Federal WIRE ACT: What It Means for Online Poker and Gaming
Online poker players and gamblers often encounter the Federal Wire Act while researching the legalities of real money online gaming in the United States. This much-misunderstood legislation is often cited as making internet poker illegal in the United States.
However, this is far from the case. Any proper reading of the Wire Act indicates that it does not criminalize online poker or online casino games for that matter. The only type of gambling affected by the Wire Act is sports betting and then only if the betting information crosses state lines.
Text of the Wire Act
Before going into any lengthy explanations of what the Wire Act is or isn't about, we must first cite the text we're talking about. After all, the actual words on the page matter foremost when attempting to understand any law. The Wire Act, after being passed by Congress and signed by JFK in 1961, was added as a new section 1084 to Chapter 50 of Title 18 of the U.S. Code.
The Wire Act now (after minor alterations over the years) has five subsections, and it is the first one (a) that we're interested in:
18 U.S. Code § 1084 - Transmission of wagering information; penalties
(a) Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility
for the transmission in interstate or foreign commerce of bets or wagers
or information assisting in the placing of bets or wagers on any sporting event or contest,
or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers,
or for information assisting in the placing of bets or wagers,
shall be fined under this title or imprisoned not more than two years, or both.
We can see that the Wire Act basically prohibits four types of activities, grouped loosely into two clauses. We have taken the liberty above of separating them out into different lines of text for ease of comprehension, but most published versions of the Act instead present this portion of the Wire Act as a single, unseparated paragraph.
President Kennedy Signing the Wire Act and Related Bills, Sept. 13, 1961Who Does the Wire Act Target?
Although there has been a lot of confusion over other aspects of the Wire Act, the question of who can be prosecuted under its provisions is straightforward, and the answer is found in the opening words: “Whoever being engaged in the business of betting or wagering…” It's clear that this law is directed squarely at those running betting or wagering enterprises. It in no way penalizes individual players.
Even under the harshest interpretations of the Wire Act, you are totally safe legally if you elect to play online poker or do any other type of internet gambling. This is a common theme among federal anti-gambling statutes, which are almost always concerned with prosecuting the higher-ups at gaming conglomerates rather than ordinary gamblers.
What Does the Wire Act Prohibit?
The language of the Wire Act, although somewhat unclear on a few points, is pretty simple overall. It proscribes transmitting certain bets or wagers or info pertaining to bets or wagers via a “wire communication facility.” In order to fall within the ambit of the Wire Act, this information has to cross international or state boundaries. Thus, wagering that takes place within a single state is perfectly acceptable under this law although, of course, other federal or state laws may criminalize certain forms of single-state betting.
What exactly constitutes a “wire communication facility” is open to debate. At the time the Wire Act was drafted, this referred mainly to telephone and telegraph services. In more recent years, the courts have held repeatedly that the internet falls into this category too. This is why the Wire Act has relevance with regard to online real money online gaming.
Differing Interpretations
The aspects of the Wire Act that we have thus far discussed are clear and uncontroversial. You may be wondering what all the fuss is about. Well, it’s the “bets or wagers” referenced repeatedly throughout the Act that are key to the various incompatible readings of it.
The second part of the first clause of the Wire Act talks about “bets or wagers on any sporting event or contest,” but the other parts of the text deal with “bets or wagers” while omitting the language about “sporting event or contest.” There are two main interpretations put forward by lawyers, judges, and other legal experts who have been involved in Wire Act litigation:
- The second part of the first clause of the Wire Act applies to sports betting alone while the remaining parts of the law apply to all “bets or wagers” whether those “bets or wagers” be on lottery tickets, poker action, casino games, or sports events.
- The entire Wire Act applies only to sports betting – the qualifying verbiage “on any sporting event or contest,” while explicitly stated only once, is implicitly included in the other portions of the text to similarly restrict the other clauses of the legislation.
Those who follow the first school of thought believe that all bets or wagers that cross state lines are illegal. This would include state lotteries selling tickets to those in other states, online casino and poker games involving participants in multiple states, and betting on sports with an out-of-state bookie.
The second way of reading of the Wire Act, however, means that only sports betting is disallowed. Other forms of real money gaming, like casino, poker, and lottery wagers, are unaffected by the Act.
Which Interpretation Is Correct?
There is no clear-cut answer as to how the Wire Act should be read, and varying jurisdictions and law enforcement agencies have subscribed to different philosophies on this topic over the years. Indeed, the Department of Justice's frequent flip-flopping on this issue has caused a great deal of consternation within the gaming industry as online lottery, poker, and casino providers were left wondering whether or not they could be prosecuted under the law.
In the past couple of years, however, a broad-based consensus has emerged. A large number of gaming lawyers, state attorneys general, and federal judges have opined that the Wire Act only impacts sports betting and does not criminalize poker, casino gaming, or lottery sales. These interpretations haven't just been circulated privately but have been put to the test of actual litigation.
The case of New Hampshire Lottery Commission v. Barr saw The Granite State sue the Department of Justice because the DoJ was of the view that the Wire Act applied to other types of betting besides wagering on sports, and New Hampshire disagreed. The case was decided in New Hampshire's favor in June 2019 by District Court Judge Paul Barbadoro, and this verdict was upheld on appeal in January 2021, providing a precedent that the Wire Act deals only with sports betting.
Judge Barbadoro Ruled in Favor of New Hampshire and Against the DoJA similar lawsuit was brought forward against the DoJ in November 2021 by IGT, a supplier of online lottery and casino solutions. The issues were very similar to those raised by the New Hampshire Lottery Commission case, and it was similarly decided against the DoJ in September 2022. The opinion in this instance virtually repeated that of the previous New Hampshire decision: The Wire Act applies only to betting on sports.
The Wire Act Today
At present, we have two major district court decisions – and an appellate verdict too – that confirm that the Wire Act is only applicable to sports betting. Multi-jurisdictional online poker is not prohibited by the Wire Act, and neither are lotteries or online casinos that do business across state and national borders.
Check out what expert jurists have had to say about the Wire Act:
…I construe all four prohibitions in § 1084(a) [The Wire Act] to apply only to bets or wagers on a sporting event or contest. – Federal District Court Judge Paul Barbadoro, June 3, 2019
…The Wire Act applies only to “bets or wagers on any sporting event or contest.” – Federal District Court Judge William E. Smith, Sept. 15, 2022
Thus, the courts, in the past few years, have been clear that the Wire Act applies to sports betting and sports betting alone. Among the few to have recently taken the contrary position have been certain officials in the DoJ, but their viewpoint has been resoundingly defeated not once, nor twice, but three times since 2019.
Therefore, organizations that provide international poker rooms and casinos over the internet are not illegal according to the Wire Act. And you, as a mere player, are certainly not liable to Wire Act prosecution. To find out more about your options for playing poker online, check out this list of U.S.A. offshore poker sites. For a similar guide to internet casinos, head over to this rundown of the top online casinos for Americans.
If this page has whetted your appetite for more information pertaining to the laws affecting U.S. online poker, then browse over to this page about the legality of internet poker in America.
Wire Act History
We've provided you above with a fairly complete overview of the Wire Act and how it is interpreted today. However, if you would like to know more about the history behind this disputatious legislation and how we've arrived at our current understanding of it, keep reading below where we summarize important events and court proceedings that have impacted how the Wire Act has been viewed and employed over time.
Drafting and Intent
The original purpose of the Wire Act was to go after the mafia, and it was for this reason that Attorney General Robert F. Kennedy pushed hard for its adoption. Careful study of the relevant documents shows that it was always intended to prosecute those in the bookmaking business, i.e., persons accepting sports bets, because this was, at that time, one of the principal revenue-generating activities of organized crime. The Wire Act was originally never intended to combat other types of gambling.
Introduced as Senate Bill 1656 in 1961, the Wire Act was quickly passed by Congress on Aug. 31 of that year. President John F. Kennedy signed it into law on Sept. 13, 1961.
Wire Act and the Early Internet
After being used for decades in relation to telephone and telegraph communications, the Wire Act began to be used to prosecute internet-related crimes. This was relatively uncontroversial because the wording defining a wire communication facility is fairly broad, and it's easy to see how the internet could be considered one. In United States v. Cohen from 2001, the Second Circuit Court of Appeals confirmed that accepting sports bets over the internet was indeed a violation of the Wire Act.
It was unclear, however, if the Wire Act dealt solely with sports betting or had applicability to other forms of internet gaming. In the case of In Re Mastercard from 2001, the court seemed to be of the opinion that casino games were exempt from the Wire Act's provisions because they were not a form of sports wagering. On the other hand, the decision in U.S. v. Lombardo from 2007 held that the Wire Act was not “limited to bets or wagers placed on sporting events or contests alone.”
This latter interpretation seemed to be the one favored by government authorities. Indeed, during the period 2005 through 2011, the Department of Justice brought enforcement action in no fewer than 17 Wire Act cases in which there was betting on something other than sports.
2011 OLC Opinion
Given the broad view taken by Justice Department lawyers regarding the Wire Act's scope, officials in Illinois and New York were worried that their plans to offer lottery tickets for sale on the internet would be determined to be illegal. Accordingly, they sought guidance from the DoJ in 2009 as to the legality of their proposed activities.
The surprising answer came in the form of a September 2011 memorandum from the Justice Department's Office of Legal Counsel. This document put forward the view that the Wire Act was properly understood to be limited to sports betting alone. Therefore, state lotteries could do business over the internet without legal worry. This incidentally also meant that online poker and casino betting were OK too.
Restoration of America's Wire Act
The 2011 state lotteries memorandum put the internet gaming industry at ease, and it was with this guidance in mind that Delaware, New Jersey, and Nevada launched their own licensed online gaming ecosystems. However, there was considerable pushback from foes of internet gambling, none perhaps as infamous or wealthy as Las Vegas Sands chairman Sheldon Adelson.
Sheldon Adelson (1933 – 2021) Was an Implacable Opponent of Online GamingIt was Adelson who was widely reputed to be behind The Restoration of America's Wire Act (RAWA) legislation. This bill was introduced in the House by Rep. Jason Chaffetz (R – Utah) as HR 4301 and in the Senate by Sen. Lindsey Graham (R - SC) as S 2159 in 2014. It would have altered the Wire Act by making it unambiguously apply to all forms of online gambling apart from state lotteries.
RAWA failed to pass in 2014 despite its sponsors trying a variety of legislative tricks to turn it into law. They tried again the following year but were unsuccessful. At this point, they more or less threw in the towel, and RAWA entered the dustbin of history.
2018 OLC Opinion
The foes of interactive gaming were not about to concede defeat after the failure of RAWA however. The Criminal Division of the Justice Department asked the Office of Legal Counsel to reconsider the 2011 opinion, and in early 2019, that office released new Wire Act guidance (although the document was dated November 2, 2018).
Under this new interpretation of the law, ALL forms of online gaming that crossed state or national borders fell within the scope of the Wire Act. At the end of the document, the author stated, “This opinion supersedes and replaces our 2011 Opinion on the subject.” The DoJ generously pledged to delay any enforcement of the new opinion for 90 days to give businesses time to alter their practices and ensure compliance with the law.
New Hampshire Irate
The New Hampshire Lottery Commission and its technology partner, NeoPollard, were aghast at the new DoJ opinion. The NH Lottery participates in several multi-jurisdictional games, like Powerball, and furthermore, it routes its internet traffic through any number of hardware systems, which may or may not be located within state borders. Therefore, it appeared that this lottery operation might run afoul of the Wire Act, under the new rules, and have to be suspended.
On Feb. 15, 2019, New Hampshire decided to sue the DoJ. Its tech vendor NeoPollard similarly filed suit. Both cases were combined, and the verdict was rendered by District Court Judge Paul Barbadoro in the First Circuit.
Barbadoro found against the DoJ on June 3, 2019, and he declared that the Wire Act applied only to sports betting. Justice officials were displeased at this result, and they appealed the decision. However, the appellate court upheld the original decision, rending its opinion on Jan. 20, 2021. The DoJ declined to pursue the matter any further.
IGT Seeks Further Clarity
The New Hampshire case was an important victory for foes of big government intrusion into the free market, but it was limited in scope to the parties involved and the areas in which they transact business. IGT, a major software provider for 37 state lotteries, felt that its economic well-being was still threatened by the Department of Justice, which hadn't formally rescinded its 2018 Wire Act opinion. The company filed a lawsuit against the DoJ in November 2021, using arguments similar to those in the New Hampshire Lottery case.
In a repeat of its earlier loss, the DoJ saw its reasoning dismantled in detail by District Court Judge William E. Smith on Sept. 15, 2022. Much as Judge Barbadoro had done three years earlier, Smith found that the Wire Act's provisions related solely to sports betting and not to any other kind of wagering.
Judge William E. Smith Dashed the Hopes of the DoJThere's the slim possibility that the Justice Department might appeal the IGT verdict, but this is unlikely because the Biden Administration has not shown the same vigor in prosecuting Wire Act offenses as the previous administration had and also because the DoJ, facing three successive courtroom defeats, will probably not elect to try its luck in the same manner anytime soon. For now and the foreseeable future, the Wire Act prohibits certain forms of sports betting that cross state lines and does not have any impact on internet poker, casino gaming, or lottery sales.