WEBVTT - U.S, Bars Online Gambling Across State Lines

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<v Speaker 1>Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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<v Speaker 1>day we bring you insight and analysis into the most

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<v Speaker 1>important legal news of the day. You can find more

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<v Speaker 1>episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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<v Speaker 1>and on Bloomberg dot com slash podcast. In a surprising reversal,

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<v Speaker 1>the Justice Department now says that internet gambling that crosses

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<v Speaker 1>state lines is illegal. This new opinion is putting a

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<v Speaker 1>chill on the industry as businesses and state lotteries evaluate

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<v Speaker 1>the implications of the change and the government's plans to

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<v Speaker 1>enforce it. My guest is Keith Miller, professor at Drake

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<v Speaker 1>University Law School. Keith, this reversed a d o J

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<v Speaker 1>opinion from twenty eleven. Tell us about that opinion and

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<v Speaker 1>why the Justice Department changed its position. Well, this was

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<v Speaker 1>a surprise, but not completely a surprise, because there had

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<v Speaker 1>been rumors in the air that this was coming. The

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

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<v Speaker 1>when he was Attorney General, got through Congress to combat

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<v Speaker 1>organized crime, and the idea behind the Wire Act was

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<v Speaker 1>to look at wire transmission facilities. In nineteen sixty one

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<v Speaker 1>that would have been a telephone, but now it includes

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<v Speaker 1>the Internet, and it essentially said that any use of

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<v Speaker 1>those UH wire transmission facilities to transmit information on bets

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<v Speaker 1>or to take bets on sporting events, and that's the

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<v Speaker 1>language is used, violated the Wire Act, and over time

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<v Speaker 1>it was used against organized crime. In the early two thousands,

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<v Speaker 1>the Bush administration used it to some extent to harass

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<v Speaker 1>Internet poker companies, and it ended up that a couple

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<v Speaker 1>of lotteries in two thousand nine wanted to have online

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<v Speaker 1>UH sales of their lottery tickets. And in two thousand

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

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<v Speaker 1>The Wire Act only applies to sports betting, and that

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<v Speaker 1>really is what gave rise to the spread of Internet

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<v Speaker 1>poker UH and Internet lotteries. Well, we know what happened.

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<v Speaker 1>Um Monday the Office of Legal Counsel looked at that

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<v Speaker 1>same statute and said, that's not the way we read

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<v Speaker 1>this law. We think that while it's unclear that on

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<v Speaker 1>balance it applies to all forms of Internet gambling and

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<v Speaker 1>not just sports, which the ebody who knows about the

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<v Speaker 1>Wire Act would would describe it charitably as a poorly

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<v Speaker 1>worded and unclear, and I think it lends itself to

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<v Speaker 1>this sort of political back and forth. Is it also

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<v Speaker 1>outdated in the modern era? It is because in nineteen

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<v Speaker 1>sixty one, there was very little legal gambling that went

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<v Speaker 1>on anywhere in the United States. Uh, the illegal gambling

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<v Speaker 1>market was predominant, was dominated by organized crime, and so

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<v Speaker 1>there needed to be a very strong response to combat that. Now,

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<v Speaker 1>our views about gaming have, for better or for worse,

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<v Speaker 1>changed quite a bit. Um the view of the Wire Act.

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<v Speaker 1>Taking that and applying it now does nothing to make

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<v Speaker 1>our country or our world safer. What it does is

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<v Speaker 1>drive gambling that we know that's going on. It just

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<v Speaker 1>drives it underground. And I think one of the things

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<v Speaker 1>we've learned over the years is if there's going to

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<v Speaker 1>be gambling occurring, we want to bring that into legal

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<v Speaker 1>and regulated markets so that it can be regulated, taxed.

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<v Speaker 1>It's safer. It drives the criminal element out. So yes,

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<v Speaker 1>it isn't an outdated view of that law. Keith. Will

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<v Speaker 1>it be difficult for the Justice Department to police this

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<v Speaker 1>where the Internet is involved? It may be because, um,

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<v Speaker 1>some people have suggested that the interpretation the memo really

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

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<v Speaker 1>this was a matter of Donald Trump giving a gift

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<v Speaker 1>to one of his benefactors, Sheldon Addlson, the fabulously wealthy

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<v Speaker 1>head of Las Vegas Sands, who has been opposed internet

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<v Speaker 1>gambling forever. They say, this is something that Trump got

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

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<v Speaker 1>a company can't rely on that certainly. UH. And if

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<v Speaker 1>the Department of Justice were aggressive and viewed any UM

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<v Speaker 1>intermediate routing of data for online gaming that would cross

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<v Speaker 1>state lines to be a violation of the Wire Act,

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<v Speaker 1>then that's going to jeopardize many types of of activity

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<v Speaker 1>online gaming act of it that has been going on,

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<v Speaker 1>even intro state poker, UH, could be jeopardized if there

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<v Speaker 1>was a finding that some of the data that was

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<v Speaker 1>used electronically crossed state lines at one time or another.

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<v Speaker 1>What about state lotteries that are so popular. I think

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<v Speaker 1>that the opinion in two thousand eleven said lotteries, You're

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<v Speaker 1>okay because this doesn't apply to you. And this UM

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<v Speaker 1>memo on Monday said, oh, yes, it does apply to you.

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<v Speaker 1>And if you do something that using these wire transmission

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<v Speaker 1>facilities to transmit data that would cross state lines, then

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<v Speaker 1>you would be in violation of the Wire Act. Now,

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<v Speaker 1>the new legal opinion will likely be challenged in court.

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<v Speaker 1>What might the grounds be the Wire Act itself. I

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<v Speaker 1>won't say that there have been books written about just

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<v Speaker 1>the Wire Act, but it has been a notorious part

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<v Speaker 1>of the gaming history of the United States, and I

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<v Speaker 1>think it's fair to say that the balance of opinion

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<v Speaker 1>about the Wire Act is that it was designed to

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<v Speaker 1>apply only to sports, and there is a Federal Court

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<v Speaker 1>decision from the year two thousand that said it only

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<v Speaker 1>applies to sports. So that would really be the basis

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<v Speaker 1>for the challenge that in looking at the law and

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<v Speaker 1>its language and legislative history, it doesn't have application to

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<v Speaker 1>any form of gambling apart from sports. Now, of course,

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<v Speaker 1>the irony to that is that the Supreme Court in

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<v Speaker 1>May of last year opened up sports betting to the

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<v Speaker 1>States by striking down a federal law, and the focus

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<v Speaker 1>on in the minds of many people has been we

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<v Speaker 1>need a federal law to get rid of the Wire

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<v Speaker 1>Act as it applies to sports betting. So this is

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<v Speaker 1>definitely one step forward and two steps back as it

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<v Speaker 1>relates to internet gambling. That was my next question, which

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<v Speaker 1>is would the kind of reasoning that the Supreme Court

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<v Speaker 1>applied in that case last may work here against the

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<v Speaker 1>opinion of the d o J. I don't think that

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<v Speaker 1>the Supreme Courts analysis in the sports betting case the

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<v Speaker 1>Murphy case, would have much bearing on this. The essence

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<v Speaker 1>of the Murphy case was that Congress was not willing

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<v Speaker 1>to prohibit sports betting itself. It just looked to the

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

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<v Speaker 1>the Court said to Congress, you don't have the constitutional

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<v Speaker 1>power to tell states how to regulate, to tell them

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<v Speaker 1>to pass laws or not pass laws. If you want

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

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<v Speaker 1>going to regulate it, you have to leave the states

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<v Speaker 1>free to do so. And I really don't think that

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<v Speaker 1>those federalism and separation of govern that powers issues would

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<v Speaker 1>have much bearing. Thanks for listening to the Bloomberg Law Podcast.

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<v Speaker 1>You can subscribe and listen to the show on Apple Podcasts, SoundCloud,

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<v Speaker 1>and on Bloomberg dot com slash podcast. I'm June Brosso.

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<v Speaker 1>This is Bloomberg