Former New Jersey Senator Raymond Lesniak (D-Union), a resilient gaming advocate who led both the state’s authorization of online gambling and sports betting, has been asked to prepare the state’s response to the US Department of Justice’s reinterpreted Wire Act opinion.
In November – but only publicly revealed this month – DOJ Office of Legal Counsel Assistant Attorney General Steven Engel reversed a 2011 opinion that said the 1961 Wire Act applied only to sports betting. Engel’s opinion concludes that the federal law applies to all forms of interstate gambling.
The restored opinion threatens the legality of online gambling in the three states were operations are up and running, and also the rapidly expanding sports betting industry.
The Wire Act bans the use of wire transmissions to send interstate or foreign bets “on any sporting event or contest.” While that wouldn’t seemingly impact intrastate online gambling and sports betting where players can only make wagers from inside state borders, Lesniak says technology complicates the issue.
If I go online to gamble on my phone and my internet connection goes through a transmitter out of the state, that can be considered a violation of the Wire Act,” Lesniak told NJBIZ. “Same thing with payment processes.”
Lesniak said New Jersey Senate President Stephen Sweeney (D) asked him to prepare the state’s Wire Act response.
Ray of Hope
Online gambling is big business in New Jersey, and has played a pivotal role in resuscitating Atlantic City.
Internet casinos won $298.7 million last year, the market’s all-time largest haul. Taxed at 15 percent, the state collected $44.8 million from online gambling. Since its legalization in 2013, online operations have accounted for more than $1 billion in casino win.
“We don’t want to lose the hard-fought gains that are helping to revive Atlantic City and the state’s gaming industry,” Lesniak told the Press of Atlantic City. “It looks like I will have to go to court again to straighten out the Justice Department’s overreaching on states’ rights, just as I did with sports betting.”
The Justice Department says states have 90 days to abide to the new opinion. However, in the interim, the DOJ will take comments from states like New Jersey.
Lesniak’s goal is to win a declaratory judgement that goes against Engel’s opinion. He’s also urging state lawmakers to file a lawsuit against the DOJ.
When the Wire Act was signed into law by President John F. Kennedy, the overarching goal of the bill was to crack down on organized crime – superficially the Mafia – from running sports betting and gambling operations. The internet was only in its earliest stages, and still decades out from becoming a part of everyday life.
“Laurel Loomis Rimon, a former Justice Department official, told Casino.org recently that Congress could “clarify the breadth of the act,” and modernize its language to “take into account online gaming and modern electronic transmissions.”
“I think it is likely that there will be a move in Congress to address the arguable ambiguity,” she concluded.