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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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Speaker 1: and on Bloomberg dot com slash podcast. In a surprising reversal,

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Speaker 1: the Justice Department now says that internet gambling that crosses

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Speaker 1: state lines is illegal. This new opinion is putting a

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Speaker 1: chill on the industry as businesses and state lotteries evaluate

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Speaker 1: the implications of the change and the government's plans to

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Speaker 1: enforce it. My guest is Keith Miller, professor at Drake

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Speaker 1: University Law School. Keith, this reversed a d o J

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Speaker 1: opinion from twenty eleven. Tell us about that opinion and

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Speaker 1: why the Justice Department changed its position. Well, this was

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Speaker 1: a surprise, but not completely a surprise, because there had

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Speaker 1: been rumors in the air that this was coming. The

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Speaker 1: Wire Act was a nineteen sixty one law that Robert F. Kennedy,

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Speaker 1: when he was Attorney General, got through Congress to combat

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Speaker 1: organized crime, and the idea behind the Wire Act was

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Speaker 1: to look at wire transmission facilities. In nineteen sixty one

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Speaker 1: that would have been a telephone, but now it includes

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Speaker 1: the Internet, and it essentially said that any use of

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Speaker 1: those UH wire transmission facilities to transmit information on bets

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Speaker 1: or to take bets on sporting events, and that's the

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Speaker 1: language is used, violated the Wire Act, and over time

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Speaker 1: it was used against organized crime. In the early two thousands,

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Speaker 1: the Bush administration used it to some extent to harass

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Speaker 1: Internet poker companies, and it ended up that a couple

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Speaker 1: of lotteries in two thousand nine wanted to have online

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Speaker 1: UH sales of their lottery tickets. And in two thousand

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Speaker 1: eleven the Office of Legal Council said, don't worry about it.

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Speaker 1: The Wire Act only applies to sports betting, and that

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Speaker 1: really is what gave rise to the spread of Internet

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Speaker 1: poker UH and Internet lotteries. Well, we know what happened.

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Speaker 1: Um Monday the Office of Legal Counsel looked at that

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Speaker 1: same statute and said, that's not the way we read

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Speaker 1: this law. We think that while it's unclear that on

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Speaker 1: balance it applies to all forms of Internet gambling and

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Speaker 1: not just sports, which the ebody who knows about the

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Speaker 1: Wire Act would would describe it charitably as a poorly

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Speaker 1: worded and unclear, and I think it lends itself to

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Speaker 1: this sort of political back and forth. Is it also

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Speaker 1: outdated in the modern era? It is because in nineteen

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Speaker 1: sixty one, there was very little legal gambling that went

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Speaker 1: on anywhere in the United States. Uh, the illegal gambling

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Speaker 1: market was predominant, was dominated by organized crime, and so

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Speaker 1: there needed to be a very strong response to combat that. Now,

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Speaker 1: our views about gaming have, for better or for worse,

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Speaker 1: changed quite a bit. Um the view of the Wire Act.

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Speaker 1: Taking that and applying it now does nothing to make

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Speaker 1: our country or our world safer. What it does is

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Speaker 1: drive gambling that we know that's going on. It just

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Speaker 1: drives it underground. And I think one of the things

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Speaker 1: we've learned over the years is if there's going to

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Speaker 1: be gambling occurring, we want to bring that into legal

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Speaker 1: and regulated markets so that it can be regulated, taxed.

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Speaker 1: It's safer. It drives the criminal element out. So yes,

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Speaker 1: it isn't an outdated view of that law. Keith. Will

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Speaker 1: it be difficult for the Justice Department to police this

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Speaker 1: where the Internet is involved? It may be because, um,

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Speaker 1: some people have suggested that the interpretation the memo really

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Speaker 1: doesn't change much of anything that There are sources that say, realistically,

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Speaker 1: this was a matter of Donald Trump giving a gift

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Speaker 1: to one of his benefactors, Sheldon Addlson, the fabulously wealthy

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Speaker 1: head of Las Vegas Sands, who has been opposed internet

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Speaker 1: gambling forever. They say, this is something that Trump got

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Speaker 1: done for Addleson, and nothing's really going to change. But

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Speaker 1: a company can't rely on that certainly. UH. And if

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Speaker 1: the Department of Justice were aggressive and viewed any UM

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Speaker 1: intermediate routing of data for online gaming that would cross

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Speaker 1: state lines to be a violation of the Wire Act,

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Speaker 1: then that's going to jeopardize many types of of activity

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Speaker 1: online gaming act of it that has been going on,

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Speaker 1: even intro state poker, UH, could be jeopardized if there

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Speaker 1: was a finding that some of the data that was

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Speaker 1: used electronically crossed state lines at one time or another.

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Speaker 1: What about state lotteries that are so popular. I think

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Speaker 1: that the opinion in two thousand eleven said lotteries, You're

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Speaker 1: okay because this doesn't apply to you. And this UM

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Speaker 1: memo on Monday said, oh, yes, it does apply to you.

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Speaker 1: And if you do something that using these wire transmission

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Speaker 1: facilities to transmit data that would cross state lines, then

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Speaker 1: you would be in violation of the Wire Act. Now,

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Speaker 1: the new legal opinion will likely be challenged in court.

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Speaker 1: What might the grounds be the Wire Act itself. I

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Speaker 1: won't say that there have been books written about just

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Speaker 1: the Wire Act, but it has been a notorious part

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Speaker 1: of the gaming history of the United States, and I

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Speaker 1: think it's fair to say that the balance of opinion

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Speaker 1: about the Wire Act is that it was designed to

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Speaker 1: apply only to sports, and there is a Federal Court

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Speaker 1: decision from the year two thousand that said it only

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Speaker 1: applies to sports. So that would really be the basis

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Speaker 1: for the challenge that in looking at the law and

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Speaker 1: its language and legislative history, it doesn't have application to

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Speaker 1: any form of gambling apart from sports. Now, of course,

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Speaker 1: the irony to that is that the Supreme Court in

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Speaker 1: May of last year opened up sports betting to the

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Speaker 1: States by striking down a federal law, and the focus

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Speaker 1: on in the minds of many people has been we

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Speaker 1: need a federal law to get rid of the Wire

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Speaker 1: Act as it applies to sports betting. So this is

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Speaker 1: definitely one step forward and two steps back as it

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Speaker 1: relates to internet gambling. That was my next question, which

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Speaker 1: is would the kind of reasoning that the Supreme Court

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Speaker 1: applied in that case last may work here against the

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Speaker 1: opinion of the d o J. I don't think that

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Speaker 1: the Supreme Courts analysis in the sports betting case the

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Speaker 1: Murphy case, would have much bearing on this. The essence

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Speaker 1: of the Murphy case was that Congress was not willing

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Speaker 1: to prohibit sports betting itself. It just looked to the

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Speaker 1: states and told them, you can't authorize sports betting. And

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Speaker 1: the Court said to Congress, you don't have the constitutional

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Speaker 1: power to tell states how to regulate, to tell them

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Speaker 1: to pass laws or not pass laws. If you want

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Speaker 1: to regulate sports betting, go ahead. But if you're not

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Speaker 1: going to regulate it, you have to leave the states

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Speaker 1: free to do so. And I really don't think that

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Speaker 1: those federalism and separation of govern that powers issues would

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Speaker 1: have much bearing. Thanks for listening to the Bloomberg Law Podcast.

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Speaker 1: You can subscribe and listen to the show on Apple Podcasts, SoundCloud,

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Speaker 1: and on Bloomberg dot com slash podcast. I'm June Brosso.

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Speaker 1: This is Bloomberg