Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcast. In a surprising reversal,
Speaker 1: the Justice Department now says that internet gambling that crosses
Speaker 1: state lines is illegal. This new opinion is putting a
Speaker 1: chill on the industry as businesses and state lotteries evaluate
Speaker 1: the implications of the change and the government's plans to
Speaker 1: enforce it. My guest is Keith Miller, professor at Drake
Speaker 1: University Law School. Keith, this reversed a d o J
Speaker 1: opinion from twenty eleven. Tell us about that opinion and
Speaker 1: why the Justice Department changed its position. Well, this was
Speaker 1: a surprise, but not completely a surprise, because there had
Speaker 1: been rumors in the air that this was coming. The
Speaker 1: Wire Act was a nineteen sixty one law that Robert F. Kennedy,
Speaker 1: when he was Attorney General, got through Congress to combat
Speaker 1: organized crime, and the idea behind the Wire Act was
Speaker 1: to look at wire transmission facilities. In nineteen sixty one
Speaker 1: that would have been a telephone, but now it includes
Speaker 1: the Internet, and it essentially said that any use of
Speaker 1: those UH wire transmission facilities to transmit information on bets
Speaker 1: or to take bets on sporting events, and that's the
Speaker 1: language is used, violated the Wire Act, and over time
Speaker 1: it was used against organized crime. In the early two thousands,
Speaker 1: the Bush administration used it to some extent to harass
Speaker 1: Internet poker companies, and it ended up that a couple
Speaker 1: of lotteries in two thousand nine wanted to have online
Speaker 1: UH sales of their lottery tickets. And in two thousand
Speaker 1: eleven the Office of Legal Council said, don't worry about it.
Speaker 1: The Wire Act only applies to sports betting, and that
Speaker 1: really is what gave rise to the spread of Internet
Speaker 1: poker UH and Internet lotteries. Well, we know what happened.
Speaker 1: Um Monday the Office of Legal Counsel looked at that
Speaker 1: same statute and said, that's not the way we read
Speaker 1: this law. We think that while it's unclear that on
Speaker 1: balance it applies to all forms of Internet gambling and
Speaker 1: not just sports, which the ebody who knows about the
Speaker 1: Wire Act would would describe it charitably as a poorly
Speaker 1: worded and unclear, and I think it lends itself to
Speaker 1: this sort of political back and forth. Is it also
Speaker 1: outdated in the modern era? It is because in nineteen
Speaker 1: sixty one, there was very little legal gambling that went
Speaker 1: on anywhere in the United States. Uh, the illegal gambling
Speaker 1: market was predominant, was dominated by organized crime, and so
Speaker 1: there needed to be a very strong response to combat that. Now,
Speaker 1: our views about gaming have, for better or for worse,
Speaker 1: changed quite a bit. Um the view of the Wire Act.
Speaker 1: Taking that and applying it now does nothing to make
Speaker 1: our country or our world safer. What it does is
Speaker 1: drive gambling that we know that's going on. It just
Speaker 1: drives it underground. And I think one of the things
Speaker 1: we've learned over the years is if there's going to
Speaker 1: be gambling occurring, we want to bring that into legal
Speaker 1: and regulated markets so that it can be regulated, taxed.
Speaker 1: It's safer. It drives the criminal element out. So yes,
Speaker 1: it isn't an outdated view of that law. Keith. Will
Speaker 1: it be difficult for the Justice Department to police this
Speaker 1: where the Internet is involved? It may be because, um,
Speaker 1: some people have suggested that the interpretation the memo really
Speaker 1: doesn't change much of anything that There are sources that say, realistically,
Speaker 1: this was a matter of Donald Trump giving a gift
Speaker 1: to one of his benefactors, Sheldon Addlson, the fabulously wealthy
Speaker 1: head of Las Vegas Sands, who has been opposed internet
Speaker 1: gambling forever. They say, this is something that Trump got
Speaker 1: done for Addleson, and nothing's really going to change. But
Speaker 1: a company can't rely on that certainly. UH. And if
Speaker 1: the Department of Justice were aggressive and viewed any UM
Speaker 1: intermediate routing of data for online gaming that would cross
Speaker 1: state lines to be a violation of the Wire Act,
Speaker 1: then that's going to jeopardize many types of of activity
Speaker 1: online gaming act of it that has been going on,
Speaker 1: even intro state poker, UH, could be jeopardized if there
Speaker 1: was a finding that some of the data that was
Speaker 1: used electronically crossed state lines at one time or another.
Speaker 1: What about state lotteries that are so popular. I think
Speaker 1: that the opinion in two thousand eleven said lotteries, You're
Speaker 1: okay because this doesn't apply to you. And this UM
Speaker 1: memo on Monday said, oh, yes, it does apply to you.
Speaker 1: And if you do something that using these wire transmission
Speaker 1: facilities to transmit data that would cross state lines, then
Speaker 1: you would be in violation of the Wire Act. Now,
Speaker 1: the new legal opinion will likely be challenged in court.
Speaker 1: What might the grounds be the Wire Act itself. I
Speaker 1: won't say that there have been books written about just
Speaker 1: the Wire Act, but it has been a notorious part
Speaker 1: of the gaming history of the United States, and I
Speaker 1: think it's fair to say that the balance of opinion
Speaker 1: about the Wire Act is that it was designed to
Speaker 1: apply only to sports, and there is a Federal Court
Speaker 1: decision from the year two thousand that said it only
Speaker 1: applies to sports. So that would really be the basis
Speaker 1: for the challenge that in looking at the law and
Speaker 1: its language and legislative history, it doesn't have application to
Speaker 1: any form of gambling apart from sports. Now, of course,
Speaker 1: the irony to that is that the Supreme Court in
Speaker 1: May of last year opened up sports betting to the
Speaker 1: States by striking down a federal law, and the focus
Speaker 1: on in the minds of many people has been we
Speaker 1: need a federal law to get rid of the Wire
Speaker 1: Act as it applies to sports betting. So this is
Speaker 1: definitely one step forward and two steps back as it
Speaker 1: relates to internet gambling. That was my next question, which
Speaker 1: is would the kind of reasoning that the Supreme Court
Speaker 1: applied in that case last may work here against the
Speaker 1: opinion of the d o J. I don't think that
Speaker 1: the Supreme Courts analysis in the sports betting case the
Speaker 1: Murphy case, would have much bearing on this. The essence
Speaker 1: of the Murphy case was that Congress was not willing
Speaker 1: to prohibit sports betting itself. It just looked to the
Speaker 1: states and told them, you can't authorize sports betting. And
Speaker 1: the Court said to Congress, you don't have the constitutional
Speaker 1: power to tell states how to regulate, to tell them
Speaker 1: to pass laws or not pass laws. If you want
Speaker 1: to regulate sports betting, go ahead. But if you're not
Speaker 1: going to regulate it, you have to leave the states
Speaker 1: free to do so. And I really don't think that
Speaker 1: those federalism and separation of govern that powers issues would
Speaker 1: have much bearing. Thanks for listening to the Bloomberg Law Podcast.
Speaker 1: You can subscribe and listen to the show on Apple Podcasts, SoundCloud,
Speaker 1: and on Bloomberg dot com slash podcast. I'm June Brosso.
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