Federal decision could mean law may not bar Internet poker

The U.S. Department of Justice on Friday revealed that it has changed its long-held position and found that the federal Wire Act of 1961 applies only to sports betting.

The new opinion on the Wire Act represents a dramatic shift in policy for the Justice Department, which had long argued that the law made all forms of Internet gambling illegal, including poker.

"(The) admission by the Justice Department that current federal law is insufficient to protect against both off-shore and unregulated Internet gaming proves the clear and urgent necessity for federal action," said Alan Feldman, senior vice president for public affairs at MGM Resorts International, in a statement.

Feldman urged Congress to act, saying with this decision there will "certainly be an unprecedented growth of gambling that provides no consumer protection and permits unlicensed operators access to the U.S. market."

The opinion by the Justice Department comes after it was asked in 2009 to analyze the scope of the Wire Act by New York's lottery division and the Illinois governor's office regarding their plans to use the Internet and out-of-state processors to sell lottery tickets.

In a 13-page legal opinion written by Assistant Attorney General Virginia Seitz dated Sept. 30, the department noted that nothing in the materials supplied by the criminal division suggests that the New York or Illinois lottery plans involve sports wagers but were just lotteries. The opinion was posted Friday.

"Having considered the criminal division's views ... we conclude that interstate transmissions of wire communications that do not relate to a sporting event or contest fall outside of the reach of the Wire Act," Seitz wrote.

The department's conclusion could mean Internet poker isn't barred by any federal statute.

The opinion was announced a day after Nevada gaming regulators adopted rules that would let companies apply for licenses to operate poker websites in the state. A regulatory decision could establish Nevada as the lead regulator of the online poker business.

Washington, D.C., also allows Internet wagering within its borders.

David Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas, was more cautious in his assessment of the federal ruling.

"It lowers one barrier to the eventual growth of intrastate gaming, which will eventually lead to interstate poker," Schwartz said.

Also, the Justice Department on Friday issued identical letters to Senate Majority Leader Harry Reid, D-Nev., and Sen. Jon Kyl, R-Ariz., responding to their July 14 request for clarification of the department's stance toward the legality of online gambling in the United States.

The letter said that the Seitz opinion "provides much needed clarity to those state governments that would like to permit wholly in-state, nonsports Internet gambling, including Internet lotteries."

Assistant Attorney General Ronald Weich assured Reid and Kyl that the opinion "will not undermine the department's efforts to prosecute organized criminal networks."

"The significant majority of our current and past prosecutions concerning Internet gambling involve cases where the gambling activity is part of a larger criminal scheme," Weich wrote.

Supporters of legalizing and regulating online poker applauded Seitz's opinion.

John Pappas, executive director of the Poker Players Alliance, said it provides policymakers at both the state and federal level with the legal confidence to move forward with licensing and regulation of online poker.

"This is a much-needed clarification of an antiquated and often confusing law," Pappas said. "For years, legal scholars and even the courts have debated whether the Wire Act applies to nonsporting activity. Today's announcement validates the fact that Internet poker does not violate this law."

Pappas said the opinion makes it even more important that Congress act to clarify the law.

The American Gaming Association also chimed in with comment.

"The Department of Justice's interpretation regarding the scope of the federal Wire Act validates the urgent need for federal legislation to curb what will now be a proliferation of domestic and foreign, unlicensed and unregulated gaming websites without consistent regulatory standards and safeguards against fraud, underage gambling and money launderings," the American Gaming Association said in a statement.

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.