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Wire Act loses its teeth after DoJ reinterpretation


Gambling operators may no longer have to play the high Wire Act after the Department of Justice decided it only applied to sports betting.


POKER O


nline poker may very well be on the cards again in the US after the country’s Department of Justice’s


latest interpretation of the Wire Act deter- mined that the law only applied to sports betting.


The DoJ has been asked about the ‘lawfulness of proposals by Illinois and New York to use the internet and out-of- state transaction processors to sell lottery tickets to in-state adults’, but few could have expected a judgement that could so dramatically open a gateway for the online gambling industry to operate legally in the US.


The DoJ found: “Interstate transmis- sions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act. Because the proposed New York and Illinois lottery proposals do not involve wagering on sporting events or contests, the Wire Act does not prohibit them.” The Wire Act has long played the bogey man for the online gambling industry in the US because despite being created in 1961, lawmakers had applied it to internet communications. But now it appears that it only has jurisdiction over sports betting and all other gambling types appear to be exempt. Professor I. Nelson Rose, on his blog at


www.GamblingAndTheLaw.com, described the judgement as ‘a big, big present’. He wrote: “President Barack Obama’s administration has just declared, perhaps unintentionally, that almost every form of intra-state internet gambling is legal under federal law, and so may be games played interstate and even internationally.”


Nelson Rose argued that without a spe- cific federal law banning online poker, the country’s individual states are free to legalise it and to partner with other states, or even international jurisdictions, that have also legalised online poker in order to commingle pool liquidity.


He added: “The immediate beneficiaries will be the DC Lottery and Nevada-


licensed private operators, since those jurisdictions are the furthest ahead. The state lotteries in Illinois, New York and New Hampshire will also initiate or expand their online games. After all, most of the provincial lotteries in Canada are already operating internet poker and other online gambling games, or are about to do so. I believe this will be a major incentive for the other states looking at legalising intra- state poker and other games.” The Poker Players Alliance (PPA) enthu- siastically welcomed the judgement and even pushed for federal recognition. “This is a much needed clarification of an anti- quated and often confusing law,” said John Pappas, PPA’s executive director. “For years, legal scholars and even the courts have debated whether the Wire Act applies to non-sporting activity. The announcement validates the fact that internet poker does not violate this law. The PPA commends Assistant Attorney General Seitz for recognising this. However, this ruling makes it even more important that Congress act now to clarify federal law, and to create a licensing and regulation regime for internet poker, coupled with clear laws and strong enforcement against other forms of gam- bling deemed to be illegal.” PPA chairman former Senator Alfonse D’Amato added: “State by state licensing and regulation could result in a balkanised online poker world where players across the nation would be limited in their choices of where and against whom they could play. This could potentially reduce the number of total players, reducing revenues state lawmakers project from this activity. At the same time, it would deter entrepre- neurs from entering the online poker market, as there would essentially be 50 different sets of laws and rules to which they would have to adhere.”


In the meantime, the stock market has


responded very positively to the news with shares in all the major listed online companies jumping in price after the news was released.


The industry may have been experiencing straightened times with operating costs continuing to head north, but the underlying performance of betting shops is impressive according to the Gambling Commission.


UK LBO industry sees 5 per cent jump in gross gambling yield


MARKET REPORT F


ootball was the only sport where over the counter turnover increased


according to industry statis- tics just released by the Gambling Commission. During the period between April 2010 and March 2011, over the counter (OTC) turnover fell by four per cent to £8.9bn, with contribu- tions from greyhounds, horses, numbers games and ‘other’ all dropping in popu- larity.


COULD THE REINTERPRETATION OF THE WIRE ACT OPEN THE DOOR FOR ONLINE POKER IN THE US?


2 BettingBusinessInteractive • JANUARY 2012


Interesting, gross gam- bling yield (GGY) for the UK LBO sector actually saw a small increase during the period, despite the drop in turnover. GGY was up by 1 per cent to £1.48bn with the off course betting sector as a whole managing to record a 5 per cent increase in GGY to £2.78bn. Including figures from on course betting, bookmakers generated just over half of the UK gambling industry’s £5.55bn GGY. The number of betting shops open during the period increased by nearly three per cent to 9,067, with the number of LBOs not operated by the big four


bookmakers remaining roughly the same at 1,554. The statistics also show that bookmakers are taking their social responsibilities seriously with the number of people challenged by bookmakers who could not provide proof of age increasing by 10 per cent to 654, 970. There was also a 27 per cent increase in self exclusions to 20,823, although this increase also drove a 24 per cent increase in known breaches of self exclusion. The Commission explained: “The number of people who have self excluded and the number of people who have cancelled their self exclusion may be lower than these figures as individuals may have self excluded from more than one venue or operator and thus been counted more than once. The number of breaches represents the number of separate inci- dents, rather than the number of individuals.” The report also contains a section on sporting integrity, and the Commis- sion’s Sports Betting Integrity Unit is likely to have a busy year with the


2012 Olympics being held in London. 210 cases of suspi- cious betting activity have been reported to the Com- mission between 1 Septem- ber 2007 and 30 September 2011 (including 17 reports between 1 April 2011 and 30 September 2011). 125 of the 210 cases were reported by betting operators under licence condition 15.1 in the first instance with 85 coming from sports govern- ing bodies, or other sources such as the media, the public or non-regulated operators. “135 cases have been closed,” the Commission said. “In 133 of those cases, the grounds for suspicion of criminal activity have not been substantiated and the Commission either closed the cases or passed them to the relevant sport’s govern- ing body with any action taken by the sport’s govern- ing body now completed. Of the remaining two, only one investigation resulted in criminal proceedings - a caution for cheating at gam- bling. The other led to the perpetrators losing their jobs and bets being voided.” Of the remainder, as at 30 September 2011, 29 cases


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