BUSINESS

Online gambling illegal again? Sure, whatever

TAGs: Department of Justice, United States, Wire Act

Sheldon Adelson was just given a cookie. Online gambling is illegal again across the United States, technically, thanks to what could be termed the “run-on sentence heard round the world.” A new interpretation by the Department of Justice of the 1961 Wire Act has just concluded that, because of a conspicuously and suspiciously missing comma, all online gambling violates the Act, and not just sports betting, which is also now technically legal itself anyway ever since PASPA was overturned. If this doesn’t make any sense to you, you’re normal.

Online gambling illegal again? Sure, whateverBefore we get into the asinine details of this nonsense, let’s all calm down. Practically this means nothing for the online gambling industry in the United States, but it will pad the pockets of lawyers aplenty. As my CalvinAyre colleague Steven Stadbrooke aptly notes, “lawyers across the country are licking their lips at the prospect of all those extra billing hours.”

The new interpretation is based on a clause in the Act that prohibits use of 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…” The question is, does the phrase “on any sporting event or contest” circumscribe the application of the phrase “bets or wagers” or is it an addition on top of the general prohibition of all bets and wagers?

Well, I’ll put my yeshiva (religious law school) hat back on for a second and shteig (Yiddish for “learn”). If all bets and wagers are prohibited by the 1961 Wire Act, then “sporting event or contest” does not apply to the whole sentence. If so, then “sporting event or contest” must be strictly illustrative. However, if it is merely illustrative, then the authors should have included the phrase “for example” or something similar. But they didn’t. Further, if the purpose of the Act was to outlaw all bets or wagers, there is no reason to include the phrase “sporting event or contest” at all. Therefore the phrase “sporting event or contest” must be a limiting phrase rather than illustrative, meaning only bets or wagers made on sporting events or contests apply here.

But anyway, none of this matters except for the lawyers who will be fighting both sides. What matters for investors in online gambling companies? Consider for example that, technically, the entire “legal cannabis industry” in the United States is clearly 100% illegal. There is no “legal cannabis industry” at all. Cannabis has never been rescheduled from Schedule I and is still illegal on a federal level. Federal agents could raid any dispensary, any company, any supplier at any time, but they do not. Why not? Because the American people would not stand for it. It’s just not something the federal government would be able to get away with.

Let’s imagine that the DOJ chooses to enforce this reinterpretation and spread out across New Jersey and raid the offices of MGM, Caesars, Golden Nugget or whoever, arresting everyone involved in online gambling in the US for 2 years as the Act stipulates. Could they do that now? Well, really they can do anything they want because they have guns. But no, they can’t. Not going to happen. Donald Trump is still President, he’s a gambling man, and this is not his priority. Will they go a little more low key and issue cease and desist orders or something? That’s New Jersey’s economy and tax revenues the federal government would be squelching, and New Jersey’s state government won’t stand for it. When one bully is already taking your lunch money and another bully comes in and demands your lunch money AND your bike, the first bully who only takes your lunch money is probably going to defend you, as you are “his” territory. Besides, the federal government is “shut down”. Whatever that means.

There’s also a positive way to look at this pathetic attempt to kill an industry, more than just to say it’s meaningless. If this is the best that Sheldon Adelson and his Coalition to Stop Internet Gambling can do, then online gambling is in very good shape. For Adelson, this is like getting the Most Improved or Best Effort trophy for sports in 3rd grade. He’s now the “Rudy” of online gambling enemies. He got to play one meaningless play at the end of the game just to say he was in it. It’s just a pity concession, something to cozy up the man’s ego so he can tell himself that he “won”. Now that he thinks he did (hopefully), the pressure will lighten a bit and federal agencies can go back to ignoring him because they have better things to do, like watch porn.

Adelson couldn’t get Congress to vote on anything and couldn’t get Trump’s ear on the subject even though he was one of the Orange Man’s biggest donors. All he could do was get the Department of Justice to reinterpret a comma while conceding that the real authority to expand the applications of the Wire Act in practice remains with Congress. Which just proves that the DOJ is not going to attempt to actually do anything in practice. Is there any wonder that it took two and a half month for this DOJ reinterpretation to even be noticed by the media at all?

Just like cannabis legalization will not be reversed despite the fact that it’s still illegal, online gambling legalization will not be reversed even if it is, still, technically illegal, according to this re-reinterpretation. Ultimately, laws are not interpreted in a vacuum as holy documents where one interpretation is “correct” and the other is “wrong”. This sort of strict orthodoxy may have a few idiosyncratic adherents within the system who consider themselves legal purists, but in the end, law is interpreted in accordance with what the real powers that be believe is in their best interests, what they can get away with, what will ultimately make them more powerful. With the grounding of PASPA, the practical legalization of marijuana in so many places, and now the federal legalization of hemp as well, it’s clear that the federal government is in no mood to harass grey-area industry, least of all online gambling.

All this is, is a nod to the ego of Sheldon Adelson as a way for those he lobbied to accept his money while putting the onus for implementation on some other unnamed faceless bureaucratic agency in the middle of a shutdown, and to get the guy him to congratulate himself over nothing and be quiet.

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