The Federal Wire Act's Impact On US Gamblers
Written into law on September 13th, 1961, by President Kennedy, The Federal Wire Act of 1961 was also known as the Interstate Wire Act. It was written to prohibit any businesses in the United States from transmitting wagers or gambling information through wire communications from in or out of state. It remains one of three primary federal USA gambling laws.
It was a time when wire communications were used by people all around the country and before the internet was invented. This page was created to explain the legal details of the law and how they have changed over the years to meet more modern technological demands in US online gambling legality.
The Original Intent Of The Wire Act
In the 50s and 60s, organized crime peaked, and the federal government scrambled to find ways to hamstring its profitability. One of the revenue streams of organized crime was illegal gambling.
Their profitability rose substantially when they started using wire communications to sanction bets from great distances, and the idea was struck in the minds of US federal legislatures. They could get the upper hand if they could stop organized crime from placing bets over wire communications. That’s precisely what they did. Wire communications applied to telegraphs and telephone conversations.
The Department Of Justice’s 2011 Formal Opinion On The Federal Wire Act
The Federal Wire Act was drafted before the Internet and, therefore, didn’t claim anything it could not have possibly understood or predicted. In September 2011, the Department of Justice issued a formal opinion regarding the Federal Wire Act’s out-of-date terminology and further defined its meaning to apply across the Internet as well. This made owning an online gambling business within the US illegal in the past.
However, it didn’t make all forms of online gambling illegal and instead was clarified in the same formal opinion to apply to sports betting alone. This opened up online casino businesses and poker rooms to the states that would legally sanction such online gambling businesses. Later on, in 2018, the Federal Wire Act came into question upon the rescission of PASPA.
It was clarified that the Wire Act would only prevent the occurrence of state-regulated online sportsbooks from accepting wagers from outside of their state, whether the wager is from another U.S. state, territory, or country.
What Was The Impact Of The DOJ Formal Opinion Of 2011 On US Gambling Laws?
While it once made owning online sports gambling businesses federally illegal in the United States, clarification was provided that actually strengthened the states' rights position concerning all other forms of state-regulated online gambling. The formal opinion by the Department of Justice actually lessened the scope of the Federal Wire Act, therefore allowing states’ rights to pick up the mantel concerning US-based online gambling initiatives.
One of the main effects of the DOJ’s clarification of the law's application was to define it as a sports betting-specific issue online, opening the door for states to regulate and legalize other online gambling ventures such as online casino games and poker rooms. States like New Jersey, Delaware, and Nevada have already acted in this manner and started regulating and legalizing such businesses.
What Was The Impact Of The DOJ Formal Opinion Of 2018 On US Gambling Laws?
In late 2018 the Department of Justice released another formal opinion on the Federal Wire Act. The new opinion makes the Federal Wire Act apply to all forms of gambling that cross state lines. This includes poker, casino gaming, sports betting, lottery games, and more. This opinion was met with swift legal actions brought upon by state officials and lawmakers.
The 2018 Wire Act opinion had little effect on states looking to enact domestic sports betting laws.
Can The Wire Act Really Be Extended To The Internet?
There has been some controversy on the fact that a federal law that was written before the time of the Internet can be extended across digital boundaries that were not yet defined by its time. Proponents of the legal online sports betting industry have argued that the US federal government is manipulating existing laws to serve their own desires because they wouldn’t have the political sway to get a new law created.
The argument also exists that organized crime, which was the reason the law was written to begin with, no longer exists in the forms that it did in the 50s and 60s and, therefore, no longer has any functional use. Opponents of legal online sports betting argue that the internet is just an extension of what the legislators back in 1961 were really trying to say. Communicating over the telephone and telegraph is essentially the same thing as communicating over the internet. The opposite argument for organized crime exists as well.
However, the new opinion on the Federal Wire Act limits the scope and reach of any modern organized crime that might look to the past for money-making models in the present due to its regulation only allowing state-regulated and licensed online sportsbook operations while preventing interactions between states concerning wagers, as well as, outside of the Us from being accepted at any state-based sportsbook.
What Is RAWA?
The Restoration of America’s Wire Act was introduced by Utah state representative Jason Chaffetz and South Carolina’s Lindsay Graham in the spring of 2014. The bill failed for good in January 2023. In essence, RAWA sought to render all forms of United States online gambling illegal. The rapid expansion of domestic sports betting has likely squashed RAWA for good.
Is All Online Betting Illegal?
It absolutely is not. Currently, owning and operating an online sports gambling business within the United States is federally illegal unless given permission and licensed by a U.S. state that has passed legislation to permit state-regulated sports betting activities. In addition, using a legally sanctioned USA online sports gambling provider that is legally regulated and located outside of US legal jurisdiction is 100% legal.
The same holds true for licensed US online casinos, US online poker sites, and US online bingo halls that operate outside of the United States. There are a few states that have legalized iGaming and permit online casinos and poker rooms to exist domestically.