door for states to legalize intrastate non-sport online gambling, such as lottery ticket sales and Internet poker. This paper examines the historical context in which Congress enacted the 1961 Wire Act and the interpretation of the Act over five decades and its implications for present-day regulatory proposals.

The detailed history that Minton provides is just one part of what makes the study such a key piece of information when exploring the issue of internet gambling and looking at how solid the ground on which proponents of the ban stand actually is in context of their use of the Wire Act. Throughout the years as Congress has sought to interpret the Wire Act and adapting the law into an ever-changing landscape, it is clear that using the law as a means to ban Internet gambling at the federal level is questionable, at best. Page 7 of Minton’s paper notes:

Interpreting the Wire Act to apply to non-sports gambling creates a conflict between the Wire Act and the intrastate exception in the Un- lawful Internet Gambling Enforcement Act of 2006 (UIGEA).

TPA encourages everybody to read this study (click here), and read the prior work on our site related to Internet gambling (click here). The more information taxpayers are armed with on this fight, the better prepared everybody will be if and when the federal ban resurfaces.